Famous for his motto “I test in prod”, Andre Cronje, inventor of Yearn Finance and other DeFi protocols, will launch a new platform. Called ve(3,3) it has been designed as an Automated Market Maker (AMM) to operate with a “protocol for protocols” architecture.
Related Reading | Solana DeFi Goes Stratospheric as Hubble Protocol Announces $3.6M Raise
In other words, this new AMM will be easy to integrate with other platforms to incentivize their own liquidity and without tradeoffs. The protocols that decide to add ve(3,3) won’t lose fees, volumes, or liquidity, as the creator of Yearn Finance explained in an official post.
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Cronje believes AMMs utility has undergone a change, from primarily serving as a tool for liquidity providers to serving as an addition to projects. Thus, ve(3,3) seeks to meet the demand of AMM’s new users; other protocols.
His new project, ve(3,3), will remove friction from the process of adding token incentives to a protocol’s liquidity, will make it simpler for projects to accrue fees from incentives, and will operate as a permissionless platform. The Yearn Finance developer said:
With the above in place, any protocol or project can easily incentivize their own liquidity, be it for their token, their stable coin, or even other derivatives, and while doing so, they fully accrue fees.
Cronje’s new protocol will have multiple features, including the capacity to natively support swaps between closely correlated assets, and uncorrelated assets, Uniswap v2 compatibility which will let projects deploy its interface, the possibility to permissionless create pools, gauges, and bribes.
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In addition, the protocol will operate with a 0.01% fee to be paid in base assets. Cronje’s protocol for protocols will let other platforms support delegation, increase “holdings proportional to emission”, and conduct locks with capital efficiency, amongst many other features.
Yearn Finance Inventor To Take AMM Utility To Its Next Phase?
As an additional incentive for projects to implement Cronje’s protocol, the platform will reward them with ve(3,3) tokens. Those projects that occupy the top 20 by total value locked (TVL) will receive these rewards two weeks after the protocol launches.
The launch could take place next week, as Cronje announced via Twitter. By the end of next week, the platform will take a snapshot to determine the projects that will receive a percentage of the 2,000,000 ve(3,3) available for rewards. Cronje added:
It is up to them (the selected projects) to decide what they will incentivize, be it their own token, stable coin, or other liquidity. The timeline for this will thus be 2 weeks post protocol launch until distribution starts.
Final commit sent off for peer reviews, audits, and third party reviews.
Target of TVL snapshot end of next week.
One week for voting (and bribes), and then emission starts.
Website will be up next week.
Launching on 👻
— Andre Cronje 👻🐸 (@AndreCronjeTech) January 11, 2022
As of press time, Yearn Finance native token YFI trades at $32,139 with a 2.7% profit in 24-hours.
Related Reading |Yearn Finance Launches New Vault, While YFI Retakes Bullish Momemtum
YFI moving sideways in the 4-hour chart. Source: YFIUSDT Tradingview
Yearn Finance (YFI) looks poised for a price correction after rising five days in a row to approach $42,000. Notably, an absence of enough buying volume coupled with overbought risks is behind the bearish outlook.
The YFI price rally so far
YFI price surged by a little over 47% in five days to $41,970 as traders rotated capital out of “top-cap” cryptocurrencies like Bitcoin (BTC) and Ether (ETH) and looked for short-term opportunities in the altcoin market.
#DeFi assets are showing some nice signs of growth to kick off 2022. $YFI, $UNI, and $AAVE are all ticking up nicely thus far with the first Monday of the year looking #bullish for several #altcoins. https://t.co/8ujolCvt5z pic.twitter.com/ASpf1dUbtn
— Santiment (@santimentfeed) January 3, 2022
Yearn Finance was among the beneficiaries of the so-called capital migration, given its value against BTC and ETH rose almost 47% and 41.50% in just five days. Meanwhile, at the core of traders’ sudden buying interest in the YFI markets was a token buyback program.
YFI/ETH and YFI/BTC daily price performance after token buyback program announcement. Source: TradingView
On Dec. 16, the Yearn Finance team announced that they had purchased more than $7.5 million worth of YFI tokens from the open market at an average price of $26,651 per unit. They also revealed $45 million extra cash in their Treasury that they would use to continue their YFI buyback spree.
Additionally, the Yearn Finance community also proposed that the YFI treasury direct a portion of the token buyback to reward YFI holders who actively participate in Yearn Governance. The proposal (full details here) is currently in its voting phase.
1/8
Since the cat is out of the bag here:
-Yearn has started massively buying back YFI.
-They are revisiting their tokenomics to do a fee distribution to holders, currently looking at veCRV model and xSushi models.
-The ratios are insane. https://t.co/CzuHhbNuhx
— Adam Cochran (@adamscochran) December 16, 2021
YFI price surged by more than 100% against the U.S. dollar after the token buyback announcement.
YFI price correction risks
However, YFI trading volume fell despite the rall, suggesting the low conviction among traders in its upward movement.
