YEarn (YFI)

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(Redirected from Yearn.Finance)

The first automated yield optimizer

Basics

  • Founded in:
  • Mainnet release: 17-8-2020
  • It started out with a protocol with which you can deposit stablecoins, and get yTokens of these stablecoins back, the protocol then deposits these yTokens for you in the protocol with the highest yield (Compound, Aave, etc.) and does this algorithmically. This then can be connected with the yPool of Curve.
  • Also got into insurance and a bunch of other directions (8-2020).

History

"Yearn.finance is a relaunch that brought with it a whole new suite of yield tools such as ytrade, yliquidate, yleverage, ypool and smart contract credit delegation lending."

Audits & Exploits

  • Bug bounty program can be found here and has rewards up to $50.000 (18-10-2020). Update: got bumped up to $200.000 on immunifi (2-7-2021). Still the case as of 23-2-2022.
  • Andre has said (15-9-2020) that yEarn 'has always been doing audits'. Spot audits (5000k) every time a new system is released. But he doesn't want those audits to give people confidence and therefor doesn't release them.
  • Scored 73% on DAOmeter (21-2-2023). Scoring low on security (centralized multi-sig), voting (no staking and delegates do net get compensated) and proposals (not stored on-chain). Only getting a perfect score on documentation.
  • From their blog (3-8-2021):

"Yearn has connected with Trail of Bits on an audit of the v2 Vault, BaseStrategy and BaseWrapper contracts. The findings of the audit were addressed in the 0.4.x series of the contracts released in May. View the report here."

  • It later got reviewed once more on 17-8-2021 and scored 93% again. And once more on 23-2-2022, scoring 93% again. "Yearn and its respective products have been audited countless times, both before and after launch. Yearn should be commended for this commitment to security - DeFiSafety has not seen this many audits conducted on a protocol before."
  • yEarn V2 scored a 93% on DeFi Safety (27-1-2021); "Yearn V2 has been audited by: PeckShield, MixBytes (twice)." with the comment "V2 is up with 93%, much better than V1's 66%  Perfect on everything but tests.  We will keep V1 and V2 up at the same time, cause you can buy either on their site."
  • From their newsletter (8-11-2020):

"MixBytes was recently engaged to conduct an audit of Yearn Finance’s v1 smart contracts, including yCover. This audit report was published on November 5th, 2020 and contained no critical or major issues. You can read the full scope of their audit, including smart contracts examined here."

  • Vault v0.2.0 got audited (24-11-2020).
  • V1 scored a 66% on DeFi Safety (10-2020); "As indicated in the audits repo, there are multiple audits with corrections implemented."

yAcademy

  • Has its own yAcademy voted in (14-11-2020):

"This proposal will establish an internal smart contract security audit team that will audit Yearn’s smart contracts and eventually other smart contracts within the Ethereum ecosystem. Equity within yAcademy will be split between Yearn governance (65%), Gitcoin (10%), Status (10%), and 15% to the first five members, 5%, 4%, 3%, 1.5%, and 1.5%, respectively. 

Smart contract auditing is a costly, yet important expenditure for the Yearn ecosystem. This YIP aims to bring the majority of this cost in-house and realize potential cost-savings. Additionally, the yAcademy will potentially be a revenue-generating entity if it engages in smart contract audits for other projects within the Ethereum ecosystem."

Bugs/Exploits

  • On April 13, 2023 Yearn Finance lost $11.6m due to a misconfiguration in a deprecated contract which still held a sizable balance.
  • On October 27, 2022 Yearn discovered an actively exploited veCRV Brive V2 reward manipulation logic error.
  • From Blockthreat (16-2-2022):

"Yearn patched a price manipulation bug in its USDT strategy thanks to the report to its bug bounty program."

"Yearn Vesting Escrow bug, escrow could be reinitialized and bricked after ownership renounced."

"Researcher paid $200k for Yearn vulnerability disclosure of a logic bug allowing bypass of the safety checks."

  • yEarn found a missing check on a low level call; no funds lost (16-5-2021).
  • From The Defiant (11-2-2021):

"Has restored its yDAI vault and returned $9.7M in DAI funds to users who were affected by the attack.16 insurance claims, issued with insurance protocol Nexus Mutual and seeking payout for the Yearn hack, have been filed since the Feb. 4 attack. Of the 16, 12 have been accepted for payouts worth ~$2.1M and 3 worth $223K remain pending, though it’s anticipated that they will be accepted."

"Tether has frozen $1.7 million stolen from yearn.finance yesterday, mitigating some of the $11 million lost in the exploit. The exploiter profited $2.7 million by taking out a flash loan from Aave and manipulating exchange rates in Curve Finance’s 3pool in which Yearn’s v1 yDAI vault was heavily invested.

The exploit was very expensive to pull off; to do it, the exploiter had to pay $3.5 million in liquidity fees to Curve, $3.5 million in staker fees and $1.4 million in fees to Aave, according to a research analyst at The Block, Igor Igamberdiev. Igamberdiev said the exploiter profited 513,000 DAI and 1.7 million in USDT."

"A potential vulnerability was mitigated ~1.5 hours after being reported by a security researcher Wen-Ding Li through Yearn's security vulnerability disclosure process on October 29 2020."

