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Yearn.Finance merging the DeFi Ecosystem

The decentralized finance (DeFi) space has grown to include platforms in various sectors such as spot trading, derivatives, and futures. Interestingly, some networks such as Yearn Finance support yield farmers and liquidity providers through an aggregation service.

Instead of offering spot trading, lending, or borrowing functionalities, it allows users to deposit funds, then it distributes it based on projected returns and the risks involved.

However, this isn’t enough to drive meaningful DeFi adoption. Therefore, Yearn followed the partnership route to expand its ecosystem and to improve interoperability between DeFi systems.

In this article, we look at the most impactful partnerships in the Yearn ecosystem:

Yearn + SushiSwap

Yearn x SushiSwap
Yearn x SushiSwap (source: Yearn x Sushi 行ってきます medium article)

On November 3, 2020, Yearn’s creator, Andre Cronje, took to Medium to announce the coming together of his platform and Sushiswap. The connection between the two platforms meets as Sushi improves its automated market-making (AMM) outlooks while Yearn digs deeper into aggregating formulas. These qualities brought a need for cooperation between them, leading to:

  • A combination of development resources.
  • A rise in the total value locked (TVL) on each platform.
  • Working together to develop and launch Deriswap, a platform bringing together spot trading, derivatives, and futures trading.
  • Introducing Keep3r Network, an on-chain price oracle on the second iteration of Sushswap.
  • Additionally, liquidity providers on Sushi provide collateral for the Sushi money market.

Partnership with Cream Protocol

The DeFi aggregator platform partnered with Cream, a lending network similar to Aave, in developing the system’s second version. With the partnership, the Yearn and Cream team created Cream V2, which introduced or enhanced leverage and lending features. Notably, the new platform enables yield farming using leverage.

Yearn x CreamProtocol
Yearn x Cream Protocol (source: Yearn & Cream v2 merger medium article)

Additionally, Cream V2 acts as a springboard to power stable credit and yet-to-be-built lending functionalities. Apart from merging resources allocated towards development and seeing a rise in individual TVL, the partnership saw shares in Yearn Vaults qualify to provide collateral in Cream.

One feature added to Cream’s new version includes rotating multi-signature keys in order to improve deployment, iteration, and testing. Unchanged features include those that touch on governance and native tokens.

Akropolis and Yearn

Yearn x Akropolis
Yearn x Akropolis (source: μα τον Δια! Yearn x Akropolis medium article)

The partnership is rather a unique one. Why? It aims to bring out the best in each platform’s team. Therefore, each team continues with their previous journey but leans on the other if they need help.

Furthermore, Akropolis users can access Yearn and a host of other networks such as Cream and Pickle. In return, Yearn investors benefit from Akropolis’s investment strategies and a pool of institutional networks. The partnership between the two platforms brought with it improvements on Akropolis.

For instance, there was a development of new vaults, an institutional application, some strategies, and a rotation of multi-signature. In addition, Akropolis’s native token was upgraded to be able to track losses.

The PowerPool Partnership

PowerPool is a decentralized protocol accumulating governance strengths in systems built on the Ethereum blockchain. In short, it brings together governance tokens from a wide range of DeFi protocols, such as Compound and Balancer.

Yearn x Powerpool
Yearn x Powerpool (source: Yearn Finance Newsletter #13)

The partnership with Yearn Finance connected YFI, the governance token on Yearn, with PowerPool’s PowerIndex. PowerIndex provides a DeFi index inspired by distributed exchange-traded funds (ETFs). The index exudes meta-governance functionalities and contains eight tokens, including YFI.

Note that the meta-governance aspect rides on concentrating user tokens from different DeFi platforms into a single contract. Next, the tokens’ voting weight is delegated to a group consensus. Notably, the contract generates a token that its holders can use to decide the other tokens’ fate in the pool.

So, what does the partnership bring to Yearn?

  • Having a share of the index gives DeFi lovers a share in Yearn.
  • It increases participation in YFI governance issues.
  • PowerIndex supports swapping. Thus, anyone can exchange another platform’s token with YFI and vice versa.
  • In return, Yearn benefits from more liquidity. Additionally, pooling YFI helps stabilize its price.

The Cover Merger

Although Cronje formally announced the partnership on November 28, 2020, the two platforms have been collaborating since Cover’s launch. The marriage between the two opens doors to advanced features targeting optimization, among other aspects.

The partnership allows Curve to provide backstop coverage to products built on Yearn. Their coming together allows Cronje’s network to enjoy Cover’s range of coverage known for supporting multiple collaterals. Yearn can mitigate risks for users through vault coverage. That’s not all. Underwriting coverage on Yearn becomes more profitable.

Yearn x Cover (source: Yearn & Cover merger medium article)

Fortunately, the benefits aren’t one way. For Cover, it’s hoisted to expand its wings to unchartered money markets. Additionally, it’s empowered to seek a bigger share of perpetual coverage and other products in the market. However, components such as the native COVER currency remain intact.

Pickle and Yearn

Yearn x Pickle (source: Pickle & Yearn ferment co-operation dill medium article)

This is another key partnership in the Yearn ecosystem. Its uniqueness emanates from the fact that it’s supposed to eradicate duplicate works among the two teams. Doing so lets each team and individuals within a team work on what they’re extremely good at.

As a result, Pickle will launch new features such as reward Gauges. Governing members on the Pickle ecosystem receive DILL tokens when they lock their tokens for governance-related purposes. DILL holders share Gauge performance, withdrawal, and deposit fees.

On the other hand, Yearn users, especially Vault depositors, are incentivized to interact with Gauges through Vault shares. The depositors also receive more rewards by setting aside Pickle tokens to receive DILL.

Others benefits originating from the partnership include:

  • A merger of the platforms’ TVL.
  • Pickle finds its way into the Yearn ecosystem.
  • Pickle enjoys Yearn’s security, among other features.
  • Pickle’s reward Gauges rake in incentives from Yearn depositors.
  • The two protocols’ teams work together on strategy creation and split profits from the strategies.
  • There’s an overall increase in rewards for users in both circles.

Conclusion

By expanding the Yearn ecosystem, Cronje and his team seek to build an inter-connected DeFi world. With everything connected to everything, DeFi adoption naturally sets in.

Apart from interconnection and adoption, the partnerships focus on, for example, reducing the duplication of roles within teams working on DeFi projects. This encourages the birth of new products and features to help drive growth in the space.

In the process, DeFi enthusiasts benefit from enhanced products and yields, which further encourage interaction with DeFi-focused systems.

Decentralised Finance (DeFi) series: tutorials, guides and more

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The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.

1 COMMENT

  1. I was expecting DEFI to die wuickly, but looks like I was wrong. I wish SimpleFX would add it, their app is simple and I recently trade on the go

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