Yearn Finance Adds yETH Vaults Earning 75%+ on Ethereum Deposits

By Martin Young
September 2, 2020 Updated September 2, 2020
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Yearn Finance Launches Ethereum Staking Vault Curve Rocket Pool

Popular DeFi aggregation protocol Yearn Finance has added its long-awaited Ethereum vaults offering some of the highest interest in the industry on ETH deposits.

Yearn Finance has gone from zero to hero in the DeFi sector, launching new products and yield farming opportunities on an almost weekly bases. The latest offerings, in addition to its extremely popular DeFi and stablecoin liquidity pools, are vaults for Ethereum and wrapped Ethereum (wETH).

There was a caveat that they are debt-based vaults and carry an extremely high risk, and there will be a 0.5% withdrawal fee. Add to this the high gas fee for deposit and they’re only likely to be profitable for larger deposits.

At the time of testing, the yields on the new yETH vault were over 75% which are some of the best returns in the industry for straight ETH collateral deposits.

Yearn Finance Ethereum Vaults
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Ethhub founder Anthony Sassano posted an example of how these new vaults can be a ‘beast for ETH stacking’ as the funds are used to mint Dai from MakerDAO which is then funneled into better-earning pools such as Curve’s.

When asked about the threat of a flash crash, as happened in the middle of March this year, he added that the strategy uses MakerDAO’s Oracle Security Module which means that there is a one hour buffer the ETH oracle price.

“For example, if ETH falls to $200, the vault has 1 hour to pay back the debt at the old oracle rate (say, $470) before the oracle updates to $200.”

The new vaults offer a simple way for farmers to access much higher yields on ETH without having to ‘harvest’ them. Just holding yETH in the vault is all that is required.

There have also been comments that this could cause an Ethereum liquidity crisis if it becomes as popular as other DeFi protocols such as Yam and Sushi, but this would in effect be bullish for ETH prices.

Ethereum and YFI Price Update

Yearn Finance’s own native YFI token has been on a tear lately, surging past Bitcoin’s price to top out at $38,000 on August 31. It has been correcting since then however and has dropped 23% to fall just below $30k at the time of writing according to Coingecko.

Ethereum has also been surging recently with a run-up to a 26 month high just over $480 today.

Martin has been writing on cyber security and infotech for two decades. He has previous forex trading experience and has been covering the blockchain and crypto industry since 2017.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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