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Yearn.finance: A Leading DeFi Project in the DeFi Pulse Index
Yearn.finance: A Leading DeFi Project in the DeFi Pulse Index
The DeFi Pulse Index (DPI) is designed to capture the performance of the most significant tokens in the Decentralized Finance ecosystem. DPI currently has a Market Capitalization of $134.33 million and a trade volume of 0.34 million.
1/14/2022
Index Coop
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Know Your DeFi Pulse Index (DPI) Token: Yearn.finance (YFI)
YFI is one of 17 tokens currently held in the DPI product. Here’s a basic overview of what you need to know about this exciting token.
What is YFI?
YFI is a token created by is a token created by Yearn. Yearn.Finance is a suite of products most well known for yVaults, a decentralized yield aggregator of various DeFi protocols, such as Aave, Compound, and DyDx among others. YFI was created in July 2020 as a governance token for the Yearn community. Yearn’s yVaults are like a savings account for your crypto, and they allow investors to receive the highest risk-adjusted yield in DeFi from various lending protocols, pools, and opportunities by identifying and actively switching managed funds to the best rates.
The Yearn yVaults achieve this by issuing the user a yToken which represents their funds in the yVault. This yToken is an ERC-20 and can be transferred or even used in other DeFi protocols as well, while still earning you yield in the yVaults. While in the yVault, yield gained from funds under management are added to yVault and on withdrawal a user would get back their original deposit amount and any yield gained in their original deposit currency. The yearn.finance protocol also accounts for the changes in APY that may occur when moving large amounts of funds into protocols and will divide the managed funds in up to 20 different strategies per yVault for the best yield.
Yearn.Finance simplifies the process of yield farming DeFi protocols. Typically one would have to stake and manually sell their farmed assets back into their deposit token denomination to realize stated yields, but yVaults completely automates this process. Thus, the protocol provides a simplified dashboard which automates what would otherwise be a complicated, gas-expensive, manual process.
Who created YFI?
Andre Cronje, a self-taught software developer, founded yearn.finance as a way to optimize his own yield automation strategies. Throughout this process, Cronje realized he could expand this code to a larger scale. One of his primary goals was to make investing in DeFi easier, safer, and more accessible to the average user.
Cronje created the YFI token in July of 2020 as a way to establish a decentralized form of governance and distance himself from yearn.finance. The token was intended specifically for users who first got involved with yearn.finance as a way to create governance and Cronje did not keep any of the tokens for himself.
What makes YFI stand out?
As yield rates for different protocols change from day to day, and the calculations to determine which protocol provides the best yield is complex, Yearn’s yVaults provide a significant opportunity for investors to make the most of their investments.
Why was YFI included in DPI?
Yearn revolutionized yield earning opportunities in the DeFi space with close to 5 billion worth of crypto assets currently earning yield in Yearn.Finance products. An index that tracks the performance of decentralized financial assets wouldn’t be complete without Yearn. As a truly decentralized product that is not limited by local regulations in addition to an active community and a governance token, Yearn’s offerings to the DeFi space have yet to meet a competitor.
YFI Tokenomics
The total supply of YFI coins is currently 36,640 with a market capitalization of approximately 900 million USD. When the token was first released, the total supply was limited to 30,000, though more have been minted after approval from YFI holders for current and future contributors.
What is DPI?
The DeFi Pulse Index ($DPI) is a digital asset index that tracks the performance of “blue chip” decentralized financial (DeFi) assets across Ethereum. It combines the features of an ERC-20 token and a traditional structured product to create a 21st-century digital upgrade to traditional structured products. DPI is capitalization-weighted based on the value of each token’s circulating supply and aims to track projects that have significant usage and show a commitment to ongoing maintenance and development.
As a bundled crypto asset, you effectively own all of the underlying tokens and can redeem your units of $TOKEN for the underlying tokens, a feature of traditional structured products that is typically reserved for large, institutional investors.
As an Ethereum-based crypto-asset, $DPI can be used productively throughout DeFi with opportunities for liquidity provision (LP), borrowing and lending, yield farming, and collateral debt position (CDP)
DPI was launched jointly by Set Protocol and Scalara (formerly known as DeFi Pulse Inc.), and was the first product to be managed by the Index Coop.
About Index Coop
Index Coop is a decentralized autonomous organization (DAO) that powers structured decentralized finance (DeFi) products and strategy tokens using smart contracts on the blockchain. We offer a suite of sector structured products, leverage and inverse products, and yield-generating products. We aim to create products that are simple to use, accessible to everyone and secure. Our products are built on Set Protocol, a twice-audited, self-custodial DeFi tool that allows for the creation and management of Ethereum-based (or ERC-20) tokens. Among users, partner protocols, and our composable products, Index Coop maintains one of the largest partnership networks in the DeFi ecosystem.
How to buy Index Coop products with fiat currencies:
First, you’ll need to create an Ethereum wallet like Argent, Metamask, Gemini, or Rainbow.
Next, you’ll set up your new wallet and connect your bank account.
Once you’ve deposited fiat currency in your wallet you can exchange it for Index Coop products like
(DPI) or the
.
You can also earn or buy DPI tokens directly via your favorite decentralized exchange.
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FAQs
Index Coop yield tokens simplify earning yield in DeFi by automating complex strategies and diversifying across protocols. They are user-friendly and cost-efficient, appealing to both new and seasoned DeFi users.
Leverage tokens automate a leveraged position by utilizing onchain money markets like Aave or Morpho to borrow funds, amplifying a user's exposure to an asset without requiring manual management. The token's smart contracts autonomously handle the borrowing, lending, and rebalancing of assets, maintaining a consistent leverage ratio despite market fluctuations. This automation eliminates the complexities of collateral management and liquidation risks, while also charging low, transparent fees that avoid expensive funding rates often charged by perps.
Index Coop is a decentralized autonomous organization (DAO) that specializes in creating and maintaining onchain structured products. Index Coop aims to democratize access to the crypto market, empowering everyone to participate in the growing digital asset ecosystem with ease.
No, yield automatically compounds and accrues to the token price. The value of the tokens you hold in your wallet will simply go up over time without the need to claim or compound rewards.
Index Coop products protect you from liquidation with automated risk management that rebalances assets to maintain a target leverage ratio that avoids liquidation.
INDEX is the ERC-20 governance token on Ethereum for Index Coop. INDEX empowers its holders to participate in decision-making processes that shape the future of Index Coop.
Yes, all Index Coop products are instantly redeemable for their underlying value at all times.
Yes, all Index Coop smart contracts have been audited by leading independent security firms such as OpenZeppelin, ABDK, Isosiro, & more. There is also an active bug bounty program through ImmuneFi. Audit information is published in the docs here.
Streaming fees (an annual fee paid continuously block-by-block), mint and redeem fees (only on leverage tokens), and borrow costs (interest paid to borrow funds from onchain markets when using leverage).