YFV Finance Yield Farming

6

Before we begin

As will be seen, YFV (YFValue) is going through a lot of changes. New features are being announced and notably, the original YFV token will eventually be replaced by a new Value Liquidity Token (VALUE). This article is for information purposes only and is not intended to comment on these changes or any implications it may have (if any). As with all yield farming projects, YFValue farming involves a huge amount of risk. Anyone intending to participate in yield farming should do full research and consider carefully the risks involved beforehand.

YFV (YFValue) is a YEarn inspired governance token that is rewarded to cryptocurrency yield farmers (also known as liquidity miners). YFV functions as a DeFi Yield aggregator – they will release a “Vault” like product which will deploy different strategies to farm DeFi yields. $YFV in the governance coin on the platform which will be used to vote on Decentralized Autonomous Organisation (DAO) decisions. YFV sets itself apart by also minting two elastic supply coins, $vUSD, and $vETH – coins that will rebase to target the price of USD and Ethereum respectively. These tokens will function similar to “Ampleforth” in terms of rebasing functionality. The team behind the project has chosen to remain anonymous.

The official website for YFV is https://yfv.finance.

Summary

  • YFValue functions as a DeFi Yield aggregator, releasing a “vault”-like product which will deploy different strategies to farm DeFi yields.
  • There are 2 types of pools for $YFV farming: Seed Pool v2 and Balancer Pool. There will be changes to this soon.
  • YFV will soon be replaced by the new VALUE token.
  • There will be an eventual migration to a new Value Liquid exchange.

How do you farm $YFV

Yield farmers can farm $YFV in two types of pools:

Option 1: Seed Pool v2. This your classic yield farming pool – tokens are staked into the pool and $YFV will be distributed over time. There is no risk of impermanent loss.

  1. Log onto https://yfv.finance/
  2. Connect your wallet
  3. On the “Seed Pool v2” page, deposit either USDT, USDC, TUSD or DAI (i.e. stablecoins)
  4. Click the Stake token button.

Option 2: Balancer Pools. This is the higher risk pool, where funds are added to a Balancer liquidity pool. This means the funds will be actively used in automated market making and possibly risk impermanent loss. On YFV there is a total of 8 Balancer Pools. For the purposes of this tutorial, let’s look at the example of using the WETH Balancer Pool of WETH:YFV.

  1. Wrap Ethereum into $WETH using the ETH->WETH tool on the sidebar https://pools.balancer.exchange/#/pool/0x10DD17eCfc86101Eab956E0A443cab3e9C62d9b4
  2. Stake WETH & YFV in the Balancer Liquidity Pool https://pools.balancer.exchange/#/pool/0x10DD17eCfc86101Eab956E0A443cab3e9C62d9b4
  3. This will generate BPT tokens
  4. Stake BPT tokens on https://yfv.finance/stake in “Balancer (YFV-WETH)” Pool

How to claim your YFV

On the main page, you will easily be able to see how much you have staked into each pool, how much YFV is claimable and the ROI in USD.

YFV pools
YFV pools
Staking pool (Image credit: Denome)
  • To claim your rewards, click into the pool. There you will see several important items of information:
  • Next Epoch: When your next rewards will be paid out.
  • Your Estimated 24h Reward: Estimated earnings of YFV in 24 hours.
  • Rewards available: How many YFV tokens are available for collection.

You can claim your YFV rewards by simply clicking “Claim Rewards”. However, this requires gas fees so you need to consider the gas fees paid to stake your tokens in the first place etc and decide if it is actually worthwhile to collect your rewards.

Note that there will be changes in distribution of YFV, see below.

How are people profiting off YFV? What do I do with the YFV tokens?

So what is the purpose of farming all these YFV tokens? YFV is the governance token of YF Value protocol. This means holders of the YFV token can use it to determinate and update the functionality of YFV protocol and change or update the rate of distribution of YFV tokens. Those that stake in YFV pools has the right to vote on-chain for the distribution rate. At the end of each week, the total votes will be automatically counted and the distribution rate of YFV will be automatically changed.

On the other hand, you can also trade your tokens for ETH or USDT on exchanges such as Uniswap, Balancer, Hotbit, BKEX and Bilaxy.

What is vUSD and vETH?

As you can see in the above section “How to claim your YFV”, in addition to YFV tokens, staking YFV also gives you vUSD and vETH tokens. A total of 1,000,000 vUSD and 1,000 vETH will be distributed to all the yield farming pools according to their percentages. According to YFV, once all the pools have been exhausted of YFV, vUSD and vETH will use an oracle price feed to match the prices of USD and ETH. Similar to Ampleforth (AMPL), there will also be a rebase of vUSD and vETH every 24 hours.

An exception to this is Staking Pool v2, see below.

Staking Pool v2 to be replaced by Governance Vault.

Staking Pool v2 is also a pool where you can stake YFV. However unlike other pools, you will NOT be rewarded with YFV and will only receive vUSD and vETH. Staking Pool v2 will soon be replaced by Governance Vault.

The Governance Vault (beta) is now open. According to the Team it is a combination of the power of YFV governance and yield farming strategies. The Governance Vault will have benefits such as voting power and be awarded vUSD and vETH. Governance Vault will also distribute VALUE tokens (see below) as follows:

  • VALUE will be awarded from emissions similar to staking pool v1. This will start from 17th September 2020 5:30pm (UTC).
  • YFV deposited into Governance Vault will be used for farming and lending strategies. Profits from this will be used to by VALUE and distributed to Governance Vault stakers.
  • After the release of Value Vault (see below), 6.8% of profits from Value Vault will also be used to buy VALUE and distributed to Governance Vault stakers.

Smart contracts under the Governance Vault are being reviewed by the Arcadia Group and another auditor.

