Yearn Finance is a protocol that provides loan aggregation, yield generation, and insurance on the Ethereum blockchain. In simple terms, Yearn offers users a wide range of DeFi options that we will explore further later, primarily making high-yield farming accessible to everyone. The project has attracted a lot of attention since its launch in July of 2020, even reaching a peak of over $90,000 in 2021.
Yearn Finance can be difficult to understand for newbies in the DeFi space.
Heck, I also had to spend a couple of hours going down the rabbit hole to learn how it works, so let’s break it down a bit, shall we?
Table of Contents:
Fundamentals
In this section, I will judge the fundamentals of Yearn Finance based on four criteria of use case, tokenomics, teams, and communities. Each will receive a maximum score of five points.
Use case
As we have already mentioned, Yearn Finance offers five DeFi products:
Vault
Yearn Finance is best known for its Vault product. It was their main strength. Users can deposit crypto assets in Vault and earn a return from it. . Deposit Chainlink (LINK), for example, and with Vaults, you will get more LINKS from it. And the returns are not of any less, and sometimes they can even reach 70-80%.
The process by which Yearn achieves these incredible returns is quite complicated, so we will try to break down as much as possible.
The first is to deposit a crypto asset, then the smart contract uses it as collateral and borrows the stablecoins for it. Yearn then uses these stablecoins to find and invest in yield farming opportunities. Automatically move funds and rebalance your investment once new circumstances arise. The protocol will automatically convert profits into the deposited token.
And wanting to be completely decentralized means that the community holds the power. All of Vault’s performance maximization strategies are designed and voted on by the community.
It all works to minimize a tedious problem for the DeFi community, gas taxes. In fact, by using Vaults, your gas rates will be significantly minimized compared to what they would be if you did everything yourself.
Earn
Earn allows users to deposit one of the following stablecoins:
- Come on
- USDC
- USDT
- TUSD
- sUSD
With Earn, the protocol will transfer your crypto assets between major DeFi lending protocol platforms. Generally, Compound, DyDx, and Aave are all optimized to earn users the highest possible return.
Yearn Finance has grown to such an extent today that Earn can’t just download all your funds into one pool. If it did, it would drastically change yield. Today, Earn finds the perfect allocation of your funds by constantly moving and balancing based on the users adding and withdrawing from pools.
You could, of course, use a platform like Aave and provide liquidity yourself, but you should monitor it constantly. Earn solves this tedious problem and makes cash farming much more accessible and easy for the average investor to understand.
ZAP
Zap, a DeFi product that allows users to convert cryptocurrency pools in no time. Only “Zap” in another pool
Users on the platform have five stablecoins at their disposal BUSD, DAI, USDC, USDT, and TUSD. ZAP can convert it to y.curve.fi or busd.curve.fi pool. And they can also “Zap” out of the pools in the available stablecoins.
Cover
Cover a newly added feature that guarantees customers losses resulting from hacks or bugs to Ethereum smart contracts. Everything is possible through a decentralized insurance model built on the Ethereum blockchain and is integrated with a project called Nexus Mutual.
The use case for this project is amazing, so it clearly deserves five points out of five.
Tokenomics
The YFI native token is the governance token for the Yearn.finance protocol. And from what we can tell, it worked perfectly in allowing users to participate in the decision-making process.
YFI has a supply of only 30,000, which explains the high price. Although according to the white paper, you can mint more. But no intention has been shown to do so by the community or developers.
Yearn Finance has also made it extremely easy for YFI holders to use their tokens for governance. To do this, users need to bet their tokens and can cast a vote. The holder’s funds will then be locked in the system for three days, but fortunately they will earn a small wagering reward.
Users will be charged 5% for withdrawals. This is done to earn the $500,000 needed to maintain the treasury. All funds earned in addition to this amount are distributed in dividends to YFI holders. The more people who use Yearn Finance, the more owners do, a great way to incentivize the community to actively develop the platform. However, it is essential to keep in mind that only users who voted earn the dividend.
I can’t see any flaws with the tokenomics of the native YFI token, so it deserves five stars.
Team
The founder of Yearn Finance is a well-known man at the DeFi space, Andre Cronje. Born in South Africa, Cronje has been around DeFi for years and has almost achieved cult status. Not only did he create a fantastic project, Yearn Finance, but he also launched it in the best possible way. In fact, at launch, all tokens had been distributed to liquid providers and none were blocked for the founder and his team. A move that consolidated it as a good DeFi, you could not ask for better.
