YFI (pronounced like ‘ wifi’, if you’re curious) is a governance token. What is YFI? The governance token of Yearn.Finance With no middleman present, the platforms will charge interest fees based purely on market conditions. Of course, all DeFi platforms are not controlled by any individual, group, or country. Like all financial projections, this is not a guaranteed number. The annual percentage yield (APY) refers to the projected earnings from accrued interest if a user maintains his or her deposit for one year. Lenders can also redeem their assets (plus interest earned) from this pool. Anyone can borrow from this pool and this incurs interest to the borrower. Meanwhile, the platforms will use the aggregate deposits from many users to create a liquidity pool. In return, users receive an ‘IOU’ token that can be used in the future to redeem the deposited crypto asset and the rewards from the accrued interest. Users deposit cryptocurrencies, tokens, or stablecoins into one of the investment products that the platforms offer. The most important concept to know is that DeFi platforms function similarly to investment banks.
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How do people earn interest on DeFi platforms?
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If you are already familiar with DeFi and yield farming, go ahead and skip to What is Yearn Protocol.Īre you more interested in knowing about the YFI token? You’re welcome to skip to this section - What is the YFI token. Still confused about DeFi? Don’t worry, I’ll help you run through the basics below. YFI is the native token (to be specific, an ERC20 token) on Yearn.finance, which is used for governance of the decentralised autonomous organisation that oversees the future development of Yearn. With Yearn, you simply deposit your crypto assets and let the Yearn Protocol algorithm work for you to earn the highest interest on various decentralised finance (DeFi) platforms. Yearn.finance (also known simply as Yearn) is a brilliant solution for those looking to invest in the decentralised finance ecosystem, but wants to take the complexity out of it. So, while your cryptocurrencies sit idly inside your wallet, why not make your crypto money work for you?
![yearn finance yfi yearn finance yfi](https://www.newsbtc.com/wp-content/uploads/2021/04/Yearn-Finance-YFI-1-860x432.jpg)
If you’ve been holding onto some cryptocurrencies, you’re already ahead of the curve to protect your money’s value from depreciating due to inflation.