Typically, a bearish divergence between price and volume leads to either correction or consolidation till conviction increases. As a result, the likelihood of YFI at least pausing its ongoing price rally is high, with its daily relative strength index (RSI) also entering its overbought zone above 70, a sell signal.
Related: YFI price gains 46% in just four days after Yearn Finance’s $7.5M buyback
Additionally, the Yearn Finance token’s latest price rally has brought it closer to a known inflection zone near $40,000, as shown via the Fibonacci retracement graph in the chart below.
In detail, the 0.618 Fib line near $40,113 has been limiting YFI’s upside attempts intraday. The same level was instrumental in stopping the Yearn Finance token’s price rally between October and November, which later led the YFI price to its 12-month low near $17,000.
Nonetheless, if the bulls manage to push the YFI price above the 0.618 line decisively, they may also take the token out of its multi-month range defined by circa $25,500 as support and $40,000 as resistance. In that scenario, YFI’s next upside target may move towards the 0.5 Fib line around $51,000.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Yearn Finance (YFI) emerged as one of the best performers in the crypto market this week, rallying by over 46% in just four days to reach a two-week high above $29,100.
The gains surfaced primarily as Yearn Finance revealed that it has been buying back YFI en masse since November in response to a community vote to improve the YFI token’s economics. The decentralized asset management platform purchased 282.40 YFI at an average price of $26,651 per token — a total of over $7.50 million.
Furthermore, Yearn Finance noted that it has more than $45 million saved in its Treasury and has “stronger than ever” earnings. As a result, it would — in the future — could deploy its income to buy back more YFI tokens.
Now that the Treasury has more than $45 million saved up and with earnings stronger than ever, expect much more aggressive buybacks. What will you do anon?
2/
— yearn.finance (@iearnfinance) December 16, 2021
Adam Cochran, partner with activist venture fund Cinneamhain Ventures, noted that Yearn Finance makes about $100 million per year in just fees collected from Vaults, its flagship smart savings account service that maximizes the value accrual of deposited digital assets.
The analyst further highlighted that Yearn had attracted more than $5 billion in total value locked (TVL) against a market capitalization of $781 million. That being said, the Yearn Finance protocol earns one of the highest fees per TVL, giving it enough liquidity to sustain its token buyback strategy in the future.
The total value locked inside Yearn Finance vaults. Source: DeFi Llama
YFI undervalued
Cochran further compared Yearn Finance’s profit-to-sales (P/S) and profit-to-earnings (P/E) ratios with another “payout-based” protocol Curve, highlighting that YFI remained undervalued compared to Curve’s staking token, CRV.
In detail, the P/S ratio indicates that how much investors are willing to pay for a company’s stock based on its sales per share. The P/E ratio shows investors’ decision to buy a stock based on the company’s past or future earnings. In both cases, a lower reading indicates an undervalued stock.
“Their P/S ratio is 3.6x and their P/E is 7.9x,” wrote Cochran about Yearn Finance, adding:
“Those numbers for other payout-based protocols like Curve are 71.9x and 143x, respectively. So around times the multiple valuations for someone who has fees on.”
7/8
Outside of holding $ETH, $YFI is actually my top pick for all of 2022.
I’m stupidly long on Yearn both in terms of my capital but also investing my time as I expect to spend a lot of time building here.
— Adam Cochran (@adamscochran) December 16, 2021
YFI to $40K next?
While Yearn Finance’s decision to buy back over $7.50 million worth of YFI helped boost its prices, the cryptocurrency also received an additional upside boost from a historical accumulation range.
The area between $18,500 and $20,000 has been attracting buyers on each YFI price dip since November 2020. It also held up against bears in September 2020, leading to a price rebound toward $40,000.
If YFI holds the $18,500-$20,000 range as support, and further rises above $24,580, or the 0.786 Fib line of the Fibonacci retracement graph in the chart above, its next upside target will be $40,000, a level coinciding with the 0.618 Fib line.
Related: As Yearn.Finance’s yield vaults grow, ‘crop’ projects define boundaries
Popular crypto trader Cuban noted that YFI’s fully-diluted valuation (FDV) is under $1 billion, which is “criminal considering the potential and the team behind.” He added:
“Macro crypto wise, I believe we have a big Q1 coming up fundamentally and a lot of people gonna be left on the sidelines after de-risking EOY.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Yearn Finance – the veteran decentralized finance protocol – announced that they would be buying back their native token YFI aggressively. In return, the price has already skyrocketed.
In a tweet from yesterday, Yearn Finance revealed that they’d purchased $7,526,343 worth of YFI from the open market at an average price of $26,651.
Yearn has purchased $7,526,343 worth of YFI from the open market. We got 282.4 YFI (0.77% of total supply) at an average price of $26,651. More YFI has been bought back in the past month than in the prior year.
They also revealed that Yearn’s treasury has “more than $45 million saved up and with earnings stronger than ever, expect much more aggressive buybacks.”
