What is Yearn Finance?
Yearn Finance is a multi-chain yield aggregator.
Background
Andre Cronje founded Yearn Finance in 2020.
How Does It Work
The project allows users to deposit tokens into vaults and automate yield generation. These vaults aim to find and deploy assets into the highest yield-generating opportunity in DeFi. They employ multiple strategies based on other protocols, such as lending on Aave and Compound or providing liquidity on Convex and Balancer. The vaults automatically claim any tokens earned from these strategies and sell them for the native token deposited into the vault. These vaults also socialize gas costs among all depositors and automatically rebalance among different strategies.
$YFI is the governance token of Yearn Finance, allowing holders to propose and vote on changes to the protocol. Fees earned by the protocol are used to buy back $YFI tokens and distribute them to $YFI stakers.
Key Takeaways
- Yearn is a yield optimizer.
- Users deposit funds in vaults that employ strategies to earn yield.
- Vaults earn yield from other protocols like Compound, Aave, or Convex.
- $YFI is the governance token.
- Yearn uses its protocol fees to buy back and distribute $YFI to stakers.
