In the field of decentralized finance (DeFi), Yearn.finance has attracted widespread attention since its launch of the governance token YFI on July 18, 2020. YFI's price soared more than 40 times in just three days, becoming the focus of heated discussion among investors. Yearn.finance emphasizes that YFI has zero financial value, but it can be used to modify mechanisms, fees, and rules in the ecosystem. This innovative governance mechanism has injected new vitality into the DeFi field.
Characteristics and supply status of Yearn governance token YFI
YFI, as the governance token of Yearn.finance, has the following distinctive features:
Zero financial value: Yearn.finance explicitly states that YFI has zero financial value, but its importance lies in the rules it can use to modify the ecosystem.
No pre-mining mechanism: YFI has no pre-mining process, ensuring fairness.
No pre-sale or auction: YFI tokens will not be sold via traditional pre-sale or auction methods.
Liquidity mining acquisition: Users need to provide liquidity to multiple platforms under Yearn.finance in order to obtain YFI. These platforms include:
yearn.finance (aggregation income agreement)
ytrade.finance (allows leveraged trading of stablecoins)
iliquidate.finance (providing automated liquidation for Aave)
leverage.finance (supports 5x leverage trading DAI using USDC)
yswap.exchange (stable automated market maker)
According to Etherscan data, the current maximum supply of YFI is 30,000, while the circulating supply is 6,633 and the number of holding addresses is 1,168.
On Coingecko, YFI’s quotation has soared to $1,443 (approximately 6.04 ETH), an increase of more than 40 times from $34 when it was published.
YFI’s governance functions
YFI holders can participate in multiple protocol decisions, including:
Add new lender
Repeal your current lender
Increased deposit and withdrawal fees
Changing the on-chain weight of credit percentage
Allocate a percentage of the protocol yield to fund the reward pool (up to 3.5% of interest earned)
Claim your share of the reward pool: At any time, YFI holders can claim their share of the rewards by burning their YFI tokens. Yearn.finance has launched its reward distribution system, with dividends exceeding $54,000 last week. Users only need to meet the following three conditions to earn platform fees and other benefits:
In the governance system, the Balancer Pool Token (BPT) balance is greater than 1,000
Voted on proposals in the ecosystem
Staking YFI: The value of Yearn’s automated market maker platform
Andre Cronje, the founder of Yearn.finance, launched a product called "Stable AMM" (yswap.exchange) a few days before the release of YFI, aiming to solve the complexity and inability to sense the flow of the current automated market maker (AMM) protocol. Issues such as gender-mining tokens and the need to provide at least two tokens.
In the DeFi field, synthetic asset issuance platform Synthetix first pioneered an incentive mechanism designed to incentivize liquidity pools and reward early participants who provide liquidity with SNX tokens. Subsequently, the automated market maker platform Curve became a market maker by injecting ETH and DAI into Curve to increase the yield of liquidity mining.
There are many ways to earn revenue in DeFi, including:
Provide liquidity (inject assets) to Uniswap to earn trading fees
Obtain SNX by providing liquidity to Synthetix’s liquidity pool
Become a market maker by injecting USDT and DAI into Curve to receive a share of trading fees
Become a liquidity provider on Aave, Compound, Fulcrum or DyDx and earn lending benefits
The V1 version of Yearn was initially used as a lending LP to help the party lending funds obtain higher returns. Afterwards, Yearn assisted Curve in launching the liquidity pool y.curve.fi. When users trade on this platform, they are actually trading yToken (such as yDAI, yUSDT, etc.).
With the continuous development of the DeFi field, the competition for liquidity mining has become increasingly fierce. Compound, Balancer, mStable and other platforms have successively launched governance tokens, further promoting the liquidity mining boom.
in conclusion
Yearn.finance’s governance token YFI brings new opportunities to the DeFi field through innovative mechanisms and governance functions. The value of its unique liquidity mining model and automatic market maker platform has made YFI a hot spot for investors. As the DeFi ecosystem continues to improve, YFI's potential and influence will continue to expand, and it deserves investors' close attention.