In a separate Twitter thread, analyst Adam Cochran detailed the move and also outlined other initiatives that Yearn is working on, including a revised tokenomics “to do a fee distribution to holders, currently looking at veCRV model xSushi models.”
All this seems to have had a considerable impact on the price of its native token – YFI.
At the time of this writing, YFI trades at around $27,000. Just a couple of days ago, the token dipped to around $19,000.
This gives an increase of about 41% in the past three days, 30% of which came in the past 24 hours alone.
Chart by TradingView
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Cream Finance was hacked for $130 million this week.
Yearn developers have suggested Aave has the same vulnerability.
Dodgers and Giants. India and Pakistan. Vin Diesel and The Rock.
Time to add another rivalry to the list: Aave and Yearn.
Earlier this week, Cream Finance—an Ethereum-based lending protocol— suffered its third attack this year as hackers made off with a cool $130 million. Now, people are starting to point fingers. In a Thursday article, DeFi publication Rekt suggested that Yearn Finance, an ever-expanding set of decentralized lending and trading protocols that began integrating with Cream last year even as it merged with Pickle Finance and pursued other ventures, should bear the blame: “The Yearn Finance decentralised monopoly has grown too large, and its operators; [sic] too careless. Why accumulate so many protocols if you don’t care for their users?”
The war of words is spilling out onto Twitter, where thinly veiled subtweets from prominent Aave contributors abounded.
So, what’s this all about? And what’s it got to do with Aave, a totally different lending protocol with similar services?
Yearn Finance and Cream Finance, which was forked from Compound, share a connection via the two developer teams, and the projects share integrations, such as the Iron Bank. Some Aave community members, meanwhile, have suspected Yearn developers of forking Aave to their own ends. So whendetails of the $130 million hack broke, some Aave community members took the opportunity to throw shade not at Cream, but at Yearn, which has a wide reach.
Banteg, one of the most prominent Yearn developers, took issue with that. “Maybe don’t bad mouth other projects while sitting on an 11 figure vulnerability,” he tweeted. (Banteg has yet to respond to aDecryptrequest for comment.)
Banteg’s tweet followed one from Yearn founder Andre Cronje today: “Aave core after 24 hour defamation marathon on yearn for cream being exploited, while Aave is vulnerable to the same exploit.”
Aave core after 24 hour defamation marathon on yearn for cream being exploited, while Aave is vulnerable to the same exploit. How is that disclosure of funds at risk going for your users? 2nd full protocol exploit. Tell me again how much better your security is. https://t.co/OahM8BJS9w
— Andre Cronje 👻 (@AndreCronjeTech) October 29, 2021
Such rumors likely prompted Tron founder Justin Sun to pull billions of dollars in crypto out of his Aave liquidity holdings today.
Yet that exploit information wasn’t fully public; it was the type of intel sharing the Soviets and Americans might have done through backchannels during the Cold War. Now, if such a vulnerability exists, it’s out in the open, leaving Aave exposed. The protocol’s users are now voting on a governance proposal to temporarily freeze or disable features that could lead to the same exploit that affected Cream. The proposal calls the measures “precautionary.”
Stani Kulechov, founder of Aave, toldDecryptthat he doesn’t see any bad blood between the two projects. He added, however, “We build together but it’s always tricky once everyone is looking at their own communities.”
The string of exploits has prevented CREAM from rising to the top of decentralized finance. And while DeFi degens aren’t often ones to cry over spilt milk, they will argue about who spilt it.
Yearn Finance has expanded its vaults to the Fantom network.
The YFI and FTM tokens have both reacted positively to the news, putting in double-digit gains.
Plans for Yearn to expand to other chains such as Arbitrum and Polygon are already in the works.
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Yearn Finance, one of the earliest DeFi protocols, is expanding to the Fantom network.
Yearn Finance Goes Multi-Chain
Yearn Finance is breathing new life into the DeFi space, announcing that the protocol will go multi-chain.
The Realm of Multichain beckons.
And Yearn has heeded the call. 📯
Today, we go multichain with the launch of Iron Bank Fantom and the first Fantom vaults on https://t.co/hEVzLGbOsI🧵 pic.twitter.com/IaAtDqdkYi
— yearn.finance (@iearnfinance) October 7, 2021
In a Twitter thread announcing the move Thursday night, the Yearn team explained that it had chosen Fantom for the protocol’s first expansion because it is “fast, simple to use, and easy to bridge to.” Additionally, the Fantom network supports Yearn’s development tools and the protocol’s Iron Bank partner Cream Finance.
The team added that Yearn Founder Andre Cronje was also a big fan of Fantom. Cronje started building a text-based RPG called Rarity on Fantom last month. It’s racked up over 230,000 players since its launch.
Following the announcement, Yearn’s YFI governance token rose over 17% before cooling off. However, the real winner from Yearn’s multi-chain move appears to be Fantom. Following a run of bullish news, including the launch of DeFi protocol Geist Finance, the FTM token has shot up 91% over the past seven days.
