What is YFI(yearn.finance)?

Only one month after the start of trading, a cryptocurrency brand with a market price comparable to that of Bitcoin, the king of cryptocurrencies, has appeared, and “YFI” has received a lot of attention.

Why did it get so much attention? And what is YFI? In this article, we will explain in detail about the crypto currency YFI, including the mechanism and issues of YFI.

1. What is YFI?

“YFI” is a crypto currency issued by a protocol called yearn.finance and used as a governance token. I think that there are many people who do not understand well because it is full of technical terms, so in this article I will explain one by one.

At the beginning, you should know that YFI is a kind of cryptocurrency, it is also bought and sold on cryptocurrency exchanges, and yearn.finance, the issuer of YFI, is very useful. It is the fact that the price of YFI is also rising as the attention is raised.

Based on that, I would like to proceed with the explanation of YFI and yearn.finance.

2. What is yearn.finance?

Before talking about the characteristics of YFI, let’s explain yearn.finance.

yearn.finance is a service that automatically selects and invests the most suitable one from the lending (service that can aim for profit by lending crypto currency) protocol in crypto currency investment. It helps you to choose the advantageous one from the various services offered by cryptocurrency exchanges and DeFi (Decentralized Finance System).

Behind the birth of yearn.finance is the diversification of operation methods using virtual currencies. The number of services that can obtain yields by depositing or lending crypto currency is increasing rapidly, and it has become difficult to manually search and select a good one. This service was created as a mechanism to automate it.

Although yearn.finance has many functions other than the main function, most users use it for the purpose of “finding the best investment destination” function “Valuts” that triggered the initial birth.

3. How yearn.finance works

Next, I will explain Valuts for finding the optimal lending solution, which is almost the main function of yearn.finance.

If you tap “Valuts” on the yearn.finance screen, you will see many plans that you can invest in as shown below.

(From the YFI official website)

When the investor selects the one he / she likes, the details are displayed, and if he / she decides that he / she can deposit the funds (crypto currency) by looking at the investment method and strategy of the funds, he / she will invest the funds there. ..

Already, not only capital gains that aim for profits by buying and selling virtual currencies, but also income gains that aim for profits by operating virtual currencies are becoming widespread. yearn.finance is a very useful tool for aiming for the income gain of such virtual currencies.

4. What is YFI?

And YFI is the governance token for that yearn.finance. A governance token is like a key currency issued by the service source, and the word “governance = governance” is included because the person who holds the token has the right to participate.

The official website has a menu item called “Gov”. This is the page of the forum on the operation of yearn.finance, which has various agenda items such as the following and is accepting votes.

(From the YFI official website)

Anyone who owns the Governance Token, YFI, can participate in the vote here.

5. Current price of YFI

As of October 2021, YFI has been around $ 30,000. As will be explained in detail in the next section, the price of YFI settled down after hitting a high of nearly $ 100,000 against the dollar, forming a range market between the $ 24,000 and $ 44,000 levels in the latter half of 2021. doing.

However, the price range of the range is 20,000 dollars (equivalent to 2.2 million yen), so the market price is like Bitcoin.

6. YFI price changes so far

Since it is a yearn.finance that is already supported by many users, you can also aim for profit by buying and selling YFI, which is its governance token. Let’s take a look at the price transition of YFI.

(From the YFI official website)

It continued to round up the top price with several ceilings, and in May 2021, it reached the highest price of $ 96,000. The price is over 10 million yen in Japanese yen, so you can see how strong YFI has shown.

In February 2021, there was negative news on yearn.finance. It became clear that there was some fraud, and there was concern that a negative image would spread to YFI. Since the price movement of virtual currencies is intense, it was naturally expected that YFI would crash, but in reality it did not drop so much and the market quickly returned to normal. Looking at the chart above, we can see that the uptrend continues around February 2021 while repeating up and down.

It is said that the subsequent surge in May 2021 helped to attract attention to DeFi, which is closely related to yearn.finance, and to be attracting attention as a support tool for DeFi-related investment. I am.

After that, the price settled down, and in the latter half of 2021, the range market as mentioned earlier continues. This is more than 10 times that of the time of listing, so the strength of YFI has not been lost.

6. Why YFI is attracting attention

Since YFI is a token born from yearn.finance, all the reasons for its attention are the same as yearn.finance. Why is YFI soaring like Bitcoin, the king of cryptocurrencies, even though there are other protocols that offer services similar to yearn.finance? I have listed the possible reasons.

yearn.finance establishes fully decentralized finance

yearn.finance is a kind of DeFi, and it is a very well-known service. There are other similar services, but it is their management policy that has gained a lot of support from yearn.finance.

Among the many Decentralized platforms, yearn.finance was born and operated as a purely decentralized network. Many say this is the first time Bitcoin was born, and it’s also noteworthy that developers have abandoned all control over yearn.finance.

To put it plainly, many investors interpret YFI as “a crypto currency since Bitcoin may have been born.”

YFI issuance limit is extremely low

The rule of thumb is that the prices of currencies and financial products, not just virtual currencies, are determined by supply and demand. The number of YFI issued is very small, which also contributes to the soaring price. The issuance limit is set at 36,666, which is two digits different from the bitcoin issuance limit of 21 million.

Of course, investors are aware of this, so it is quite possible that the desire to own it now is pushing up the price because of its high rarity.

DeFi lending is expected to get more and more attention

DeFi lending, the “main battlefield” of yearn.finance, is a new investment area that is gaining more and more attention. In addition to the technological innovation in the fact that DeFi is a decentralized financial system, the speculation that there is no doubt that the market for DeFi lending will expand further in the future is predominant.

When these speculations spread, buying tends to call for buying, and these speculations also play a role in the soaring YFI that has occurred several times.

Andre Colonge’s name recognition

I mentioned a little about the developers of yearn.finance earlier. The developer of this yearn.finance is Andre Colonge, who has become so famous in the world of DeFi that no one knows it. The celebrity worked on and founded yearn.finance. Therefore, it seems that yearn.finance and Andre Colonge are regarded as equal.

Andre Colonge’s every move has also affected the YFI market, and as he launches new gimmicks, YFI may be under more buying pressure.

7. Challenges faced by YFI

YFI and yearn.finance seem to have great potential due to the large number of factors that raise prices, but of course there are also challenges.

Many industry insiders have pointed out the trend of Andre Colonge, who carries the image of yearn.finance on his own. If he makes any negative comments about yearn.finance or withdraws from this project, YFI prices may also be under downward pressure. Being so personal is a major challenge for YFI.

From an investor’s perspective, especially from a cryptocurrency beginner’s perspective, the difficulty of its existence and the height of the threshold can be issues. YFI, which has been described as attractive so far, is not listed on the crypto currency exchanges in Japan and cannot be purchased on the exchanges. To purchase YFI, you need to purchase another crypto currency such as Bitcoin at a domestic exchange and use it to exchange it for YFI at an overseas exchange.

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