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).
– yETH vault added
– yWETH vault added
– SNX assets updated
– Footer with links added
– 0.5% withdraw fee
– These are debt based vaults and carry extremely high risk
– Do not risk your funds pic.twitter.com/7hvU9Ab8u0
— yearn.finance (@iearnfinance) September 2, 2020
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.
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.
The @iearnfinance yETH vault is an ETH stacking beast 🦍
How it works:
ETH sell side liquidity crisis incoming.
— Anthony Sassano | sassal.eth 👨🌾 🏴 (@sassal0x) September 2, 2020
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.