FTM/USD Chart. Source: CoinGecko
Yearn Finance lets users deposit crypto assets into vaults and scours DeFi protocols looking for the best yields available on each asset. With Yearn’s launch on Fantom, users can initially deposit funds into vaults for wrapped Fantom and the stablecoins DAI, USDC, and MIM. So far, users have deposited over $49 million to vaults on the Fantom network.
Yearn Finance was one of the first DeFi protocols to launch at the start of last year’s “DeFi summer,” quickly becoming one of the most popular yield aggregation platforms on Ethereum. Since then, it has maintained its status as a DeFi blue chip and is currently the ninth biggest DeFi protocol with over $5.3 billion in total value locked according to DeFi Llama.
Unlike other DeFi protocols, Yearn has previously taken a more conservative approach to development, opting to build out its existing products with a laser-like focus. The announcement that Yearn is expanding to other chains marks a significant development for the protocol going forward. Interestingly, the Yearn team also hinted that it may launch on Arbitrum, Optimism, Polygon, and Avalanche in the future. “There’s more multi-chain fun coming soon,” the announcement read.
Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.
This news was brought to you by ANKR, our preferred DeFi Partner.
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Yearn Finance is taking its first steps into the multiverse after announcing its integration with Fantom Network.
A pillar of the decentralized finance (DeFi) sector, Yearn began as an automated yield aggregator, offering users the highest yields for their assets across Ethereum.
Instead of manually moving cryptocurrencies from protocol to protocol on the hunt for the best rate, Yearn executes this process automatically through its Earn product. Yearn’s Vaults product is a rung above, letting users deposit their money into pools that execute more exotic yield-generating strategies beyond simple, one-off deposits.
Before today’sannouncement, these services were exclusive to =Ethereum. Now, they’re being rolled out on Fantom Network. “The realm of multichain beckons. And Yearn has heeded the call,” the project’s Twitter account revealed.
Only after users have switched their network from Ethereum to Fantom on the Web 3 wallet can they interact with the first four Fantom-based Vaults on Yearn: USD Coin, Fantom, DAI, and stablecoin Magic Internet Money.
The yield at press time is unknown, but users have already begun piling into the Vaults, with the Fantom Vault currently managing more than $51 million.
Source:Yearn Finance
Alongside Yearn Vaults, the joint Iron Bank venture between Yearn and lending and borrowing platformC.R.E.A.M Financeis also launching on Fantom. Iron Bank whitelists protocols, letting them borrow from CREAMv2 using zero collateral.
What is Fantom Network?
Fantom is similar to Ethereum and other smart contract-enabled Layer 1s in that it lets builders create decentralized applications and protocols.
Unlike Ethereum, however, Fantom uses a Proof-of-Stake (PoS) consensus algorithm for verifying transactions. The specific PoS iteration that Fantom uses is also rather unique, leveraging something called an Asynchronous Byzantine Fault Tolerant (aBFT) mechanism.
These differences ultimately mean that Fantom is less energy-consumptive and has a higher throughput than many of its competitors.
The network’s native token, FTM, has also enjoyed a heady week, rising by 86% over the past seven days, according to CoinGecko. Like Ethereum’s ETH, FTM is used to pay transaction fees on the network.
Beyond just speculators, however, the network has experienced genuine growth.
According toFTM Scan, a data platform for all things Fantom, the number of unique addresses has risen from just over 1,500 in April to a whopping 854,284 addresses at press time, with popular DeFi applications like Yearn Finance, Curve Finance, SushiSwap, and Ren joining Fantom.
Yearn Finance (YFI) has joined forces with Immunefi to launch a bug bounty program. The team says it is setting aside from $100 to $200,000 to reward whitehat hackers depending on the severity of the bug, according to a press release on July 1, 2021.
Yearn Finance (YFI) Bug Bounty
Yearn Finance (YFI), Ethereum-powered decentralized finance (DeFi) heavyweight that claims to be focused on offering users the highest possible yield on their ether, stablecoins, and altcoins deposited in its liquidity pools has tapped Immunefi for a bug bounty program.
Launched by Andre Cronje in 2020, Yearn Financesuffereda severe attack that saw about $28 million stolen from its liquidity pools last February. However, in a bid to dig out possible loopholes and vulnerabilities that may still be hiding in its codebase, the team is now initiating a fresh bug bounty project.
The team says the amount of the bounty to be paid out to hackers participating in the bug bounty depends on the severity of each vulnerability found and how it could affect the protocol’s availability, integrity, and lead to serious loss of funds.
Making DeFi Safer
Launched in December 2020, by Mitchell Amador,Immuneficlaims to be the premier bug bounty platform dedicated to fostering the security of blockchain platforms and smart contracts. Since going live last, year, Immenefi has helped a vast array of projects to dig out vulnerabilities in their code and it’s currently trusted by leading DeFi protocols, including Synthetix, Sushiswap, and Chainlink, amongst others.
