yEarn Shares V2 Plans for Credit Delegation & Open YFI Farming

yEarn – a liquidity aggregator taking DeFi by storm – has unveiled plans for a V2 upgrade set for early next week.

https://t.co/Tm4Su0BzFk v2 https://t.co/yJra2bjWCv

— yearn.finance (@iearnfinance) July 24, 2020

For those who missed it, yEarn recently released its governance token – YFI – which can only be earned from yield farming various interest-earning liquidity pools. This yield stacking propelled yEarn to over $200M in TVL over the past week, giving the project center stage attention from DeFi at large.

Now, yEarn looks to leverage that focus through a UI overhaul of its rigid yield farming interface. Citing a variety of upgrades, yEarn will look to make yield farming more accessible and more open for other participants who want to submit their own strategies to the platform.

What’s the Know?

V2 offers a malleable, upgradable version of the yEarn framework with the introduction of three new components:

• yVaults – Contracts to deposit popular DeFi tokens and receive interest-earning yTokens in return.
• Controllers – Yield controllers responsible for assigning the highest yield to individual Vaults through governance.
• Strategies – An automated blueprint for a yEarn pool, open and accessible to anyone.

Underpinning these new upgrades are optimizations to gas costs, effectively allowing any yEarn strategy to be entered with as little as $2, even when gas prices are sitting at around 100 gwei like they are today.

At 100 Gwei the new deposit/withdraw system is $2~$3 in gas.

We hope this will make yield farming significantly more accessible. Currently busy with the UI, will deploy in next 2~3 days. pic.twitter.com/zCXJTwrRVc

— yearn.finance (@iearnfinance) July 24, 2020

yVault can be thought of as interest-earning Maker Vaults, with initial support for LINK, LEND, REN, SNX, and WBTC offering a diverse pool of collateral to lend and earn against. Interestingly enough, yVault collateral can also be delegated, allowing you to deposit LEND and receive yDAI in return. This in stark contrast to most lending protocols where supplying tokens only returns an interest-earning representation of the same asset being supplied (DAI to cDAI in the case of Compound). Now, users can lend any major DeFi token in exchange for an interest-earning stablecoin which captures the highest APYs DeFi has to offer.

Paired with the capacity for anyone to submit a new yEarn strategy, what’s likely to emerge is a collaborative yield farming ecosystem in which traders share strategies with their peers in exchange for a portion of system fees directed back to them as a creator. While all new strategies will need to be approved through governance, yEarn will offer a predefined list of optimal strategies to act as a kickoff for new builders.

Permissionless strategies offer a unique mechanism to growth as creators directly benefit from more capital which flows through their yToken(s). “(System fees) are split between the governance ecosystem, the yield farmers, and the strategy creator. So if your strategy is selected as the highest performing strategy, you receive funds every time the system receives rewards.”

Now, with community support in favor of YFI-only voting and the next iteration of YFI rewards, the incentive to create your own yToken has never been stronger.

Next Steps

What started out as a chaotic race to farm is slowly shaping into the most diverse conversation DeFi governance has seen to date. Since its creation less than a week ago, the yEarn governance forum has seen more than 100k unique views. This comes in tandem with continued discussions about optimal protocol roadmaps and a suite of internal audits geared at user safety.

Engagement doubled in 3 day

~100k pageviews in 4 dayshttps://t.co/PgFoWVgFZW pic.twitter.com/twnv0Qfqkf

— yearn.finance (@iearnfinance) July 24, 2020

While many were quick to call YFI a blip in the wider DeFi matrix, it’s becoming more clear that a protocol specifically for yield farming optimization is not going anywhere anytime soon. It’ll be fascinating to see if other builders can compete with Andre’s yToken wizardry to further leverage yield stacking to it’s full potential.

In the meantime, be sure to keep up with the project on Twitter or by joining the conversation on Discord.

And – as always, please participate at your own risk!

Cooper Turley

Cooper is the Editor of DeFi Rate and a contributor to leading DeFi outlets like the Defiant and Bankless. He is active in the DAO ecosystem through projects like MetaCartel and Raid Guild where he seeks to incubate governance models and grassroots community development. He is an ambassador of Set Protocol and the Director of Fitzner Blockchain Consulting where he authors a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.