Yearn Finance building a DeFi empire to replace traditional banks
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Yearn Finance building a DeFi empire to replace traditional banks

  • Yearn Finance has evolved into a multi-purpose decentralized financial platform.
  • DeFi projects will soon be able to replace banks by offering the same services.

Yearn.Finance is a DeFi project with the most expensive native token in the industry. At the time of writing, one YFI could cost you more than $29,000, which is still relatively cheap compared to its all-time high reached $44,00 on September 12.

The project was rebranded from iEarn and went online in July 2020 as a rising star of the DeFi universe. The founder of the project, Andre Cronje, proclaimed the goal to make DeFi simple and accessible for a broader range of the crypto crowd with no time or interest to study the increasingly complex DeFi phenomenon and want a simple “plug-and-play” solution. Eventually, he succeeded, as Yearn Finance effectively launched the DeFi boom.

The market value of the project nears $900 million. Its scarcity explains the high value of the YFI token. There are only 30,000 tokens in circulation, while their average daily trading volume exceeds $800 million. 

Yearn.Finance evolves into a one-stop DeFi shop

Following a series of mergers and acquisitions, the platform has become an aggregator for various DeFi protocols offering a variety of financial services. As FXStreet previously reported, Yearn.Finance absorbed at least five projects, focusing on those that fell victims of devastating hack attacks and were hanging on by a thread. 

Cover Protocol, Cream Finance, Pickle Finance, SushiSwap and Akropolis have become a part of the YFI ecosystem, while Curve, Compound and Aave had their functionality integrated with the Yearn.Finance platform.

The takeover strategy gives Cronje access to innovative technologies and allows it to expand its business opportunities. At this stage, YFI functionality covers the full range of banking services and can rival its traditional competitors by offering much lower trading fees and higher returns. 

DeFi has everything to replace banks

As we know it, traditional banking business includes four main components that cover the whole spectre of financial services for companies and individuals. They are deposits to store money and earn passive income, investments to put money to work and build wealth, lending and borrowings to raise debt capital when needed and custody to ensure that the money is safe. Banks provide us with handy tools to manage our finances and take hefty fees for their services.

However, with the emergence of DeFi, people got the opportunity to receive the same services virtually for free. DeFi makes the whole process cheaper and faster as smart contracts and distributed ledger technology allows to perform peer-to-peer transactions without an intermediary.

As the industry is still at its early stages, many platforms are not user-friendly and too complicated for an ordinary Joe. Moreover, in many cases, they focus on a particular financial service, meaning that users have to hop between various platforms to perform different economic tasks. 

Yearn.Finance is about to change that by offering the whole spectre of banking services only in a decentralized fashion.

1. Exchange services: SushiSwap, the latest YFI’s acquisition, is an automated market maker (AMM) that serves as a decentralized cryptocurrency exchange, allowing users to swap their tokens directly and pay only a minor withdrawal fee. The popular protocol has the potential to will replace exchange services provided by banks, especially once it integrates fiat support.

2. Institutional investments: Akropolis is an investment platform initially conceived as a solution to a pension bomb problem. Under the umbrella of YFI, it will become the front-of-house provider of investment strategies for institutional investors.

3. Insurance services: Cover Protocol, acquired by YFI, offers protection against smart contract risk by providing peer-to-peer coverage with fungible tokens. The project aims to make DeFi a safer place where protocols and users trust each other. In the long run, Cover plans to become a multi-purpose DeFi insurer by allowing users to buy coverage on anything.

4. Lending services: Cream protocol focused on core lending and leverage products. After the merge with YFI, the project will specialize in lending-related products and operate collateral credit solutions. Apart from that, YFI platform users can access lending services with its integration with the Aave platform. 

The DeFi industry still at the very beginning of the journey; however, it is evolving at lightning speed with projects like Yearn.Finance challenging traditional banking and creating comprehensive decentralized financial solutions.

FX Street

FX Street

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