yEarn – a yield aggregation protocol – has deployed it’s highly anticipated yETH strategy.
https://t.co/Tm4Su0BzFk updated;
– yETH vault added
– yWETH vault added
– SNX assets updated
– Footer with links added
Disclaimers;
– 0.5% withdraw fee
– These are debt based vaults and carry extremely high risk
– Do not risk your funds pic.twitter.com/7hvU9Ab8u0
— yearn.finance (@iearnfinance) September 2, 2020
The yETH vault is the first of its kind as it’s underlying yield strategy was created by a community member and not Andre Cronje (shoutout Banteg!). You can think of the yETH vault as a vehicle for leveraging ETH collateral to earn ETH denominated returns.
The yETH Vault currently offers ~90% variable APY, a rate that is significantly higher yield than most readily available CeFi and DeFi options for earning on ETH. Despite the attractive yield, remember that this is a beta product that has yet to be battle-tested, DYOR before depositing any funds.
Huge moment in finance just happened with the @iearnfinance ETH vault launch. What this means is someone essentially deployed a single asset fund strategy on #ethereum. Complete with management fee and performance fees. Currently yielding ~90% APY in ETH w/ ~$6M ETH in it already
— Joey Krug (@joeykrug) September 2, 2020
While advanced DeFi users such as DeFi Dad have long employed similar strategies to earn a yield on ETH, the yETH vaults abstract away almost all of the complexity and expertise away from the process.
??I've been using the strategy that will power yETH vaults (draw DAI from CDP + farm stablecoin returns) for a long time, but it always required:
???Time/Effort
??Expertise
??Gas
??Monitoring ETH/USD
??And you're telling me @iearnfinance is about to automate all of it?! #DeFi https://t.co/i7jFfuB3SF pic.twitter.com/yNeiY59XHd
— ? DeFi Dad ? defidad.eth (@DeFi_Dad) September 1, 2020
How Does it Work?
Generally, all the yEarn.Finance’s “vault” products seek the best returns for yield farmers and pool deposited funds to optimize gas fees with varying underlying yield strategies.
Takes ETH -> borrows DAI from Maker -> deposits DAI into Curve -> earns CRV + trading fees
The yCRV pool currently earns 100%+ APY so the yield will be significantly higher than just borrowing DAI and getting leveraged
— Lucas ?? (@0x_Lucas) September 1, 2020
With this particular strategy, ETH locked in the yETH Vault is used to generate DAI through Maker. That DAI is then used to earn yield and purchase ETH off the open market. Newly purchased ETH is shared with yETH Vault owners pro-rata relative to their total liquidity. It’s worth noting that this strategy is not risk-free. In fact, yETH is constantly teetering on the edge of Maker’s collateralization ratio, meaning a massive flash crash could wipe out all ETH in the Vault.
Please use extreme caution. Debt based vaults can be very dangerous. This is also a new design that moves away from delegated vaults and does carry additional risk. https://t.co/kPbEWGNjOQ
— Andre Cronje (@AndreCronjeTech) September 2, 2020
While there are a multitude of market forces at play right now, many in the DeFi community see the yETH launch as a bullish sign for ETH going forward as more ETH is locked up in yEarn.
What’s Next?
yEarn has been on a meteoric rise since it’s launch and many have looked to capitalize on its hype. Despite many attempts at imitation (YFV, YFII, ZZZ, and more) yEarn’s market dominance shows that while you can fork code, you can’t fork an engaged and innovative community.
Combined with the recently launched yInsure products powered by Nexus Mutual, yEarn is now providing a much more holistic offering for DeFi yield seekers of varying risk appetites. Just a few hours after launch and there is already more than $5,000,000 of ETH deposited, a strong signal that the DeFi community will continue to utilize this product.
To stay up with yEarn, follow the project on Twitter.
Business Development and Operations at TrustToken – TUSD. Jack is a startup generalist and DeFi enthusiast. Stay connected with him by following @HHJackSun on Twitter.
