The YFI Vault V2 — Earn YFI with your YFI

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yEarn just-released the YFI Vault which allows you to generate more YFI automatically. First we are going to look at how to deposit into the vault, and then we’ll also see the strategy behind the revamped vault.

Depositing YFI into the Vault V2

Start by going to the yearn.finance/vaults and click on the yearn.finance vault. The strategy is so new that the APY and even strategy details haven’t yet been updated at the time of writing. If you already have YFI in your METAMASK wallet which is connected to yearn.finance, you can simply deposit it straight into the vault. If you’d like to deposit some other crypto, whether a stablecoin or ETH, you can do that via zapper.fi and it’ll do the back-end conversion for you quickly.

How does the YFI V2 Vault work?

By staking your YFI tokens, you get yYFI tokens in return as a collateralized version of your debt. Then the vault harvests the yCRV tokens generated by the yearn governance. If YFI tokens are in the yearn governance, you’re eligible to claim yCRV rewards periodically. What the vault does is to automate the process of harvesting yCRV, selling it, and converting it back into more YFI for the vault. Since there isn’t much liquidity between YFI and yCRV, the vault automates this swap via USDT and WETH trades.

Ultimately, the YFI that goes back into the vault compounds, meaning the longer that you keep your YFI in the vault, the more the interest is going to stack up. We don’t have a clear indication on the projected APY of this brand new YFI Vault strategy, but we can guess it’ll be between 10–20% as that’s the reward from the governance. There is no risk of liquidation, and it’s a fairly safe and stable vault strategy.

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