yEarn – a yield aggregation protocol – has deployed it’s highly anticipated yETH strategy.

 

The yETH vault is the first of its kind as it’s underlying yield strategy was created by a community member and not Andre Cronje (shoutout Banteg!). You can think of the yETH vault as a vehicle for leveraging ETH collateral to earn ETH denominated returns.

The yETH Vault currently offers ~90% variable APY, a rate that is significantly higher yield than most readily available CeFi and DeFi options for earning on ETH. Despite the attractive yield, remember that this is a beta product that has yet to be battle-tested, DYOR before depositing any funds.

 

While advanced DeFi users such as DeFi Dad have long employed similar strategies to earn a yield on ETH, the yETH vaults abstract away almost all of the complexity and expertise away from the process.

 

How Does it Work?

Generally, all the yEarn.Finance’s “vault” products seek the best returns for yield farmers and pool deposited funds to optimize gas fees with varying underlying yield strategies.

With this particular strategy, ETH locked in the yETH Vault is used to generate DAI through Maker. That DAI is then used to earn yield and purchase ETH off the open market. Newly purchased ETH is shared with yETH Vault owners pro-rata relative to their total liquidity. It’s worth noting that this strategy is not risk-free. In fact, yETH is constantly teetering on the edge of Maker’s collateralization ratio, meaning a massive flash crash could wipe out all ETH in the Vault.

While there are a multitude of market forces at play right now, many in the DeFi community see the yETH launch as a bullish sign for ETH going forward as more ETH is locked up in yEarn.

What’s Next?

yEarn has been on a meteoric rise since it’s launch and many have looked to capitalize on its hype. Despite many attempts at imitation (YFV, YFII, ZZZ, and more) yEarn’s market dominance shows that while you can fork code, you can’t fork an engaged and innovative community.

Combined with the recently launched yInsure products powered by Nexus Mutual, yEarn is now providing a much more holistic offering for DeFi yield seekers of varying risk appetites. Just a few hours after launch and there is already more than $5,000,000 of ETH deposited, a strong signal that the DeFi community will continue to utilize this product.

To stay up with yEarn, follow the project on Twitter.