"The yEarn team discovered and patched a potential vulnerability in certain yVaults in less than 30 minutes."

  • Eminence, an NFT gaming ecosystem by yEarn, got hacked for $15M after traders rushed to farm EMN. Even before it properly launched (29-9-2020):

"The contracts were about 3 weeks from completion by Cronje’s account and hadn’t been properly tested and secured. This gave one savvy hacker the opportunity to use a flash loan to drain the pool of all its funds less than three hours after the project went viral on Crypto Twitter. Luckily for those affected, the hacker has graciously returned $8M of lost funds, good for a forthcoming 50% refund as per balances taken at a snapshot the block before the hack took place. Cronje has signaled that the experiment is beyond recovery. "

  • Sam Sun found (10-8-2020) a bug in the initial release of yEarn’s yVault where an attacker could “man in the middle” the swaps.
  • Had a long read (3-3-2020) by DeFi Weekly explaining how some users interacted with unannounced code of iEarn (not yEarn) / Curve and lost and made money:
    1. "We could probably summarise the situation as follows:
    2. Someone was snooping Github and realised new contracts with fresh liquidity has been seeded
    3. Through this, Charlie (a whale) thinks he can manually manipulate the pools to steal the BUSD and USDT that was seeded
    4. As he's manually executing each transaction, Andre and Michael realise something's not right here
    5. At the same time, Billy also realises something isn't right. He tries to turn it to his advantage but does it with a tiny bit of success. It's still unclear what his intentions were.
    6. Being one step ahead, 'Friendly Whale' execute the trade the 'Malicious Whale' was trying to do (taking out BUSD/USDT at a highly favourable/manipulated price). A few minutes late and they would have lost funds to the tune of $200k+
    7. Charlie, realises the mistake he's made, cancels his supposed master move transaction and is down $500k."

Governance

Admin Keys

"The relevant contracts are identified as upgradeable/callable/governable within their respective technical documentations, although this is certainly more implicit than explicit. However, this is more explicitly implied in their governance documentation. Smart contract change capabilities are identified. This protocol's pause control (setEmergencyShutdown) is documented here. This protocol has no timelock and this is explained."

DAO

"yEarn Finance doesn’t have a DAO for protocol governance but does use the YFI token for on-chain voting. Instead, yEarn relies on a 6-of-9 multisig held by various community members to implement proposals. Executing decisions through a multisig wallet isn’t the most capture-resistant way to manage the treasury.

Even in a DAO, 5-10 elected members enforce decisions. However, a meaningful difference is that plans to decentralize via a DAO will allow the token holders to veto executive decisions and remove DAO members."

"yEarn Finance is the first project on Ethereum, whose governance is entirely in the hands of token holders. While other teams like MakerDAO and Compound Finance give users the power to participate in major decisions via token-based voting, yEarn is different in that there is no foundation, early venture investors or management holding large stakes.

While 63% of token holders voted in Proposal 0, the next six on-chain votes didn’t meet the required 33% quorum, so they were declined.

Cronje also gave up control over YFI issuance —which it solely held after launch to the concern of many— and put it in a multi-signature wallet, which requires 6 out of 9 participants to agree on changes. Cronje isn’t one of the signatories in the multisig."

Camila Russo (of The Defiant) is one of them.

"[Andre] gave up control of the governance contract over to the community, a group of 9 community members, some of whom were well-known personalities in DeFi like Calvin Liu from Compound and Curve but the rest were community members involved in YFI from the beginning. What this means is that , in the immediate short-term, no new YFI can be minted as there is no minter and the time-lock prevents one from being set for a minimum of 3 days. The multisig owners can set minters, but the rest of the governance decisions are to follow the status quo in which a proposal is made and an on-chain vote is carried out."

The article was written by Daryl Lau, who is also one of the signatories.

"Best exemplified by yEarn and the release of its zero pre-mine, no initial offering governance token - YFI - the DeFi community is driving yEarn into one of the most active conversations around decentralized governance the sector has seen to date. Whether it be the vote to extend YFI liquidity mining incentives, distribute minting capabilities to trusted community members, or amendments to the governance process, the yEarn governance forum has 100k views in under a week of being live."

"YIP-45: Add a bounty for proposing YIPs that are implemented

Approved September 1st. Any implemented YIPs will now trigger a 500 yCRV fee that is payable to the YIP author from the Yearn Treasury. This is intended to incentivize community members to propose YIPs which benefit the protocol."

"Yearn Finance token holders voted for the protocol to mint 6,666 new tokens, prioritizing the implementation of a funding model for contributors over keeping a hard cap. Holders of 1.66k YFI (83.4%) voted “yes,” compared with 330.5 YFI (16.6%) voting “no,” on the off-chain governance tool Snapshot."

"Two noted Yearn community members propose Governance 2.0, which would see certain Yearn Multisig powers clarified and extended in coordination with new autonomous contributor teams, or yTeams."

yDAO

"yDAO is a new DAO for the yEarn platform created by DAOhaus. It will be used to fund value-added contributions to the yEarn ecosystem, is open for anyone to request funding for yEarn related tasks, is focused solely on funding projects, not on protocol-level governance and more."

yDAO Funding Vaults

"yDAO Funding Vaults enable YFI token holders to delegate pooled credit lines to anyone looking to bring additional value into the yEarn ecosystem. The yDAO vault can fund anything from smart contract audits to front-end design updates, or even viral meme campaigns to raise YFI awareness, as long as yDAO stakeholders approve of it.