Value Liquid: Coming soon

Value Liquid is an upcoming exchange and will be launched on 18th September 2020. After its opening, all the liquidity from the YFV pools will be automatically migrated from Balancer to Value Liquid. And once VALUE token is introduced, liquidity from Uniswap or SushiSwap can also be migrated to Value Liquid.

Value Vaults: Coming soon

Value Vaults will be available from 21st September 2020, it is currently in the final stages of testing. These Value Vaults are the next core feature of the project and is intended to achieve long-term profitability of YFV. Technical details and concepts for Value Vaults have not yet been released by the team to prevent their strategies from being forked and to maximise value for YFV stakers.

Important: Changes to YFV token and introduction of Value Liquidity Token (VALUE)

YFV tokens and its issuance will go under some changes in the coming few weeks.

For the liquidity pools, Balancer Pools (e.g. Bal Balancer Pool) will stop issuing YRV at the next epoch (approx. 18th September 2020). The Balancer Pools will be undergoing some structural changes which have not yet been announced. Meanwhile, Stablecoin Seed Pools (e.g. Seed Pool v2) inflation rate would be doubled but will end in 3 weeks (approx. 2nd October 2020).

The total supply of YFV will be capped at around 3.8mil YFV. A new token will be introduced, known as Value Liquidity Token (VALUE). The new VALUE token will have a maximum cap of 3mil VALUE. Totaling 6.8mil tokens in the YFValue ecosystem. YFV and VALUE both have the same price and governance powers. But VALUE is intended to allow YFValue protocol to keep growing. This is because VALUE will be governed through a VALUE DAO contract, which has the features of burning and locking rewards.

YFV holders will be able to use a migration contract to swap their YFV to VALUE at a 1:1 ratio. There will be an option for that on the YFValue interface. And for a while, both YFV and VALUE will co-exist. Eventually, though it is not specified when, there will be a community vote for a complete transition from YFV to VALUE through VALUE DAO.

Balancer Pool Token (BPT) Liquidity Providers (LPs) will be able to transfer all of their current liquidity tokens to the new pools which will issue VALUE.

Will the YFV-VALUE transition affect yield farmers?

Farmers should approve transfers from the current Balancer Pools that give out YFV to new Balancer Pools that distribute VALUE. Eventually, the Value Liquid exchange will be opened and there will be automatic migration, so no further actions are required.

Will the YFV-VALUE transition affect YFV holders and traders?

Trading on centralised exchanges such as OKEx, and decentralised exchanges e.g. Uniswap will not be affected.

However, those trading on Balancer need to be aware that Value Liquid will launch on 18th September 2020. At such time, all the liquidity from the YFV pools will be automatically migrated from Balancer to Value Liquid. After the migration, you will no longer be able to trade YFV/VALUE on Balancer. Traders will need to swap YFV to VALUE and from then onwards trade VALUE at Value Liquid.

YFV Farming risks

The biggest risk of YFV farming comes from potential vulnerabilities in the staking contract. on 30th August 2020 YFV announced that the audit of YFV Protocol had been successfully completed by The Arcadia Group. According to YFV, the audit identified a small number of low severity issues relating to code quality and health. No high or critical severity issues were found. The letter from Arcadia and a summary of the audit report can be found here.

There is also the question of the limited supply of YFV tokens. There is only ever going to be 21,000,000 YFV tokens so some of the (perceived) value of the token is because of its limited supply. But what happens when every YFV token has been mined or distributed? This is unknown and it is worth noting that YFV is currently backed by any other asset.

Minting Risks

One of the biggest concerns about YFV was the presence of minter keys – which could potentially mint an infinite number of $YFV tokens. Developers have stated that all minter keys are burned, and pools which could mint new tokens have also had minting features removed.

YFV had previously also confirmed and addressed community members’ concerns that there was a minting key oversight and exploit related to vUSD and vETH which would allow funds to be locked. What YFV did to remedy this was that they kept the minting keys until they were able to recover the funds that some users may have lost by farming in Pool 0. After that, the team transferred the governance keys of vETH and vUSD from YFV protocol to several members of the community to hold in safe custody. The community members selected were: Reuben Yap (COO of Zcoin), DeFi Dude, Matthew Neimerg (CEO of Cardinal Cryptography), TQT, Ian Ocasio and myself. This eventually led to the launch of Staking Pool v2 which will be replaced by Governance Vault (see above).

More Information

YFV Github
YFV Medium and news
YFV Telegram
YFV Discord

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

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The DeFi series on this website also covers topics not explored in YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

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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.

6 COMMENTS

  1. Hi Michael,

    didnt see the reply section right away… shame on me ,-( was challenging your bot section though.
    like your style and way how to present and invest topics. neutral and honest. you and data dash are one of my first channel – which i still stick too because you guys havent changed.
    Great work you are doing. Keep the good stuff up coming. hope you still get some sleep looked tired in some of your videos :0
    I watched all your Defi and Farming videos. i would like to move more into that space and try more things out on my own.
    is your telegram discussion group still active? are there any new yield farming projects upcoming worth looking at it?
    i leave my email below but you can also dm me @andy6703

    Cheers, thanks and keep doing the great work
    Andy

    P.S. Really great to see that your fanbase is growing constantly 🙂

  2. Hi Michael,

    didnt see the reply section right away… shame on me ,-( was challenging your bot section though.
    like your style and way how to present and invest topics. neutral and honest. you and data dash are one of my first channel – which i still stick too because you guys havent changed.
    Great work you are doing. Keep the good stuff up coming. hope you still get some sleep looked tired in some of your videos :0
    I watched all your Defi and Farming videos. i would like to move more into that space and try more things out on my own.

    Cheers, thanks and keep doing the great work
    Andy

    P.S. Really great to see that your fanbase is growing constantly 🙂

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