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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