Operationally, the Vault will be funded by YFI holders. Applicants looking for funding will need to set up a Gitcoin Grants page and make an official proposal in the yEarn forums. If approved, yDAO governance can set a credit limit that the applicant can draw from. This is made possible by the recent addition of YFI as accepted collateral on Aave and their Credit Delegation rollout.

The yDAO Funding Vault is a trusted on-chain resource for anyone to request funding for important yEarn ecosystem tasks. This is a big deal for three reasons.

  1. Accessible decentralized funding will add fuel to yEarn’s momentum and attract even more talented contributors to the already vibrant community.
  2. It provides a formalized process for the yEarn community to fund projects crucial to the protocol’s success.
  3. Funding selection is at the discretion of yDAO contributors, giving yDAO the flexibility to evolve into a DeFi-native crowdsourced venture fund.

Initially, yDAO is meant to fund value generative development within the yEarn ecosystem. Still, based on the community sentiment thus far, it’s not hard to imagine a future where yDAO becomes a generalized DeFi incubator. Some in the YFI community have already dubbed yDAO  the “YFI Combinator”."

Delegated Funding DAO Vaults

  • From this blog (29-8-2020):

"Inspired by fair launch capital we have developed a new kind of tooling, Delegated Funding DAO Vaults.

The concept is simple; Funders provide YFI into the fair launch Vault. This works as per a normal delegated vault, you receive your LP share based on your contribution."

Treasury

  • Has its own Treasury Vault.
  • From their newsletter (16-11-2020):

"Will establish an Operations Fund effective with the upcoming launch of v2 yVaults. Key specifications of this YIP are as follows:

  1. Effective with the introduction of Vaults v2, allocate 50% of Treasury fees to an Operations Fund, with the other 50% distributed to YFI stakeholders.
  2. Permit the Operations Fund to buy YFI or any other asset as required with its funds, and to include such in the assets at its disposal.
  3. Produce quarterly financial reports of the Operations Fund activities and decisions.
  4. As it goes in effect, the Operations Fund replaces the treasury cap of YIP-36 and the budget of YIP-41.
  5. The Operations Fund, its asset purchase authorization, and the other matters contemplated herein are not permanent, and can be altered or replaced by YFI holders as required, through the passing of a new YIP. 

Voting concluded on November 15th with nearly 100% of the vote in favor of the YIP. You can view the final vote here." 

Token

Launch

Token allocation

  • All tokens come from liquidity mining. Had no investors, Andre did not get tokens except from the bit of liquidity mining he did at the start. Therefore people have called it a very fair start.

"Of the seven on-chain votes held so far, the first one, called Proposal 0, passed. This proposal was to decide whether YFI supply should be capped at its current total supply of 30,000 in perpetuity or if the protocol should retain the ability to mint additional tokens in the future. 61% of participants voted to allow for YFI minting beyond the 30,000 supply."

  • The proposal in the end got voted in by the weight of one whale. And afterwards initiated an inflationary model likewise to the Synthetix model.

"Yearn Finance token holders voted for the protocol to mint 6,666 new tokens, a 22% increase over the current total supply of 30k, prioritizing the implementation of a funding model for contributors over keeping a hard cap. Holders of 1.66k YFI (83.4%) voted “yes,” compared with 330.5 YFI (16.6%) voting “no,” on the off-chain governance tool Snapshot."

Utility

  • Turned into a veToken model (19-10-2023):

"Member all that YFI Yearn bought back from the market? By locking YFI to veYFI holders can vote to allocate that YFI by boosting vault rewards. Users can stake vault tokens for YFI rewards (in the form of dYFI), which can be redeemed for discounted YFI.

You can lock veYFI from 1 week up to 4 years, with a longer lock granting more reward boosts. With the minimum boost (1x), you get to keep 10% of the dYFI you farm, the other 90% goes to veYFI lockers. With maximum boost (10x) you receive 100% of the farmed dYFI."

  • Tokenomic changes were voted in to do more buy backs and let users stake (21-12-2021).
  • The YFI token lets you directly claim (24-7-2020) from the yCRV pool. If you stake your yCRV tokens inside the YFI governance panel you will get YFI tokens.

Token Details

  • How to get the YFI token, from this Deribit article (24-7-2020):

"In short, you have to provide liquidity to the ecosystem. The initial supply of 30k YFI was distributed equally into 3 different pools with differing mechanisms, each targeting a different goal.

  1. Actual users of the yearn protocol. All Liquidity Providers on the Curve.fi yearn pool who staked their tokens (yCRV) would earn a portion of 10k depending on their share of the pool over a week.
  2. Liquidity Incentivisation. By providing liquidity on Balancer in portions of 98% DAI and 2% YFI, Liquidity providers would earn a portion of 10k depending on their share of the pool over a week.
  3. Governance Participation. By providing liquidity on Balancer in portions of 98% yCRV and 2% YFI, and then staking the balancer pool tokens (BPTs) would earn not only a portion of 10k depending on their share of the pool over a week, but also allocate voting shares in proportion to the number of BPTs staked. Voting is also a prerequisite for participating in the fee rewards pool, which pays out protocol fees to qualifying stakers of YFI in the rewards contract."

