In mid-2020, Decentralized Finance (DeFi) protocols began to emerge as a popular way to earn interest on cryptocurrency holdings without having to entrust one’s assets to a centralized entity. These protocols generally run on Ethereum, but in the summer of 2020, the Binance Smart Chain (BSC) appeared on the scene and began to challenge Ethereum’s dominance in the DeFi space.
One of the most popular protocols on BSC is Yearn.finance (YFI), which allows users to pool their assets and earn yield from a variety of sources.
YFI is a protocol that allows users to pool their assets and earn yield from a variety of sources. The protocol is designed to be automated and decentralized, with no need for human intervention or management.
YFI’s main selling point is its simplicity: users just need to deposit their crypto into the YFI pool and let the protocol do the rest. The YFI protocol currently supports seven different types of assets: BTC, ETH, BNB, BUSD, USDT, USDC, and DAI.
The YFI token is the native token of the Yearn.finance protocol and is required to participate in some of the protocol’s features. For example, YFI holders can vote on governance proposals and earn rewards for participating in liquidity provision.
The token also gives holders a say in how the protocol develops over time. As of October 2020, there are less than 30,000 YFI tokens in circulation, making it one of the rarest cryptocurrencies in existence.
The main risk associated with YFI is that it is still a relatively new project and has not yet been battle-tested by the volatile cryptocurrency markets. However, as DeFi continues to grow in popularity, it is likely that we will see more projects like YFI emerge and thrive in this new ecosystem.