Golden Observation丨Interpretation of "Big Uncle"'s latest online treasury strategy yETH

Golden Finance Blockchain, September 4th "Yearn Finance" is an aggregation financial platform that supports automatic warehouse transfers. It currently aggregates Compound, dYdX, Aave, DDEX and other protocols. Recently they announced the launch of the latest treasury yVault strategy "yETH", let's take a closer look at it.

Yearn Finance was formerly known as iearn. When an account deposits, the platform will automatically allocate the funds to the agreement with the highest current yield. Then yearn will give the user a proof of equity called yToken, through which the user can withdraw the tokens he originally deposited and the corresponding income. Currently, the yearn platform has supported wealth management services for various stablecoins such as DAI, USDC, USDT, TUSD, sUSD, and BUSD.

Golden hot search-ethexc list: ZEC tops the list: According to the data of the Golden Finance ranking list, in the past 24 hours, ZEC topped the list. The specific top five list is as follows: ZEC, BCH, LTC, BTG, BHD. [2020/7/20]

On September 2, Yearn Finance officially launched the new smart pool yETH and yWETH, and users can earn benefits by staking Ethereum. The yETH Vault has been launched along with the yWETH Vault and some other updates. The yETH Vault is the same as the yETH Vault but with wrapped ETH, an ERC-20 token pegged to Ethereum’s native token ETH.

The core steps of the yETH treasury strategy are not complicated. First, you need to deposit Ethereum’s native token Ether (ETH), then use ETH as collateral, and obtain the stable currency DAI through MakerDAO with a 200% mortgage rate. After earning interest, DAI Send to Curve Finance, a stablecoin liquidity protocol. Then, the stablecoin DAI you exchanged will be locked and earn interest (this part of the income mainly comes from the transaction fees of the Curve decentralized exchange) and additional CRV tokens. At this time, you only need to sell CRV and exchange it back to Ether Tokens, which are then automatically redistributed to the yETH vault.

Golden Salon | Pan Chao: For the application layer of the non-bottom public chain, the dual-currency mechanism is necessary: In the golden salon with the theme of "MakerDAO-How to Achieve Greater Development of the Dual-currency Mechanism" held today, MakerDAO China Pan Chao, the person in charge, said that there are two types of tokens in the MakerDAO system. One is the stable currency Dai, and the other is the governance and equity token MKR. Dai can be understood as a Maker product, and MKR is the stock of the system. MKR holders manage the stability of the Dai system, gain benefits when the system is running well, and automatically take out when the system is not well managed. This is a reasonable incentive mechanism.

For the application layer of the non-underlying public chain, the dual currency mechanism is required. Trying to capture and secure the value of an entire application (especially a financial application) with a single token either has no product currently available, or no one will be responsible for the product in the future. [2020/4/22]

Yearn.Finance is currently able to use the yVault strategy, and its token holders are also receiving batch returns. Under the new yETH strategy, it brings MakerDAO governance token MKR holders, Ethereum holders, and YFI holders This is because they can earn YFI token rewards from the "0.5% transaction fee". Thanks to the higher yield, the yETH strategy attracted 345,120 Ether liquidity funds (approximately US$139 million at the current exchange rate) on the first day after its launch, and this number is expected to continue to increase.

Zhang Haihui, Secretary-General of Golden Exclusive Blockchain Joint Development Organization: The supervision of blockchain and ICO by governments of various countries is still in the early stage of exploration: Exclusive interview with Golden Finance. Secretary-General Zhang Haihui said that blockchain and cryptocurrency are inseparable. Through the Token mechanism, blockchain has well realized the unification of information flow and value flow. Every country encourages the innovative development of blockchain, but specific There is a lot of uncertainty in regulatory measures. Like the early British "Red Flag Act" in the automotive field, there are still similar bills in many countries in the blockchain field. Therefore, the governments of various countries are still in the exploratory stage of supervision of blockchain and ICO, sometimes loose and sometimes tight, and will eventually become more and more reasonable with related developments. [2018/6/17]

Although this new treasury system is somewhat risky for investors, the main purpose of this incentive system for developing new strategies is to motivate developers to build "rock-solid" code. According to the plan, the Yearn Finance agreement may undergo multiple audits in the future. In its analysis report, Delphi Digital points out some of the reasons for Yearn Finance’s success, explaining:

Jinse Finance reported on the spot that the 2018 World Digital Asset Summit is about to kick off: The 2018 World Digital Asset Summit (WDAS) sponsored by FBG Capital will kick off in Singapore on May 2. WDAS is committed to aggregating global high-quality areas Blockchain projects, developers, and investors conduct in-depth research on token economics and its growing impact on the traditional economy. The conference will last from May 2nd to May 3rd, focusing on blockchain investment, blockchain scalability, community building, privacy security, exchange development, technology companies entering the blockchain, cryptocurrency transactions, Interoperability, stable currency, decentralized exchanges and other major topics of blockchain development will be fully discussed, and Jinse Finance will bring you timely live reports on the spot. [2018/5/2]

"For now, it is difficult to determine what exactly is the reason for the market to be so excited about YFI, but it is clear that this product has a certain degree of market fit, it is easy to use, especially the efficiency of obtaining fee income is very high, and the benefits are also extremely high. attractive and generate income for token holders without diluting capital.”

Is DeFi becoming too speculative?

Yearn.Finance reminded investors in the yETH and wETH strategy release announcement that investors need to be cautious due to the extremely high risk of debt-based vaults.

At present, in the yETH strategy, the biggest risk is the liquidation risk, that is, if the price of the Ethereum token falls to a certain price, the user’s ETH position will be liquidated. This is done to ensure that DAI is anchored to the US dollar, and Investors obtain the stable currency DAI through MakerDAO with a mortgage rate of 200% in the initial stage-from this perspective, the risk will basically be "passed on" to investors.

Although yearn has participated in Nexus Mutual's smart contract insurance, it is still in the beta testing stage, and users who want to experience it need to pay attention to risks.

Currently, MakerDAO's mortgage rate is 150%, which means that once the price of Ethereum plummets, the funds stored in the vault have the risk of "losing all". In addition, there are other risks and problems in the current DeFi ecosystem, such as the need to pay high gas fees when interacting with smart contracts, and the ability of the yETH treasury to interact with multiple smart contracts may lead to multi-layered risks.

When asked how to compare the DeFi hype with the initial coin offering (ICO) boom in 2017, 21Shares Research Assistant Lanre Ige believes that DeFi may still have room for growth. He finally said:

“DeFi and ICOs are hard to compare because the current DeFi cycle is a bit shorter than the last ICO cycle, but by far the biggest difference between the two is the current DeFi market Valuations are not driven by large new inflows, but this long-term sustained institutional interest is much higher than in 2017."

Part of this article is compiled from cointelegraph

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