Woofy

"WOOFY holders already make up 9% (3.2k) of all addresses with Yearn exposure (YFI or WOOFY) even though WOOFY only stores 0.7% of Yearn’s market cap. 84% (2.7k). YFI and WOOFY’s derived price (WOOFY price * 1M) has so far held within +/- 5% of YFI’s unit price."

Coin Distribution

"The YFI pools have been effective in getting YFI into the hands of thousands of wallets. But since the YFI distribution stopped, the increase in addresses has slowed down. Instead, larger investors picking up YFI are now likely a key driver of price action. Smaller retail traders getting involved before the whales is an interesting DeFi trend which stands in stark contrast to the ICO boom of 2017. The #1 YFI whale is currently staking their 1,858 tokens in the Fee Rewards contract (so you won't easily spot them on Etherscan's balance rankings). It's fair to assume some whales are spreading their tokens across multiple wallets."

"The tracking of token distribution remains a tricky task however, as different analysts produce widely different figures based on the criteria of which addresses to include. Head of DTC Capital Spencer Noon believes that Yearn.Finance (YFI) is one of the most well distributed DeFi tokens on Ethereum, with the top five addresses holding less than 10% of the total supply. “$YFI: 9.5%. It's only 2 weeks old but $YFI is already the most decentralized #DeFi project ever." This is in marked contrast with Conti’s evaluation that YFI’s top five addresses hold almost 60% of the total supply."

  • Average balance of current YFI holders is over $100,000 (4-9-2020).

"Crypto fund Polychain Capital has picked up a further 141 YFI. The fund can now boast owning 1.6% of the entire supply, all purchased from the open market."

  • From the INDEX October update (9-11-2020):

"At a $15M market cap, DPI index controls ~0.5% of all DeFi governance tokens in circulation for our index ($3B combined market cap). This makes Index Coop the top holder of DeFi’s biggest tokens and the #4 largest holder of YFI excluding exchange."

"Despite the fact that liquidity mining was extremely popular due to Compound’s token release a month prior, only nine early farmers were able to secure greater than 1% of the YFI supply. Looking at the current token distribution today, we can see that while the top two holders are Binance and Coinbase, there are still considerable amounts of YFI in DeFi protocols such as SushiSwap, Aave, and Yearn’s own governance staking. In total, more than 21,000 addresses hold YFI, a number that has more than doubled over the past three months. Overall, a little over 1/3 of all YFI is held in CEXs like Coinbase, Binance, and FTX."

"The response from Curve takes on much more meaning when you consider who controls the 0x431 wallet. Nansen lists 0x431 as being the first wallet to farm YFI. As well as holding a large amount of K3PR, this wallet is also now voting to increase the gauge weight of the Fantom pool, so perhaps you can draw your own conclusions."

Tech

"At 347 commits on their vault repo alone, it's clear that this DeFi monster has well documented its rise."

Implementations

How it works

Fees

Upgrades

  • Tokenomic changes were voted in to do more buy backs and let users stake (21-12-2021). This upgrade would also introduce a gauge system like Curve.

"The BABY: Buyback & Build Yearn YIP has formally passed with 99.4% of the eligible vote in favor of the proposal. This YIP ceases rewards to YFI staked in the governance contract, and instead routes protocol earnings to Yearn’s treasury. Earnings are then used to buy back YFI in the open market and utilized as incentives for Yearn contributors or other growth initiatives intended to benefit the Yearn ecosystem. This YIP is now binding, and you can read the full description here."

"Yearn’s V2 comes with a new fee structure which, while maintaining the same overall fee level of roughly 20%, eliminates the project’s withdrawal fee, adds a management fee (2%), and increases the performance fee (taken as a percentage of the yield generated on behalf of the user) to 73% from 17%.

Instead of using their veCRV to boost their own vaults, Stake DAO has conceded the fight and migrated their Curve pools to operate on top of Convex. This move allows them to provide a higher APY than Yearn at present, but may be regrettable in the future, as it gives up more power to the already strong Convex platform."

  • Had four big new proposals voted in (16-11-2020) which were focussed on fee allocations, an in house auditing team and an Operations Fund.
  • From DeFi Rate (24-7-2020):

"V2 offers a malleable, upgradable version of the yEarn framework with the introduction of three new components:

  1. yVaults – Contracts to deposit popular DeFi tokens and receive interest-earning yTokens in return.
  2. Controllers – Yield controllers responsible for assigning the highest yield to individual Vaults through governance.
  3. Strategies – An automated blueprint for a yEarn pool, open and accessible to anyone.

Underpinning these new upgrades are optimizations to gas costs, effectively allowing any yEarn strategy to be entered with as little as $2, even when gas prices are sitting at around 100 gwei like they are today."

