yEarn - a fan-favorite liquidity aggregator - has shared the blueprints for a YFI governance token in tandem with a suite of new liquidity pools.
Best popularized for the Y Curvepool, yEarn offers a number of avenues for users to earn passive interest for supplying capital to any number of the protocols supported pools. Historically, yEarn pools have earned some of the best lending rates in all of DeFi, with the yearn.finance pool aggregating $8M in AUM in tandem with a historical return of just over 10% APY since launch.
Today, yEarn introduced a suite of new, existing, and discontinued products including:
- yTrade - Trade top stablecoins DAI, USDC, USDT, TUSD and sUSD with up to 1000x leverage using an initiation fee or 250x without an initiation fee.
- iLiquidiate - An automated liquidation engine for Aave defaults.
- iLeverage - Open a 5x leveraged Dai Vault using USDC as collateral.
- iPool - A y.curve.fi <> sUSD curve.fi meta pool offering the best rates between Curve's two most popular pools. (Discontinued)
- ySwap - A stable AMM allowing for single-sided liquidity provision while collecting interest and rewards.
- *.finance - TBA credit delegation platform using Aave undercollateralized loans.
What emerges is a sophisticated lending and arbitrage protocol that routes liquidity across different corners of DeFi to earn the best returns. Using lending protocols like Curve, dYdX, Compound, and Aave along with AMMs like Uniswap and Balancer opens the door for cross-protocol returns extremely difficult to mimic as an average user.
As if that wasn't enough, the incentive to use yEarn just got a little sweeter.
YFI Governance Token
Following in line with the wider trend of liquidity mining, YFI can ONLY be earned through usage of any of the aforementioned pools. This is in stark contrast to something like COMP and BAL in which a portion was held by the time and another portion was offered in an Initial DEX Offering. Instead, the only way to earn tokens is through usage, and yEarn was very blatant about stating the token has 0 value outside of governance.
It's likely that the most popular way to earn will be through the yCurve stablecoin pool, and Curve graciously put together a guide on this works here.
YFI Rewards Pool
Outside of openly memeing that YFI has 0 financial value, the project has created a pretty strong token model under the hood. Off the bat, yEarn pools aggregate a suite of rewards and fees including (but not limited to in the future):
- yearn.finance interest
- curve.fi/y trading fees
- ytrade.finance leverage fees and liquidation bonuses
- yswap.exchange system fees
- iliquidate.finance liquidation bonuses
- system dust (unassigned interest or fees)
All of these fees are collected on a regular basis and routed to a Vault which normalizes all the above-mentioned income to aDAI. Once in aDAI, YFI holders can claim a pro-rata share of that reward pool directly from the contract address by burning YFI tokens.
yEarn has stated that they will be releasing an interface for the burning and redemption of these fees in the coming weeks. Last but not least, yEarn has also shipped a staking dashboard to make it easy for users to stake and unstake their position across any of yEarn's various liquidity pools.
Underpinning this whole ecosystem is an incredibly meta ecosystem at play. While you need 1000 IQ DeFi knowledge to get involved, those who are savvy enough are sure to reap the rewards of the most organic, strongly-designed DeFi token to date.
As aggregate liquidity continues to heat up, we'll keep reminding users that it's a good time to be a yield farmer - so long as you keep in mind that there's a lot of inherent risks that come with it.