What is Yearn?
Yearn.finance provides a range of DeFi products that offer yield generation, lending aggregation, and insurance on Ethereum.
Our latest update means you can now use Argent to invest in one of Yearn.finance's most popular DeFi products: Yearn Vaults. Vaults let you easily get exposure to a crypto investment strategy, as we explain below.
Yearn was launched in July 2020 and already has over $450 million worth of assets locked in its protocols. It was founded by Andre Cronje but is now community-led, with blockchain-based governance that uses the YFI token.
It's worth stating at the outset that Andre and the Yearn community stress that Yearn "is in beta. Use at your own risk". It is a fast moving and experimental project and we'd strongly encourage everyone to do their own research. To assist with that, we've listed some of the risks involved below, in addition to some further reading. First though, we dive into what Yearn Vaults are.
What are Yearn Vaults?
To understand Vaults we first need to understand a craze that took DeFi by storm this year: 'yield farming'. The (admittedly) bizarre name refers to a process of borrowing and lending crypto with various DeFi protocols, e.g. Compound, with the aim of earning the best return (or yield). People would quickly switch between protocols depending on where had the highest interest rates at the time. People were also incentivised to switch by the fact that some protocols distributed tokens to participants. Yield farmers could therefore earn both interest and new tokens.
As you can guess, the process got highly complex very quickly. Most people didn't know where to start if they were to get involved. This is where Yearn comes in.
Yearn Vaults (or yVaults) aim to automate the process of yield farming, reducing the complexity into a single deposit or withdrawal. It's kind of like passive investing for yield farming. Users supply liquidity to a Vault. The Vault puts those funds to use to try to maximize returns. When you deposit into a vault, you receive yTokens, representing your share of the token pool.
Each vault has a different APY (Annual Percentage Yield) which you can see in Argent and on the yearn.finance interface. It's important to understand that this APY can (and does) change regularly over time. At time of writing the timeframe for APY displayed is weekly. Each vault is created and maintained by a Controller, who oversees the strategy execution. This strategy can change over time.
Compared to yield farming by yourself, Vaults also have the advantage of helping you to save on network fees (gas), keep a good collateral/debt ratio to avoid defaulting, and automatically optimize for high-yield strategies - even while you're asleep!
For a more detailed breakdown on how Yearn Vaults work, using the example of yETH, see this article.
How do I use Yearn Vaults in Argent?
Using Yearn Vaults in Argent is even easier, here's how:
- Open the 'Investment' tab in Argent
- Tap 'Yearn Vaults'
- Select a vault you'd like to invest in
- Tap 'Buy investment'
- Enter the amount you'd like to invest
- Tap 'Invest'
At launch, we support the following yVaults in Argent: WETH, USDC, TUSD, DAI, USDT, YFI, GUSD, LINK, aLINK, and 5 Curve.fi pools (Y, BUSD, SBTC, 3POOL, and Compound). Please note that all vaults may not be visible at any one time, as some vaults may be disabled.
Only yUSD, GUSD, DAI, LINK, TUSD, USDT, USDC and YFI can currently be bought natively in Argent at time of writing. The rest need to be obtained another way, such as using Curve.fi through WalletConnect.
The majority of vaults are based on stablecoins, one exception is the yWETH (Wrapped ETH) vault. You do not need to wrap your ETH to use the yWETH vault (either is fine).
What are the fees for yVaults?
Argent does not take a fee for Yearn Vaults! As usual, network fees will apply (we do not profit from gas).
Each vault has some amount of the total funds idle and most of them active in the strategy. You can learn more about this here.
Yearn.finance takes a 0.5% fee on funds withdrawn from active strategies, and no withdrawal fee if your funds come from the idle funds. Yearn.finance also takes a 5% fee on additional yield, which they describe as a 'fee on the some profit-generating transactions that incur high gas costs' and 'critical to the vault's internal functioning'.
Can I earn YFI in Argent?
The supply for YFI is finite, and all YFI that will exist has been distributed. However you can earn existing YFI through Argent providing you stake YFI in the YFI vault. See here for more info on how this works.
Do you plan to add more Yearn products in Argent?
We will always consider adding new Dapp features if there is demand for it. Let us know in our Discord!
Do you plan to support Yearn v2?
Yes, once it's out and more battle-tested we'll look to support it.
Is Yearn safe to use?
Argent users use Yearn Vaults at their own risk. Yearn advises that users do their own research before deciding whether to invest. If the stablecoins underlying vaults lose their peg, then your funds may be at risk.
While the assets deposited can't decrease, the debt of the vault can increase. If a strategy does not manage to outperform the debt, then a portion of the asset will be impermanently locked. If a strategy later outperforms the debt again, the asset will again be available to withdraw.
Bugs in the smart contract are another possible risk. Yearn's smart contract code is open-source for anyone to look at. Smart contract risk is also compounded for any contracts that the vault interacts with.
Yearn.finance undergoes regular independent audits, which are available publicly here. However, please note that not all vaults may have been audited. Yearn also have a bug bounty system in place.
- Yearn - Documentation on Yearn Vaults
- Ivan On Tech - What are Yearn Vaults?
- Talking Crypto - Earning YFI from Vaults
- Finematics - Yearn Vaults Explained