Liquidity Mining

Staking

  • Turned into a veToken model (19-10-2023):

"Member all that YFI Yearn bought back from the market? By locking YFI to veYFI holders can vote to allocate that YFI by boosting vault rewards. Users can stake vault tokens for YFI rewards (in the form of dYFI), which can be redeemed for discounted YFI. You can lock veYFI from 1 week up to 4 years, with a longer lock granting more reward boosts. With the minimum boost (1x), you get to keep 10% of the dYFI you farm, the other 90% goes to veYFI lockers. With maximum boost (10x) you receive 100% of the farmed dYFI."

"Over half of all YFI was quickly staked in governance. However, in early August C.R.E.A.M. launched, with high CREAM rewards for YFI, causing a flow from gov staking to the new Compound fork. A few days later, YAM launched, and at one point nearly half of all YFI was staked in their famously unaudited contracts.

After YAM’s distribution finished, YFI flowed back to governance staking and into the YFI vault (which was deposited into C.R.E.A.M.). In late August, Aave added YFI as collateral, causing a resurgence of YFI deposits in money markets, decreasing holdings in governance staking. As September (and DeFi Summer) came to a close, YFI started to flow more to centralized exchanges, and like with many DeFi tokens corresponded with what turned out to be a short-lived “DeFi Bear Market”.

yETH Vault

"It’s pretty simple really - you deposit your ETH or WETH into the yETH or yWETH vault, the vault takes your ETH and puts it into a MakerDAO CDP/Vault, it then draws DAI against this ETH at a 200% collateralization ratio, puts that DAI into Curve Finance’s Y pool in order to farm CRV + trading fees, and then recycles the CRV and trading fees into ETH by buying more of it on the open market."

"Users will deposit ETH on Yearn, which will in turn deposit it in MakerDAO in order to borrow dai (DAI). The DAI will then be deposited in CRV in order to withdraw its liquidity provider (LP) tokens and earn CRV tokens, both of which can then be plugged into whatever the optimal place to farm them might be.

Notably, the writer of the yETH smart contract will earn a small portion of all profits on it. The idea here is that it gives developers an incentive to write strategies for the project, though it also sounds similar to the early days of mutual funds where a large portion of investors gains were wiped away by fees, until Vanguard came along and created indices."

Scaling

"Andre Cronje reveals the updated yEarn system will be L2 compatible and will incorporate elements from Aave, Chainlink, and Synthetix."

Interoperability

Other Details

  • From this tweet (25-11-2020):

"yEarn is in the process of changing its fee structure, upping the performance fee to 20% and swapping the 0.5% withdrawal fee for an annual 2% management fee."

Oracle Method

"Yearn doesn't use oracles, as explained here. This protocol documents sandwich attack mitigation techniques. This protocol documents flashloan countermeasures at this location."

Their Other Projects

Coordinape

"Allows DAOs to autonomously allocate funds and reward contributors. Coordinape was built for the Yearn DAO, but can be generalized for other organizations. Coordinape is currently closed source, but when it’s up and running anyone can register to contribute to the Yearn platform or their own DAO."

Eminence

  • An NFT gaming ecosystem which got hacked for $15M after traders rushed to farm EMN. Even before it properly launched (29-9-2020):

"The contracts were about 3 weeks from completion by Cronje’s account and hadn’t been properly tested and secured. This gave one savvy hacker the opportunity to use a flash loan to drain the pool of all its funds less than three hours after the project went viral on Crypto Twitter. Luckily for those affected, the hacker has graciously returned $8M of lost funds, good for a forthcoming 50% refund as per balances taken at a snapshot the block before the hack took place. Cronje has signaled that the experiment is beyond recovery. "

StableCredit

"StableCredit is a protocol that combines tokenized debt stable coins, lending, AMMs, and single sided AMM exposure to create a completely decentralized lending protocol. You can provide any asset and create tokenized credit called StableCredit USD (can also support EUR, JPY, etc).

The process as follows;

  1. Provide amount (x) USDC
  2. USDC price oracle is used to determine the USD value of 1 USDC
  3. The protocol mints x * USD value StableCredit USD
  4. The USDC and StableCredit USD is provided into the 50:50 AMM
  5. The protocol calculates the system utilization ratio, up to a maximum of 75%.
  6. The utilization ratio (or 75% max) value of the supplied USDC is minted as StableCredit USD

At this point, your StableCredit USD is your “lending credit”. You can use it to borrow (buy via the AMM) other assets, so if another user provides LINK as collateral, you can borrow LINK by “selling” your lending credit. When you want repay your debt, you can “sell” the LINK back for StableCredit USD, pay off your debt, and receive your USDC. The AMM’s create the utilization ratio’s between assets. The total system utilization ratio defines the amount of credit line you are extended to borrow against. The AMM defines the premiums at which you borrow/repay assets.

We are currently finalizing the UI and will make it available in the coming weeks."

SyntheticRebaseDollar

"yEarn launches a new credit-based rebase index designed to track the USD value of its underlying collateral."

yBorrow

"yBorrow allows LPs to create vaults and assign credit via Aave from which borrowers can draw their credit line. Credit delegation supports smart contract to smart contract. You can delegate to a yVault and farm yield with the borrowing asset you prefer."

yCredit

"Andre Cronje unveiled yCredit collateralized lending which he said could be “economically exploited.” It then immediately got exploited."

yInsure

 "yInsure comes as a big win for DeFi traders as Nexus Mutual requires KYC to purchase a cover, whereas yEarn allows anyone to protect against smart contract risk. To do this, yEarn community members underwrite a cover on Nexus, tokenize it as an NFT, and then ‘resell’ that same cover to other users via the token.

