Why Yearn.Finance Is Going To Explode In 2021
DeFi or Decentralized Finance has seen tremendous growth over the past few years. The next-generation DeFi platform that continues to make high waves in the crypto space today is Yearn.Finance (YFI).
This prominent cryptocurrency was introduced as a completely decentralized ecosystem and got quite a lot of traction in 2021. Yearn.Finance is a successful yield aggregating platform built on the Ethereum Blockchain.
With its unique and advanced technology, Yearn.Finance is becoming a game-changer within the DeFi sector. As investors are looking forward to YFI price predictions, let's see why Yearn.Finance is going to explode in 2021.
Looking At 2021: Is YFI Set For A Massive Rally?
YFI is an open-source network that moves user funds automatically between DeFi lending protocols, depending upon the ROI for their investment. Acting as an aggregator for DeFi protocols, the platform uses numerous bespoke tools like Curve, Compound, and Aave. Likewise, it brings the highest possible yield for those who have stakes on the platform.
But is YFI all set for a bullish rally this year? If yes, what are the driving factors that fuel the coin to explode in 2021? Let's see.
#1: YFI Unstoppable Growth
Like many other ERC-20 tokens, 2021 was an exciting year for Yearn.Finance. Since the beginning of the year, it has surged over 330% and hit an all-time high of $93,435.53 on May 12. As of writing, YFI sits at $45,158.77 with a market cap of $1,654,393,154.
Yearn.Finance officially began its journey in 2020 when Cronje, the founder, started working closely with Curve Finance and Aave to create the iEar protocol. Since its inception, it has become one of the most valuable decentralized finance coins in the market.
YFI also holds the title as the first cryptocurrency to become worth the same or more than (at times) Bitcoin per unit.
#2: Significant Features
Yearn.Finance allows users to optimize their earnings in crypto assets through a lending and trading service. In order to maximize APY (Annual Percentage Yield), the platform will switch your holdings between highly reputed yield farming platforms like Compound, Aave, and Dydx.
Moreover, this simplistic protocol ensures that your funds remain in the highest paying pools by continuously monitoring the market leaders. Yearn.Finance currently supports DAI, USDC, USDT, TUSD, and sUSD.
Yet another significant feature of this emerging DeFi project is that it provides services using code, thereby removing the need for a financial intermediary such as a bank or custodian. It does this with the help of a system of automated incentives around its crypto-token, the YFI.
#3: The Governance Token
YFI is the primary governance token of Yearn.Finance network and plays a significant role in governing its protocols. It is an ERC-20 token and serves several essential purposes within the system, apart from governing the protocols.
Like other DeFi platforms, the more YFI token users hold, the more sway they have in the decision-making process. But the proposals can only be tabled if 33% of the token holders agree to them, making them more authentic and user-centered.
There is only a maximum supply of 30,000 YFI tokens, of which all are under circulation currently. Therefore, the only way to get YFI other than trading from exchanges is through providing liquidity to one of Yearn.Finance's platforms.
#4: A Complete Decentralized Project
Yet another significant factor that drives Yearn.Finance to explode in 2021 is that it is a complete and one of the best-decentralized projects available in the market today. It combines multiple technologies to combat centralization within the sector.
A significant step towards decentralization was that the company never hosted an initial coin offering, and therefore there was never a pre-mine of YFI tokens. These factors have earned Yearn.Finance an established position as one of the most decentralized projects in the crypto industry.
How Yearn.Finance Works: A Glimpse
Before investing in Yearn.Finance, it is better to have a glimpse at how the network works and why it is the best within the DeFi platforms.
Whenever a user deposits a stablecoin into Yearn.Finance, the network immediately converts it into an equivalent amount of yTokens, which are yield optimized tokens, such as yUSDC, yUSDT, and yDAI. Further, Yearn.Finance automatically shuffles these funds between Compound, Aave, and Dydx pools based on the highest yield.
The Yearn.Finance Ecosystem
Yearn.Finance has a vast ecosystem that consists of several unique features, which are the driving force behind this crypto token. Therefore, the Yearn.Finance ecosystem consists of:
- yearn.finance: A profit switching lender that focuses on enhancing lending yields
- ytrade.finance: That creates leveraged stable coin trades
- yliquidate.finance: That provides zero capital automated liquidations for Aave protocol
- yswap.exchange: A single source automated market maker
- iborrow.finance: Tokenizes debt in other protocols
In order to utilize these features, users can choose either of the following three categories.
- Earn: To connect the wallet and find the best returns.
- Zap: Allowing access to the stablecoin facilities through Curve Finance.
- Vaults: To optimize pool liquidity by depositing digital assets.
Vault is one of the major protocols of the Yearn.Finance ecosystem. Using the platform's self-executing code, it allows users to follow active investment strategies. The vault basically allows YFI users to deposit cryptocurrency and earn yields.
When launched, it was meant to support mere stablecoins. But with the network's expansion, it now supports ether, tokenized Bitcoin products, Chainlink, and other major coins. The significant feature of vaults is that they mitigate the high cost of transacting on Ethereum.
Why Yearn.Finance Is Going To Explode In 2021
Yearn.Finance aims to become a game-changer within the crypto market with its unique toolset that leverages proprietary protocols to increase investor yields. After a rapid ascent in August 2020, Yearn.Finance has again shown a tremendous surge in 2021.
There is more than $650 million worth of crypto assets staked in Yearn currently. Additionally, Yearn.Finance is also at the heart of the hottest trend in the crypto industry today: Yield Farming.
Experts predict that this crypto token will explode tremendously in 2021, and if it continues to maintain its momentum, YFI might hit a value of $95,800 by 2022.
Yearn.Finance will continue to gain more community support as it allows regular people who are not technically inclined to access advanced strategies in the DeFi sector. YFI remains to be one of the best and most exciting experiments in decentralized management so far.
Considering all its intelligent tools and simplistic protocols, Yearn.Finance might likely explode in 2021, opening up novel opportunities for traders and investors alike.
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