To this day, he says he is no longer actively involved in every day of Yearn Finance, but is still considered something of a figured head for the community. As mentioned above, team members are developers that the executive powers of the community have granted for a limited period of time. And the system is proving to work miracles.
For these reasons, the team undoubtedly deserves five points out of five.
Community
Being a DeFi project, therefore not in the hands of any central organization, the community is a vital part of the ecosystem. Changes are discussed and developed on the Yearn governance forum. Community members are behind creating new Vaults strategies, as we mentioned earlier.
Some members join the Yearn multisig and gain more executive powers. The measure is fortunately only temporary and is excellent for avoiding electrical jerks. Help the project build and grow. And to streamline all governance processes, Yearn even created a portal on Boardroom.
In addition, Yearn Finance has also gained some weight on social media platforms. On Twitter, he amassed a following of 120k, over 15,000 members on Discord, and nearly 6,000 on Reddit.
I hate to be repetitive, but Yearn Finance has one of the best communities in the DeFi space, so again five points out of five.
Verdict
In terms of fundamentals, Yearn Finance is impeccable, achieving a staggering 20/20.
In conclusion my YFI Price 2021 forecast
Yearn Finance has impeccable fundamentals, scoring 20/20 according to our criteria. Everything is as good as it could be. And this is not an everyday event, particularly with mid-cap altcoins.
But let’s take a look at the price right? At the time of writing, Yearn Finance has just dropped below $50k. The project has a market capitalization of about $1,800,000,000, the 58th largest.
Yearn Finance and similar projects like Badger DAO are in the midst of a hype cycle. Liquid agriculture and tokenization of blockchain assets will be the focus of attention in the cryptocurrency world for the next few years. Projects like this will explode, particularly if they have some big fundamentals.
Yearn Finance is already increasingly TVL (total locked value) is around $3,600,000,000, which is about double the market capitalization. Ideally, the market capitalization:TVL ratio should be around 1:1. So the picture is clear, YFI at this price is undervalued.
So, for these reasons, I see Yearn Finance as a great investment. And I predict that YFI will reach the $120k-150k range by the end of the year and touch $500k within five. Suppose crypto returns agriculture becomes mainstream even more in the future and reaches the average investor, taking the place of traditional conservative investing. In that case, the sky is the limit for a project like Yearn Finance.
This is not financial advice. I am only expressing my opinions and you should not base your investment decision on them. Always do your research and trade responsibly.
Yearn Finance 2025 Price Prediction
Based on the above data and arguments, a YFI token price in 2025 could be between $200k and $500k. A reasonable long-term estimate: ~$300k
Yearn Finance 2030 Price Prediction
We are still not sure if Yearn Finance and similar projects have a long-term future and the YFI token could be worth ZERO in 2030 since the project may not exist by then. The chances are 50-50 in our eyes that this will happen. However, in the event that YFI maintains its place at the top of the yield agricultural food chain, it could very well reach $1 million per token.
Is it worth investing in Yearn Finance?
Yearn Finance is a good short-term investment when the market is in the bull race. Usually these types of newer projects do extraordinarily well when the overall crypto market is in green and far outperforms other better-known projects. However, make sure you get out of it in time as they tend to take a hit during range and bear market cycles.
Why will Yearn Finance succeed?
Because it offers a valuable service, it has already built a name for itself in its niche and has not suffered security breaches or other types of compromises (economic, reputational, etc.). The token itself provides utility and makes sense, which is not the case with many other similar projects.
Why will Yearn Finance fail?
Yearn Finance may fail due to fierce competition, dynamic technology field, and rocket-speed developments in its niche. Another common reason why this type of project fails is team problems: the team splits up or leaves the project entirely.
Will Yearn Finance reach $100k?
This is part of the real possibility, even in the short term. It could very well reach $100k within a year.
Can Yearn Finance reach $200k?
Yearn Finance will almost certainly NOT reach $200k in the near future, unless we see a bull run that will see bitcoin at $100k and ETH at $20k.
Where to buy and how to store YFI
The best exchanges to buy and sell YFI are:
- Binance (buy/sell with USDT, BTC, BUSD, EUR, BNB)
- Coinbase Pro (buy/sell with USD, BTC)
- SushiSwap (buy/sell with ETH)