LPs will soon be able to provide capital to Insurer Vaults in exchange for a claim on 0.1% initiation fees and a 0.01% ongoing weekly premium. Insurer LPs are able to vote with their liquidity as new claims submitted. This comes as the first step in a fungible insurance ecosystem. Users will soon be able to purchase insured tokens with 1:1 value protection —for example, a Dai token that has insurance baked in. Over $1M in cover has been taken out by more than 10 unique addresses in 48 hours, a sign that there is clear demand for those looking for protection without wishing to undergo KYC."

  • Stopped after the merger with Cover (28-11-2020):

"Yearn can focus on vaults and lending, with yInsure (and yNFTs) being taken over by Armor."

"To overcome the limitation of KYC, Yearn Finance created yInsure where users can buy Nexus Mutual’s covers without doing KYC. yInsure was supposed to be taken over by Safe Protocol. However, due to some infighting between the founder, Alan and a prominent community member, Azeem, the project was canceled. Alan went on to release Cover Protocol, and Azeem took over the yInsure product and released Armor protocol."

Yliquidate

"Yliquidate.finance was also launched that allows for automated liquidations using flash loans."

yswap.exchange

  • From this blog (10-9-2020):

"Based off of the concept a tokenized transfer token, we designed yswap.exchange (more information here). The concept was simple, in AMMs such as uniswap, you have TokenA:ETH, and ETH:TokenB. A trade of TokenA <> TokenB can be described as TokenA -> ETH <> ETH -> Token B. ETH, can be seen as a transfer token/mechanism. It itself does not need to have value, when it is created/destroyed it must simply abide by its creation/destruction rules. This allowed us to develop an AMM with single sided exposure (yswap.exchange is not live, it still has design flaws, do not use it)."

  • From their AMA (29-10-2020):

"Currently, none of Yearn’s devs are working on ySwap and are instead focused on other things such as v2 yVaults as well as new strategies. However, you can see that ySwap is still in Andre’s backlog of projects. The most up to date info we have on ySwap is in our docs."

Roadmap

"Andre Cronje reveals the updated yEarn system will be L2 compatible and will incorporate elements from Aave, Chainlink, and Synthetix."

Usage

"The MakerDAO community has greenlit a proposal to deposit $100M of USDC from its Peg Stability Module (PSM), which holds reserve assets backing the DAI stablecoin, into a tailor-made noncustodial Yearn vault. The debt ceiling of the vault will be set at $100M, with an estimated yield of 2% APY."

"In one week since it launched, it’s gone through a parabolic price increase, eye-popping returns for yield farmers, hundreds of millions deposited into the platform’s liquidity pools and —this is likely the most unique aspect— seven on-chain votes.

YFI is distributed among those who supply liquidity for the yEarn platform and that’s the only primary market — there was no pre-sale or initial DEX offering. The system has worked out, with YFI up more than 70x in one week, climbing to almost $2,500, a record."

"Over the last quarter, Yearn’s revenue before expenses was $4.4 million. The platform’s most popular product, yVault, was responsible for virtually all of this income: it contributed $4.1 million to the total.

In turn, most of that $4.1 million came specifically from Yearn’s yUSD vault, which brought in $2.8 million. Nine other token vaults generated the remaining $1.3 million in revenue. Governance members who staked tokens were paid $2.5 million from the project’s revenue. Yearn additionally paid operating expenses to participants in the form of administrative salaries ($173,000) and security audits ($82,000). Futhermore, $43,000 was put into community grants that funded development activity, legal work, and publicity. In the end, the project’s balance sheet is healthy, with assets amounting to $581,000 and no liabilities."

Projects that use or built on it

yEarn and its (old) relationships with other projects

Yearn and Curve

"Both of these projects hit their stride over the past few months, having benefited from each other in a type of symbiotic relationship, although an argument could be made that Yearn was more parasitic in nature. Through its automated Vault strategies, Yearn drove large amounts of liquidity to Curve's stable liquidity pools. In return for these asset inflows, and as part of Curve's broader liquidity mining program, Yearn's strategies earned CRV, the governance token of Curve's DAO. The strategies were designed to market sell the CRV they earned and reinvest the proceeds generated back into their Vaults. The profitability of selling CRV, at previously much higher prices, enabled Yearn's Vault strategies to offer high yields, thus attracting even more liquidity, and to Curve as well. In a way, Curve was "paying" Yearn through the inflation of its token to help bootstrap its protocol by directing liquidity towards it. As the price of CRV has continued to fall, and Yearn strategy yields along with them, these dynamics are in a state of flux. Strategies that once sold all of the CRV they earned, are now setting aside and locking up 10% of it for 4 years, in order to boost their rewards and influence over Curve DAO."