Commenting on the collaboration with Yearn Finance, Amador said:
“Vulnerabilities in smart contracts represent a possibility of a direct loss of funds; meaning companies need to come up with the most cost-effective way to ensure their safety. One of those ways is launching a bug bounty, and we’re excited to see more companies turning to this option. We’re proud Yearn Finance chose our collaboration.”
As decentralized finance continues to grow in popularity, DeFi protocols have become quite attractive to hackers. In 2020 alone, hackers made more than$120 millionfrom 15 DeFi exploits and a good number of projects have sufferedserious hacksthis year.
In related news,BTCManagerinformedon June 23, 2021, that Coinbase crypto exchange has launched its automated smart contracts vulnerability checker designed to quickly fish out loopholes in Ethereum and other blockchain-based tokens.
In the traditional equities market, “blue-chip” stocks are household names that have proven strong financials and steady returns over the long-term, even through downturns. The label is far from technical, and functions more as the financial community’s subjective stamp of approval: These companies are here to stay, and you can’t go wrong investing in them. Think Amazon, Apple, Nike, and Warren Buffett’s Berkshire Hathaway.
In the nascent and rapidly evolving DeFi (decentralized finance) sector,Decrypthas identified eight projects that have achieved something close to blue-chip status with the community—for now. Our criteria include reputation, lack of hacks, price performance, and continued updates and new features.
DeFi is still so new that it might feel crazy to crown any DeFi projects “blue chips” yet.
But investors have locked up more than $65 billion in DeFi protocols, according toDappRadar. Still, not every DeFi project is created equal. Hacks, exploits, and “rug pulls” have dotted the rise of the sector, separating the cash grabs from the blue chips. Investors should proceed with caution, and as with any new and volatile asset, only put in what you could stand to lose. Building the future of finance won’t happen without at least a few hacks, crashes, and scares.
Certainly, none of these projects is as established as a brand like Microsoft or Apple, but each one has earned some level of trust from the DeFi investor community. In crypto, that’s worth its weight in digital gold.
Decryptwill update our list of blue-chip DeFi tokens over time as the space evolves.
1.
1. Aave: The Finnish ghost
Founded: 2017, rebrand to Aave in 2018
Founder(s): Stani Kulechov
Ticker: AAVE (was LEND until 2020)
Price performance in 2021: +104.78%
DecryptLearn guide here.
Formerly ETHLend,Aavebegan by allowing users to earn interest on their idle tokens by lending to borrowers. Unlike Big Bank alternatives, this activity is also entirely transparent on the Ethereum blockchain. Aave has built out this vision over the years, adding new features and evenearninga payments license in the UK.
More than $10.4 billion is locked in Aave as of June 28, 2021. (via DeFi Pulse)
You can earn a variable interest rate on more than 20 different assets, ranging from the common to the exotic. This interest rate changes depending on the market’s demand to borrow said assets. If tons of investors want to borrow DAI, for example, then the protocol incentivizes lenders to lend DAI via attractive rates.
It’s a bit different when borrowing, though, as rates are both variable and stable. Today, it costs users11.8% instableinterest to borrow DAI and 3.61% invariableinterest, with the stable rate remaining unchanged over a much longer period.Whether you like it or not, borrowing assets is a key market in DeFi. You might, for instance, be bullish on Ethereum and don’t want to sell that Ethereum. At the same time, you may also want to invest in another project or simply wish to pay your bills with crypto dollars or euros.
Taking out a loan like this can be risky, though. If the value of the asset you borrowed against (called your collateral) drops, the protocol can begin to sell this underlying asset to make up your shortfall. This threshold is different for each asset on Aave. Each asset’s risk parameters can be viewedhere.
2.
2. Uniswap: The decentralized unicorn
Founded: 2018
Creator(s): Hayden Adams
Ticker: UNI
Price performance in 2021: +195.44%
DecryptLearn guide here.
Built in 2018,Uniswapis crypto’s leading decentralized exchange orDEX, commanding more than 64.7%of the market share at press time. (Its closest competitor in this category isSushiswap, a near-identical fork). Despite the growing number of decentralized exchanges, Uniswap has maintained its dominance for some time. This, as well as the excellent performance of its governance token, UNI, has earned the project its blue-chip status.
DEX (decentralized exchange) market share by volume as of June 28, 2021. (via Dune Analytics)
The UNI token was distributed in September 2020 via aretroactive airdrop. Anyone who had used Uniswap prior to the airdrop was awarded 400 UNI tokens, at that time worth roughly $1,400. Hayden Adams, the protocol’s creator, used it as a means to thank the community for supporting the exchange in the early days.
You can swap any Ethereum-based token on the market, and if it’s not included on the DEX, it’s simple to add that token by simply copying and pasting the smart contract address. After trading, you can also earn money by putting the assets sitting idle in your wallet into the protocol.
On Uniswap v2, there is a flat fee of .3% on all trades. This means that folks who add their coins to the exchange, called liquidity providers, earn .3%pro rataon every trade made for a specific token pair. Thus the pair with thehighest trading volumealso accrues the most fees. And the more money you add, the larger the share of those fees you can earn.
