Yearn.finance, DeFi’s automated pruning protocol, has recently launched its latest yvault strategy so far. YVault Strategies is a set of predefined actions that allow users to automatically deposit and send funds to liquidity pools where high rates of return and extra tokens are achieved.
The YETH repository was launched on September 2, along with the yWETH repository and many other updates. The YWETH Store is similar to the yETH Store, but uses ETH and ERC-20 code encapsulated, attached, and supported by ETH.
According to a recent newsletter for Delphi Digital customers, YETH’s inventory strategy includes four main phases. Ether (ETH) is deposited first, and then used as collateral for DAI acquisitions of MakerDAO with a 200% guarantee rate. The interest is earned and DAI is sent to Curve Finance, the currencies’ stable liquidity protocol.
Then DAI is banned, and interest (from Curve DEX trading fee) and extra CRV tokens are received. CRV is then sold for Ether, which is redistributed back to the YETH store.
At the time of writing, the yVault strategy has a 90% interest rate and 0.5% withdrawal fee, which is then distributed among YFI token holders.
Lairn Finance and the Future of DeFi
The YVault strategies currently available on Yearn.Finance provide huge returns for owners, and when it comes to yETH, this provides an optimistic view for MKR owners such as MakerDAO, Ether and of course YFI. This is because token holders receive a YFI retention bonus from a 0.5% withdrawal fee.
Given the high profitability of storage, YETH currently has 345,120 Ether ($ 139 million) stored just one day after launch, and a number of analysts expect to increase.
While this new warehouse system is risky for investors, the rewards system for developing new strategies is designed to motivate developers to build robust code, and protocols are expected to undergo a comprehensive review. In the report, Delphi Digital also highlighted several reasons for Yearn Finance’s success, saying that:
“It’s hard to find just one reason why our team is so passionate about YFI. It’s clearly a commodity market. It’s easy to use, especially considering the efficiency it provides through commissions. Profitability is attractive and it provides Revenue from token holders without dilution. ”
DeFi is too speculative?
In a tweet about YETH and WETH vaults, Yearn.Finance warned that vaults are high risk because they are “debt-based vaults and extremely high risk.”
The risk mentioned here is liquidation risk, which means that if the Ether price falls to a certain price, the user’s positions will be wound up in the air. This is to ensure that DAI is linked to the US dollar as DAI is supported by ETH at a rate of 200%.
The current limit for the ratio of security is 150%, which means that there is a very high risk of losing all the money in these vaults.
Furthermore, there are common risks and challenges associated with the current DeFi ecosystem, including the high gas fees required to interact with smart contracts, and the fact that the yETH vault interacts with more smart contracts, adding more layers of risk to the process.
As Defi’s high-risk investments continue to surpass themselves, industrial hype and price increases in space suggest that a potential bubble is forming.
Asked about the hype surrounding DeFi and how he compares to the hype surrounding ICO 2017, 21Shares researcher Lanri Aege told Cointelegraph that there may still be room for growth. exclude:
“Although it is difficult to compare considering that the current cycle is still an order of magnitude smaller than the previous one, the big difference is so far that today’s valuations have not been driven by more new money – although they are clearly more flexible. 2017, long-term institutional interest.