yEarn and Pickle

  1. "Pickle Jars & Yearn’s v2 Vaults merge.
  2. Pickle introduces reward Gauges. Pickle emissions remains, with tokens distributed through reward Gauges.
  3. Yearn Vault depositors can earn additional rewards by depositing Vault shares in Gauges.
  4. Pickle Governance participants get voting power by locking Pickle for set maturity dates, and receive DILL.
  5. Yearn vault depositors can earn additional rewards by locking Pickle for DILL, up to 2.5x, the more DILL they hold the greater the rewards.
  6. Gauge deposit, withdrawal, performance, and protocol fees go to DILL holders.
  7. A new token, CORNICHON, tracks losses from the recent Evil Jar exploit, distributed proportionally to victims of the attack."

yEarn and Cream

  1. "Cream & Yearn merge development resources
  2. Cream & Yearn TVL increases
  3. Yearn vault shares serve as collateral in Cream
  4. Yearn vault strategies get access to leverage through Cream
  5. Cream specializes in lending-related products
  6. Cream becomes the launchpad for Stable Credit
  7. Yearn & Cream launch a new 0 collateral protocol credit solution
  8. Pair lending" 

yEarn and Cover (Ended)

  1. "Cover provides a wider range of coverage and accepts more types of collateral.
  2. Cover products like perpetual coverage will get an expanded addressable market.
  3. Cover expands into a new cover money market, making the CLAIM token a collateral & borrowable asset.
  4. Yearn gets coverage for vaults and can offer users a reduced risk product.
  5. Yearn can focus on vaults and lending, with yInsure (and yNFTs) being taken over by Armor.
  6. YFI cover writers earn increased fees from YFI coverage underwritten.
  7. Yearn LPs will be covered by default through Cover’s perpetual products."
  • The partnership got ended by yEarn (5-3-2021), and vocally so by Andre.

yEarn and Akropolis

  • Andre Cronje announced (30-11-2020) their partnership with Akropolis, which would have the following results:
  1. "Akropolis & Yearn merge development resources
  2. Akropolis & Yearn TVL increases
  3. Akropolis gets access to Yearn, Pickle, and Cream products, and can integrate its DCA solutions with these
  4. Yearn gets access to new investment strategies created by Akropolis
  5. Yearn accesses Akropolis business development expertise and exposure to its institutional client network
  6. Akropolis vaults merge with Yearn v2 vaults and become eligble to earn Pickle through the forthcoming Pickle Gauge, and leveraged through the forthcoming Cream v2 lending protocol.
  7. A new token will be introduced that tracks the losses incurred by the victims in the recent Akropolis exploit. It will be distributed proportionally through a snapshot."

yEarn and SushiSwap

  • Andre Cronje announced (1-12-2020) their merger with SushiSwap, which would have the following results:
  1. "Sushiswap & Yearn merge development resources
  2. Sushiwap & Yearn TVL increases
  3. Sushiswap will complete and launch Deriswap in collaboration
  4. Integration of Keep3r inside Sushibar v2
  5. Yearn strategies will use Sushiswap moving forward
  6. Yearn will help create xSushi vaults so people can earn SUSHI-ETH-YFI-wBTC.
  7. Keep3r will move the full treasury as liquidity to Sushiswap KP3R/ETH (~$11MM)
  8. Keep3r will implement on-chain limit orders, stop loss, and take profit for Sushiswap LPs
  9. Keep3r will offer gasless swaps via MetaWallet for Sushiswap trades
  10. Sushiswap will be involved in a stealth project following Deriswap release with Yearn
  11. Sushiswap money market will be launched that uses Sushi LP as collateral
  12. Cream protocol reserve will provide liquidity to Bento Box
  13. Cover agnostic protocol will launch to use SUSHI as coverage and allow covSUSHI to cover individual pairs, such as CLAIM-SUSHI-WETH-WBTC
  14. Coverage money market will include Sushiswap perpetual coverage
  15. Sushi token and governance will stay the same
  16. 0xMaki will lead the AMM arm of yEarn

Synergies*

  1. Yearn will be allocated 0.2x allocations for pairs that needs to be incentives (make more liquid potential candidate CRV<> yyveCRV or any other pairs or vault)
  2. Yearn will participate in Sushi governance and add to its treasury some SUSHI
  3. Sushiswap will participate and add to its treasury YFI
  4. Grants for Sushi contributors will now be paid via yGift
  5. Keep3r/ETH will be added to the permanent menu

* Pending Governance votes by Yearn and Sushiswap respectively"

yEarn and PowerPool

"[The] PowerPool partnership aims to improve existing areas for Yearn. PowerPool will lead participation in Yearn governance through its meta-governance inter-protocol voting."

yEarn and BadgerDAO

  • From a blog by Andre Cronje (11-2-2021):

"We allocated 15% of our total supply to the Badger developer mining program (Currently valued at $258M). Our goal is to ensure vault strategists in the industry are properly rewarded for their hard work and as part of our collaboration we can leverage the Badger developer pool to further incentivize these strategists.