The arrangement is slightly more granular on Uniswap’s latest release,v3. Instead, liquidity providers can select a fee tier from .05%, .3%, and 1%. They can also specify a specific price range for which they would like to supply liquidity, meaning they would only earn fees if there are trades made within this price range.
3.
3. SushiSwap: Cooking up dapps
Founded: 2020
Founder(s): “Chef Nomi”
Ticker: SUSHI
Price performance in 2021: +118.39%
SushiSwap came out in August 2020 as a kind of Uniswap-meets-yield-farming DeFi app. These days, you can do most of the same things as on other super apps like Aave or Compound: there’s a decentralized exchange; lending market; and a mini network of dapps (called “BentoBox” dapps). You can stake its governance token, SUSHI, and vote on upgrades to the platform; and there’s a yield farming dapp called Onsen.
SushiSwap tagged along with the “DeFi summer” trend of naming complicated financial protocols after food, and distinguished itself by being by far the most successful and least scammy. It was created by an anonymous team of developers, led by “Chef Nomi” and stewarded by a community manager called 0xMaxi. Little is known about them, apart from that 0xMaxi is a very smart young man with a French accent.
More than $2.5 billion is locked in SushiSwap as of June 28, 2021. (via DeFi Pulse)
The project was really started by Chef Nomi, but he did a runner last summer, withdrawing a couple million dollars from the protocol’s treasury with him. After much ado, he came back to the platform, returned all the money, and was swiftly excommunicated from development. 0xMaki became the de facto leader of the decentralized protocol, and the protocol has operated like this ever since.
SushiSwap is the 9th largest decentralized finance protocol, with $2.44 billion of value staked in its smart contracts, and its SUSHI governance token is up 108% in 2021 as more users pull up a seat at the sushi table.
4.
4. Maker: DeFi’s central bank
Founded: 2015
Founder(s): Rune Christensen
Ticker: MKR, DAI (stablecoin), BRK (unit bias token)
Price performance in 2021: +200.93%
DecryptLearn guide here.
Maker’s claim to fame is that it mints the market’s one of the only successful decentralized stablecoin DAI. Unlike centralized stablecoins like Circle’s USDC or Tether (USDT), DAI is backed by overcollateralized loans. Overcollateralized loans are loans made where the underlying asset exceeds the value of the loan.
A similar principle is at play with Maker. To mint $1 in DAI, users put up $1.5 in ETH. This is because the collateralization ratio on Maker is 150%. If the value of the collateral falls below 150% (i.e. $1.5 in ETH becomes $1.4), the protocol will begin selling the collateral to pay back the borrowed DAI as well as slap an additional fee as a penalty. One of the earliest tactics for speculators was to use Maker and generate leveraged longs on their ETH bids. After borrowing DAI against their ETH, they would then proceed to buy even more ETH using that borrowed DAI, and so on.
These days, the number of assetsusedfor collateral is much higher and the collateralization ratio varies, asset to asset. In April, Maker and Centrifugeexpandedbeyond crypto, allowing users to mint DAI with physical real estate as collateral. The move offers a glimpse into a world where traditional finance and crypto are seamlessly integrated.
The most valuable aspect of Maker is DAI. But one concern has been the growing percentage of collateral in Circle’s USD Coin (USDC). This is because Circle has ultimate control over the activity of its token. In 2020, the firm evenblacklistedan Ethereum address holding $100,000 in USDC. With more than55.5% of all DAIbacked by a centralized company, many DeFi purists have warned that the protocol may be deviating from its original objective.
5.
5. Compound: High-tech, high-interest savings
Founded: 2017
Founder(s): Robert Leshner
Ticker: COMP
Price performance in 2021: +60.88%
DecryptLearn guide here.
Like a high-interest savings account, you can earn interest on various tokens on Compound. The range of tokens is slightly less varied than that of Aave, and it’s also missing some of the unique features that Aave has built out in the past few years.
Compound is credited withinventing yield farmingat scale (then called “liquidity mining”) in June 2020. IDEX, a decentralized exchange, wastechnically the first projectto do something like this in 2017, but it was a much smaller experiment. On May 27, 2020, Compoundannouncedthe launch of its COMP token. Distribution began on June 15, 2020, following the passing of Compound’sProposal 007.
If you were lending or borrowing on the platform at that time, you began earning the COMP token as a bonus. You might, for instance, have been earning 2% on your DAI holdings; but during the yield farming event, you earned this 2% plus the COMP token proportional to your contribution within a given market.
The theory was that the event would incentivize new users to participate and earn the governance token, effectively decentralizing control over the protocol. That’s because users who hold the COMP token are also eligible to vote on issues like changing Compound’s logo or adding new assets.
The protocol remains a top-five DeFi protocol in terms of total value locked (TVL). TVL is a general metric for measuring how much money a given project has “locked” in its smart contracts. As for future developments, Compound Labs is currently buildingGateway, a multi-chain version of Compound.
More than $6.6 billion is locked in Compound as of June 28, 2021. (via DeFi Pulse)
6.
