Many tokens are down by at least 18%, ending
the year on a sour note for investors.
But one project attempting to
combat this is Yearn.Finance
They recently announced changes to their tokenomics that may
turn it into a black hole for their own
token, a change that could lead to the next
phase of evolution within the entire DeFi industry.
and understand the scope of this opportunity.
so please do your own research
before you throw your money into anything.
Also let's go ahead and run a grid
trading bot on the Yearn Finance token.
That way we can track and see how it does
at the end of this video,
Click Create Bot, Grid Trading.
We're going to do $1,000 for this investment.
All right, leave the AI parameters, Create, okay, and
we're good to go.
Now, let's cover the basics.
Yearn is a DeFi protocol.
The protocol was created by Andre Cronje in
early 2020 before yield farming as a concept
was plastered on every DeFi website's banners.
The thing Cronje wanted to make was a
way to automate the strategy he was personally
using to find the highest earning lending pools.
This led Yearn.Finance to build
out functions for earning money.
The first is aptly named Earn.
This is a yield aggregator that shifts between
other protocols like Aave, Compound and Curve
to get users the best yield. Investors use Earn
to deposit their stablecoins and let the algorithm
do the hard work of rebalancing investments between those
protocols, effectively saving users the time it takes to
hunt down the highest yield.
When users invest, they get back ytokens,
which kind of act as a receipt that
represent the amount of money they have invested.
For example, if you deposited the stablecoin Dai into the
Earn program, you would get yDai in return.
Then we have Yearn vaults, which employ
more complex and arguably riskier strategies to
get you potentially higher returns.
Here the invested money goes into yield
farming strategies, sometimes with multiple steps that
can generate liquidity provider rewards or LP
rewards, transaction rewards and other gains from
DeFi pools through the Ethereum ecosystem.
There are many of these vaults
available right now on their site.
Here's what, the Curve ibKRW liquidity pool.
It's going to look a little bit confusing, but
I promise it's not that bad.
In this pool,
holders earn fees when they deposit synthetic
Korean won to a Curve liquidity pool.
Basically, this pool supplies the synthetic tokens to
Convex Finance to earn CRV and CVX rewards,
which are then traded for more synthetic tokens
to invest back into the strategy.
So it gets pretty heady pretty quick
trying to understand how these strategies work.
But the great thing is that
because you don't have
to understand each and every step, and it's
much less time consuming for the average investor
Something else that can save you a ton of
time and headache is joining my Patreon community where
you'll find additional content, moneymaking strategies, a private community,
coaching, and a whole lot more.
It's an amazing deal for as little as $10 a month,
you can grab a spot linked in the description below.
Now YFI is the main utility token for the Yearn protocol, and
as of now it has a maximum supply of 36,666.
Users of the platform earn YFI tokens by providing
liquidity either to earn pools or in their vaults.
An interesting thing about this token is there
was zero supply at launch and no tokens
were pre-minted or sent to investors for trading.
and the prices for YFI have been astronomical because of
this strategy, many regardless as the first crypto token
that has ever surpassed Bitcoin's individual token price, you
can buy YFI on the open market today
at a price of about $29,000, and this is
up from recent lows of about $19,000 during crypto's
downturn towards the end of 2021.
But the proposed changes to Yearn caused the token to
spike 85% in the week of December the 20th.
To me, YFI is one of the
most exciting DeFi tokens out there, especially
with the potential revisions to its tokenomics.
The first is the creation of a YFI vault.
This will contain YFI that has been bought back
from the market, reducing that total circulating supply.
Users will be able to stake YFI
and get xYFI in exchange.
The additional YFI bought back by the treasury
will increase the value of this liquidity pool
for all holders of the xYFI token, that is the stakers of YFI.
Now, buying back the YFI from the market would obviously
require a significant amount of capital from Yearn Finance,
which the protocol now has thanks to saving initiatives
implemented to hedge against the bear market.
In their proposal, it was reported that Yearn
has bought back roughly 300 YFI in the
last year, costing around $10 million.
Now the second change to YFI has to do with
governance, where users could then lock up their tokens for
up to four years, with the longer lock period, meaning
the greater your share of rewards generated by the pool
and then to add to that.
If you end up trying to leave the
pool before your locking duration has expired, you
would incur certain penalties, part of which would
be paid out to the other lock stakers
further benefiting them for sticking with their staking.
The third change is a system
involving newly created vault gauges.
Depositors in this system earn rewards based
on their veYFI weight,
basically their share of the total
volume locked within this pool.
How this works is tokens of the treasury are
allocated to vault gauges based on weekly governance voting,
basically another form of passive income on this site.
And the fourth change is really just an announcement
of what the proposal calls useful work features, tools
that help veYFI holders earn more rewards, putting
more on the line for those who want to
contribute to the Yearn ecosystem.
So in summary, what's happening here is that YFI, a token
that has been a bit stagnant for the last six months,
and holders of this token will be rewarded
disproportionately for their willingness to be
locked in the protocol for a longer period, so you can
think of it as a one-two punch of reducing supply
and rewarding long term holders.
Now, I do consider it my duty to also point out the risks.
Even after this proposal could get approved,
there is still the issue of governance attacks
where holders of the majority of YFI tokens
can vote to approve policies, policies that change
the rewards users are eligible to receive.
There's also the issue that user demand
to lock up YFI may eventually fall.
This would make holding lock tokens less attractive
as rewards for each holder would eventually decrease.
The authors of the proposal say that minting new tokens
would have to be considered at a later time if
this were to happen and that could drive the price
of YFI down in the short term.
It's important to understand worst case scenarios and
only commit to YFI staking if you intend
to stick out through your entire lock period
no matter how rewards might change.
So based on a preliminary poll, it looks like this
proposal has enough support to get past, and it's almost
certain that there may be some immediate price movements with
a lot of upside potential for long term holders.
If and when that happens.
I've been running a trading bot on the YFI token
now for five days and the results are in and
they're pretty juicy because my timing for starting this bot
was impeccable and we are up 10.98% in
just five days running this bot on the YFI token.
This might be the best short term bot results
I've ever seen, and I'm pretty stoked on.
If you want to try out Pionex for trading bots
yourself, I'll have them linked in the description below.
But as with any investment in this space, I
strongly recommend you do your due diligence and please
only invest money that you can afford to lose.
This is a very exciting space, but it's also a very
new and volatile space where it's easy to make mistakes.
If you'd like to check out a more user-friendly
way to earn yield on your crypto, let me
introduce you to a channel sponsor of mine, BlockFi.
With BlockFi, you can earn interest on your cryptos and stablecoins
with just a few clicks and they have a
crypto credit card that pays you cash back in Bitcoin.
I'll have BlockFi linked in the description below.
So that's going to do it for today.
I would like to thank you so much for watching
and I hope you have a profitable day!