Synergies

  1. Moving forward Yearn BTC developed vaults will live in the Badger app and we will incentivize them with Badger and DIGG rewards which are claimable every 2 hours.
  2. Both DAO’s will share in the net revenue from these vaults based on the total TVL that Badger brings. These vaults will be clearly labelled in our app as they have a different fee structure compared to our existing vaults.
  3. We will launch our first collaborative vault soon which will be a single asset WBTC vault. The first non-BTC LP vault in our app.
  4. Badger will migrate our existing CRVRENBTC Super Sett vault (currently $291M TVL) to Yearn. This will allow Badger to benefit from boosted CRV rewards while sharing in fees that today we don’t get with that vault.
  5. Strategists for any vaults that live in the Badger app will be eligible to earn from our developer mining pool on a monthly basis. Those emissions are voted on by the community and the amount they earn is based on the TVL from their strategies vs total TVL from all strategies."

yEarn and other protocols

  • Besides the above (2-12-2020), Andre has also announced Hegic and PowerPool as projects to work with. Keep3r and Deriswap are also part of the group. A list of the group of these protocols together can be seen here, on CoinGecko (2-12-2020).

yEarn and Alpha Homora

  • From their blog (11-1-2021):

"Yearn v2 will coincide with an update of C.R.E.A.M v2 (Iron Bank) and will enable Yearn yVaults to develop leveraged yield-farming strategies and cross-asset strategies utilizing Alpha Homora. Users will be able to deposit DAI and borrow an equivalent dollar amount of ETH via C.R.E.A.M and enter SushiSwap liquidity pools utilizing Alpha Homora’s leveraged yield-farming product. Users will ultimately be able to obtain 90x leverage on stablecoins or 80x leverage on ETH to farm SUSHI, CRV, ALPHA. If the user uses Yearn yVaults they will also potentially be eligible to earn PICKLE."

Competition

"YFI and forks had quite a week: a fork called YFII catching fire in China before getting removed from the Balancer UI, YFI started farming YFII and dumping it, and then a different fork (YYFI) was a scam where the owner drained the Balancer pool."

Pros and Cons

Pros

"yield optimiser, single developer, raised no venture capital funding to go live, everyone had to earn the token in order to buy it. Largest incentivised parties that will do stuff to increase the value of the network: users + Andre/future team"

  • Founder Andre Cronje is notorious in crypto by now (19-10-2020) and is renowned for shipping code.

Cons

  • The founder has had a history of calling it quits and then continuing again. This can be destabilising for the community.
  • From DeFi Weekly (18-11-2020):
  1. "The ability for the project to attract and retain new devs. Paying devs from treasury with cash is sub-optimal and makes it hard to retain and attract top tier talent. Slowly more and more of the YFI community is waking up to this but no clear solution presents itself.
  2. Competition from other yield farming protocols such as harvest, pickle and the countless others is rising very quickly. Creating differentiation is going to be increasingly harder given where things are heading in this arena."

"yEarn is a plutocracy, with highly skewed distributions and low participation. As an example, this yEarn proposal from last year to "formalize operations funding", had 118 participants (~0.5% voter turnout), with fully 2/3 of the "yes" voting power coming from eight addresses. That's not much mitigation of their governance liability in my opinion. I view yEarn as essentially running a company, and if the SEC pressed them, I have a feeling it would be deemed a security (ie. not "sufficiently decentralized")."

Team, Funding, Partnerships, etc.

Team

  • Full team can be found [here].
  • Andre Cronje; founder, left after he handed over the multisig towards Banteg and others. Felt like it was a personal attack when they asked him to do so.
  • Contributors are public and identify as Yearn employees on their LinkedIn employee page.
  • According to Andre yEarn has '20 employees' (15-9-2020).
  • From their AMA (29-10-2020):

"For the main developers on payroll, you can see here that we have banteg as the lead dev, and @x48#2975, fubuloubu, doug, and luciano as full-time devs as well. orbxball serves as our lead strategist. For this month Matt Bridges also received a grant for his dev work, along with Bob_The_Buidler."

Funding

"Yearn currently has a few fees in place that generate revenue for the protocol and certain stakeholders. There's the 5% "performance" fee that's taken when profits are harvested and reinvested back into the Vault's base asset. For some vaults, 10% of that performance fee is paid to the strategist to incentivize the creation of new strategies. There's also a 0.5% fee on withdrawals, which is only charged if the funds needed to pay out are pulled from actively deployed capital.

Yearn has generated ~$3.4m of “profit” over the course of its first 3 months and the community is now deliberating on fees to add or remove. Some are rightfully questioning whether siphoning value away in the form of capital distributions is the right move at this stage of the project's life cycle."

"Yearn Finance token holders voted for the protocol to mint 6,666 new tokens, prioritizing the implementation of a funding model for contributors over keeping a hard cap. Holders of 1.66k YFI (83.4%) voted “yes,” compared with 330.5 YFI (16.6%) voting “no,” on the off-chain governance tool Snapshot."

Partners 

  • iEarn was part of (2-3-2020) the first members of the Ren Alliance, as an Utility member integrating RenVM or adding renBTC, renZEC, etc.

"Demand for the [[[Hegic]]] protocol, which temporarily suspended activity after a bug earlier this year, is soaring as its partnership with Yearn Finance’s rockstar founder compounds with increasing demand for trading protection.

Yearn strategies will use Hegic to gain additional exposure to stablecoins to protect against downside risk and leverage binary options. This would allow forthcoming Yearn V2 vaults to capture more yield while remaining market neutral, with the added protection against market volatility thanks to put and calls. More on the collaboration is detailed in this article."

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