6. Curve: Decentralized stablecoin trading
Founded: 2020
Founder(s): Michael Ergorov
Ticker: CRV
Price performance in 2021: +118.39%
For a layperson, you can understand Curve as a decentralized exchange that’s optimized for assets with the same relative value. An example of this kind of asset could be a stablecoin like USDC or Tether. Another example could be the various “wrapped” versions of Bitcoin, including WBTC and renBTC.
It’s also important to remember that though these assets aim to hold the same value, this is not always the case.The discrepancy is usually minimal, though, amounting to cents.
Still, money is money and many investors want to make sure they’re getting the best bang for their buck. This is especially true for large holders of these kinds of assets.
The number naturally increases as the size of this trade increases, with Curve coming out the winner on most occasions. What’s more, trading fees on Curve are much lower than on Uniswap. As mentioned above, Uniswap charges traders 0.3% while Curve charges 0.04%.
This enhanced efficiency is also important for those looking to lend and borrow their idle assets. As mentioned earlier, the rates for lending and borrowing on assets fluctuate based on supply and demand. DAI may be earning 3% on Compound, but USDC could be earning 7% on Aave. Thus swapping the former for the latter makes the most sense when seeking the highest returns. Using Curve means retaining as much value as possible.
Like Uniswap, Curve also allows users to earn interest for providing liquidity. There is also the Curve governance token, called CRV. Holders can propose and vote on various upgrades or changes to the protocol using this token.
7.
7. Synthetix: Tokenized stocks
Founded: 2017
Founder(s): Kain Warwick
Ticker: SNX
Price performance in 2021: -37.68%
DecryptLearn guide here.
Synthetix lets users create synthetic versions of traditional assets (like stocks and commodities) on the Ethereum blockchain. The platform calls them “synths.”
These synthetic assets track the price of the mirrored asset through the use ofdata oracles, specifically Chainlink’s. As the price of gold (XAU), for example, rises, the price of synthetic gold (sXAU) follows in lockstep. Likewise, as the price of Tesla stock (TSLA) sinks, so too does the synthetic Tesla stock (sTSLA).
The top three synths on Synthetix as of June 28, 2021. (via Synthetix Stats)
Synthetix also lets you create unique types of assets that may not exist in traditional finance. A user could create a synthetic asset that rises or falls in line with a country’s gross domestic product (GDP), for example. Similarly, you could create an instrument that tracks the popularity of top crypto influencers, rising as each influencer accumulates more followers.
Though neither of these examples exists at press time, Synthetix offers a platform to create such assets. To create them, holders of the native token, SNX, must make a Synthetix Improvement Proposal (SIP) and let the community vote on the proposal’s execution.
Like all the DeFi blue chips on this list, Synthetix’s token is also a governance token. But, beyond just voting on SIPs, the SNX token also plays a fundamental role in the stability of the protocol and the health of these synthetic assets.
This is because the synthetic Apple stocks, oil, and global currencies are difficult to trade outside of the Synthetix ecosystem. For instance,sOIL, an asset that tracks the price of oil, is not listed on Coinbase. And though the contract address can be added manually on Uniswap and on DEX aggregator 1inch, there isn’t enough liquidity to efficiently execute the trade. To buy them, users must mint the protocol’s native stablecoin, sUSD. And to do that, users must first stake their SNX. This is a similar mechanism as Maker’s DAI minting process.
Staking SNX does bring with it a host of incentives. Users who stake their tokens are also eligible to earn fees generated anytime a synthetic asset is traded throughout the entire platform. This fee is 0.3% at press time. Stakers also enjoy handouts as part of the protocol’sinflationary rewardson a regular basis.
You’ll notice that the SNX token has vastly underperformed its blue-chip peers this year. Some likely reasons for this are the complexity of the protocol, and mounting competition (Solana, for example, is now listing tokenized stocks on its blockchain). Still, Synthetix is one of the original DeFi protocols in the space, with many projects taking ideas from it for their own approaches.
8.
8. Yearn: Yield farming for dummies
Founded: 2020, Formerly iEarn Finance
Founder(s): Andre Cronje
Ticker: YFI, WOOFY (unit bias token)
Price performance in 2021: +19.87%
Yearn Financelaunchedin 2020 as an aggregator of DeFi interest-earning services that found users the best rates without needing to constantly move funds and rack up gas costs. It’s the equivalent of going toBankrateto find out which bank offers the highest rate for a savings account. But instead of having to pick only one account, you just deposit your funds to Bankrate and the company automatically selects the highest rates even as those rates change.
The biggest difference, of course, is that Yearn (like all of DeFi) is made up of lines of code available to anyone with an Internet connection rather than a centralized bank or equivalent. This specific service from Yearn is called “Earn” and is just one of a handful that the project offers.
Instead of aggregating interest rates, Yearn’s “Vaults” have more flexibility in how they generate returns. If, for example, you deposit some of your Wrapped Bitcoin (WBTC), an ERC-20 token that tracks the price of Bitcoin, the Vault will execute a variety of operations to yield users a current return of0.57%.
