Yearn.Finance (YFI) – All you need to know

What is Yearn Finance?

Yearn Finance is a decentralised finance portal where users earn money by investing their crypto assets. The YFI coin is the cryptocurrency that powers the Yearn Finance platform. Yearn Finance pays out a portion of its fees to YFI holders as a dividend, and they can also vote on platform governance.

Yearn Finance is a gateway for people who want to hold their cryptocurrency and earn interest, but don’t want to have to work out the best place to invest it themselves. Instead, they can deposit their crypto on Yearn Finance and the platform automatically works out where to find the best returns. Every time this happens it generates a fee, which is what funds the dividends YFI holders receive.

To extend its capabilities as an investment portal, Yearn Finance has merged with a number of other platforms in the decentralised finance space. This means that it’s opening up more advanced investment strategies to a wider audience.

How does Yearn Finance work?

Yearn Finance works out the best way to invest cryptocurrencies to generate the highest yield. When a user deposits funds into Yearn Finance, the coins are pooled together and distributed between reputable crypto lenders, like Aave, Compound, and DyDx, in order to generate the highest return. Yearn moves deposits around between different lenders in order to produce the best results, a practice known as ‘yield farming’.

The Yearn Finance token is used for governance of the Yearn platform and to earn fees from every transaction. There is a limited supply of YFI coins – only 30,000 – and they were exclusively distributed to the Yearn Finance community before being made available to trade on exchanges in August 2020. Because its investment strategy had generated a significant amount of value before the tokens were distributed, the YFI/USD price almost immediately surged above $30,000.


Fact-checking & references

Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.

Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >