Yearn Finance seeks to build DeFi’s user-friendly yield robot

Robots on the Internet are waiting earn money for you – if you have a lot of money.

Driving the news: Aspire Financelead robo-advisor for yield, revealed details about its v3 this week, catching up with the project with an effort that spans decentralized finance (DeFi) to standardize money-earning tokens.

Why is this important: Challenge is confusing, but Yearn Finance has been laser-focused on a simple mission: a place where people can dump their assets and rely on its smart contracts to grow them.

  • “Smart contracts” simply means software on blockchains. Yearn’s smart contracts get instructions from top space yield hunters, who get paid generously for that.

The context: Earning interest in DeFi isn’t new, but standardizing ways to account for it could open up new use cases.

  • ERC-4626 is the new standard on Ethereum for tokens that earn interest. It tracks how much of an asset pool a user owns. If the pool grows, the value of those shares increases.
  • This approach could facilitate thesay, borrow against deposits or to buy structured products that guarantee a certain return.

aspire is the original robo-advisor for yield in DeFi. He has a bunch of “cofferswhere users can dump funds and expect them to earn more on the assets they have deposited.

  • Each vault has a strategy (or several strategies) that it follows to grow depositors’ funds.
  • As of this writing, there are 11 coffers that generate double-digit returns. We claim more than 800% returns at the moment. Many more are in the high single digits.
  • Returns are measured in the underlying asset, not dollars.
  • And they fluctuate. Something that gains an 800% annualized rate this week could fall to 8% next week.

🗝 The key for Yearn however, it is that his strategies are changing. Yearn continues to move funds from his vaults to the highest paying locations (this would make your head spin and fly to do it yourself).

Yes, but: Gas charges. 😫 The returns above do not include the costs of using the Ethereum blockchain. Getting in and out of Yearn is computationally intensive, so users pay a lot to do it.

  • For example, an Axios source verified the Curve Rocket Pool as we write this. Investing 1 ETH there ($2,950) would have cost $134 in gas fees. That’s a 4.5% loss that just happened (gas costs vary wildly).
  • Gas charges would have been the same for more money, though. This is why Yearn works best for sophisticated and well-resourced users.
  • But again, this deposit in another chest (Curve stETH) is only $12.
  • Aspire to Arbitrum or may be cheaper upfront, but they also have less track record and fewer opportunities.

Be smart: Yearn has a good security track record, but all smart contracts in DeFi are risky. This is not a place to save for retirement.

About Johnnie Gross

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