What looks like a list of jargon is a set of titles for multi-step operations that Yearn strategies are executing. (via yearn.fi stats)
Let’s unpack one of these strategies. The “MakerWBTCDAIDelegate” strategy takes your deposited WBTC, deposits this into Maker to mint DAI, then takes this newly-minted DAI and re-deposits it into another Vault called the “DAI Vault.” The DAI Vault then executes a variety of additional operations to earn yield. Once earned, the DAI is then converted back into the original asset deposited, in this case, WBTC, as interest earned.
The DAI vault commands more than $500 billion in assets. (via yearn.fi stats)
For finance junkies, Yearn’s Vaults are not dissimilar from how a hedge fund operates. Users put money in, pay a fee (currently there is a 20% performance fee and a 2% management fee), and earn returns. Hedge funds are, however, renowned for being black boxes. Yearn Vaults are all fully visible on sites like Etherscan.
After Earn and Vaults, there’s also the Yearn token, YFI. This token was distributed via a yield farming mechanism, with only 30,000 tokens total. It, like every other DeFi blue-chip token, is a governance token that lets users vote on various issues for the protocol. None of this allocation was set aside for the project’s creator, Andre Cronje. Unlike other blue chips, however, YFI is also one of the most expensive tokens, worth just less than one Bitcoin at press time.
The YFI token has soared from $800 to $80,000 in the past year. (chart via CoinGecko)
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Three of DeFi’s leading projects are in dispute after Curve Finance proposed removing CRV rewards from Alchemix’s pool in the protocol.
The proposal argues that Alchemix already generates yield from Curve Finance via Yearn Finance’s vaults.
Alchemix recently launched its latest alETH product with Saddle, a Curve Finance fork.
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Some of DeFi’s best-known protocols are debating the impact of their yield farming strategies. The discussions center on Alchemix, Yearn Finance, and Curve Finance.
DeFi Projects in Conflict
A group of DeFi’s leading protocols has come to blows as Alchemix, Yearn Finance (Yearn), and Curve Finance (Curve) discuss Alchemix and Yearn’s yield farming strategies built on top of Curve’s liquidity pools.
To get an understanding of why this conflict is taking place, it’s necessary to explain how these DeFi protocols interact with one another. Curve is a decentralized exchange specializing in stablecoin pools and pools between assets of the same value.
Curve incentivizes liquidity provision by distributing CRV tokens on top of the fees made by the liquidity providers. One of Curve’s most substantial liquidity providers is Yearn. As covered in Crypto Briefing’s Project Spotlight feature on the protocol, Yearn allocates the funds it gets from individual users into Curve pools (amongst other strategies) and sells part of the CRV rewards to provide users with better yields than they would normally receive on Curve.
Alchemix is a DeFi protocol built on top of Yearn’s flagship vaults feature. In Alchemix, users lock a certain amount of DAI and can borrow up to 50% of the deposit in alUSD, Alchemix’s stablecoin. The locked DAI is used to collect yield through Yearn’s vaults to reimburse the original loan. Alchemix’s alUSD also has its own Curve pool, which is incentivized with CRV rewards.
On Tuesday, the Curve team opened a proposal to remove CRV rewards from the alUSD pool, arguing that Curve rewards are distributed twice with alUSD. First, users earn CRV through Alchemix’s core mechanism of locking DAI in Yearn’s pools (which themselves farm and sell CRV tokens). Second, users can stake alUSD on Curve to earn additional CRV rewards. When Alchemix sells CRV rewards or uses a protocol like Yearn which automatically sells them, other Curve liquidity providers suffer from the resulting inflation. This creates a “double sell” problem for CRV holders.
The timing of Curve’s proposal is significant. Alchemix recently announced that it would use Saddle, a fork of Curve, rather than Curve itself for its new alETH product. This decision may have acted as a catalyst for Curve’s proposal against Alchemix. When Alchemix announced that Saddle deposits were live, Curve responded that it was “99% sure” Saddle’s code violates a license on Curve’s contracts. Like Uniswap V3, Curve has licensed its code to protect itself against copycat projects.
Btw 99% sure that the way Saddle reimplemented the code (line-by-line translation from one language to another, unless anything changed) violates the license on Curve contracts. Just saying
— Curve Finance (@CurveFinance) June 15, 2021
Yearn developer banteg announced that “Yearn [would] vote against” Curve’s proposal to remove CRV rewards from the Alchemix pool. They reasoned that the alUSD pool provides some of the highest yields and fees for Curve, and therefore removing the incentivization could hurt the protocol in the long run. While Curve’s governance proposal hasn’t yet received any votes, the ongoing debate is heating up.
Disclaimer: The author of this feature held ETH and other cryptocurrencies at the time of writing. Andre Cronje, the founder of Yearn Finance, is an equity holder in Crypto Briefing.
This news was brought to you by ANKR, our preferred DeFi Partner.
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