While Ethereum and the rest of the crypto market saw a strong pullback on Wednesday, the DeFi space has continued its ascent to the upside.
What is fueling the recent growth in DeFi is a number of product launches and new projects. One such product is Yearn.finance’s (YFI) latest “Vault,” the yETH Vault. This product gives investors the opportunity to earn a high yield on their ETH. ETH is currently a rather unproductive asset, offering little yield on money-market platforms like Aave.
The product has already seen success, despite launching just 24 hours ago as of this article’s writing. According to on-chain data, the Yearn.finance product has already garnered dozens of millions worth of investment.
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Ethereum Vault on Yearn.Finance Garners Over $50 Million in First Day
The Ethereum Vault on Yearn.Finance has seen extreme success just 24 hours after its launch. According to on-chain data trackers, there is now 168,000 ETH worth of capital locked up in the product, which amounts to around $75 million.
The capital is yielding around 90% per annum, according to Yearn.finance. The yield is purportedly being generated through a multi-step process this is as follows:
- Deposit ETH into a collective pool, controlled by a Yearn.finance contract.
- Deposit ETH into a MakerDAO loan, also called a collateralized debt position. DAI is minted through this loan position.
- DAI is then deposited into the Curve.fi protocol to yield CRV, a governance token of the protocol that has garnered much traction over recent weeks.
- The CRV is then regularly liquidated for DAI, which is then converted back into Ethereum through decentralized exchanges.
- ETH is then distributed to holders of the Ethereum Vault token, yETH.
The collateralization ratio of the CDP is constantly rebased by those that call the “harvest” function for the Ethereum Vault contract, thus ensuring that the position is not liquidated.
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Driving ETH and YFI Higher
Analysts say that this is poised to drive Ethereum and Yearn.finance’s YFI coin together in tandem. This is because YFI holders can obtain fees from users of the Ethereum Vault and ETH should see renewed demand as investors look to invest in this product.
“The @iearnfinance yETH vault is an ETH stacking beast Gorilla How it works: Put ETH into yWETH vault > ETH is put in @MakerDAOat 200% collat > draw DAI > put DAI into @CurveFinance to farm CRV > recycle it all into ETH. ETH sell side liquidity crisis incoming. Few understand.”
The @iearnfinance yETH vault is an ETH stacking beast 🦍
How it works:
Put ETH into yWETH vault > ETH is put in @MakerDAO at 200% collat > draw DAI > put DAI into @CurveFinance to farm CRV > recycle it all into ETH.
ETH sell side liquidity crisis incoming.
— Anthony Sassano | sassal.eth 👨🌾 🏴 (@sassal0x) September 2, 2020
How far Ethereum rallies, though, remains to be seen.
Featured Image from Shutterstock Price tags: ETHUSD, ETHBTC, YFIUSD, YFIETH Charts from TradingView.com It Took YFI's Ethereum Vault One Day to Garner $50m in Investment