Upon launching the project, yearn.finance issued YFI to people who had invested in the YFI protocol. Ethereum miners perform the task of processing and validating YFI transactions, just like how Bitcoin miners process and validate Bitcoin transactions.īut if Ethereum miners earn Ethereum from mining Ethereum, how can you earn YFI? Well, you can’t-at least, not anymore. This means that YFI does not have its own miners. YFI differs from Bitcoin in a few key ways.įirst, YFI is an ERC-20 token, meaning it is a token that runs on-and is backed by-the Ethereum blockchain. Odd, but given the bizarre tone of the rest of the tongue-in-cheek community, not entirely unexpected. Among the copycat imitations are YFII, YFIII, and WAIFU, the latter a reference to ultra-effeminate cartoon women, usually from Japan. YFI has been so successful that it spawned a series of imitations some of them are scams and others have turned into legitimate projects. It doesn’t give you the right to tell other contributors what to do. Yearn.finance’s manifesto states: “Holding YFI entitles you to signal for real, practical change that improves Yearn. So why is YFI worth an infinite amount more than its creators envisioned? Without getting bogged down in the “Why do any cryptocurrencies have value?” debate (or its stomach-churning forefather: why does anything have value?”), it’s likely because of the fact that YFI is scarce, the project is fashionable, and to buy a YFI token is a $30,000 investment into a single voting right for its governance protocol. ![]() Remember, its creators had written: “And just because we feel we didn’t stress it enough, 0 value.” It trades for $29,212 and traders shift $328 million of it each day. As of January 2021, YFI has a market capitalization of $880 million, making it the 48th largest cryptocurrency by market cap. We don’t have any of it.” But, like all decentralized projects, the fate of the token is out of their hands. There is no pre-mine, there is no sale, no you cannot buy it, no, it won’t be on Uniswap, no, there won’t be an auction. They wrote: “We reiterate, it has 0 financial value. Strangely, the creators wrote at the time of the token’s launch that YFI should have “0 value,” and warned its users: “Don’t buy it. By contrast, there are about 18.5 million Bitcoin in circulation. ![]() In part, that’s because there are so few YFI tokens in existence the protocol minted just 30,000 of them and can’t mint any more. As of January 2021, its all-time high price is $43,873-higher than Bitcoin’s all-time high. ![]() Yet, like so many others, YFI became incredibly valuable. It’s one of several governance tokens of its kind. To power it, yearn.finance launched a token, best known as YFI, that holders could use to vote on future proposals to upgrade the network. This governance protocol, launched in July summer, is the focus of this article. Since the summer boom, Cronje and his team have expanded the project, which as of January 2021 comprises a lending bot, a yield bot, an insurance protocol and a governance protocol. Yearn.finance was created by Andre Cronje, a South African software developer. Consider it a kind of algorithmic trading bot for interest accounts, the crypto equivalent of moving your money between different interest-bearing bank accounts to harvest interest and discounts at Applebee’s. Deposit money in its smart contracts, and yearn.finance’s algorithm automatically invests in DeFi protocols to maximise yields and generate as much interest as possible. Yearn.finance, previously known as iearn.finance, played a central role in guiding this mini gold rush. This made it incredibly difficult to work out, at any given moment, which protocol offered the highest yield. Sign up and Trade here.īecause the market was growing at such an astonishing rate and new protocols and tokens were created all the time, these yields varied massively each day. Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. So lucrative was yield farming that people invested money in DeFi protocols-mostly lending protocols and decentralized exchanges-expressly for the purpose of earning these tokens, which could offer yields in excess of 1,000%. ![]() Spurring all of this was something called “yield farming,” which involved scooping up lucrative loyalty rewards and interest earned from investing in different decentralized finance protocols and then selling the lump-sum for a profit. The industry, a collection of financial crypto projects powered by automated code (smart contracts), had started the year at a valuation of $1 billion, but in the summer added at least an extra $1 billion every week. In the summer of 2020, decentralized finance took off.
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