Yearn Finance Vaults Guide

This is a quick guide to help your understand how Yearn Finance Vaults work.

Last updated on May 5, 2022

Notion image

What is yearn.finance?

yearn.finance (Yearn) is a DeFi vault and yield aggregator that helps you generate the highest yield farming profits. When you deposit assets into Yearn products, you gain access to the best automated strategies for swapping funds between DeFi protocols, such as the Synthetix Network Token ($SNX) and Compound ($COMP). Yearn optimizes token lending by algorithmically finding the most profitable lending services and the highest yields, making farming accessible to the masses and giving new users access to advanced strategies. Specifically, Yearn vaults (which Steakwallet integrated) can be best described as actively managed mutual funds where the investment strategies are performed by Yearn's self-executing code.

Support Vaults

Ethereum

  • Tether Stablecoin (USDT)
  • USD Stablecoin (USDC)
  • Dai Stablecoin (DAI)
  • Uniwswap (UNI)
  • Wrapped ETH (WETH)
  • Wrapped Bitcoin (WBTC)
  • Chainlink (LINK)
  • Compound (COMP)
  • Yearn Finance (YFI)
  • 1inch (1INCH)
  • Synthetix Network (SNX)

Beta Vaults on Fantom

  • Dai Stablecoin (DAI)
  • USD Stablecoin (USDC)
  • Wrapped Fantom (WFTM)
  • Yearn Finance (YFI)
  • Magic Internet Money (MIM)

Depositing into a Yearn Vault on Steakwallet

Depositing into a Year Vault via Steakwallet follows the same flow as staking an asset. You simply select the token you want to deposit into the Vault, click “deposit”, choose the amount, and confirm. Remember that you’ll need ETH to pay for the deposit and withdraw transactions, or FTM if it’s a Fantom Vault. That’s it. Your assets are now in the Vault and are earning based based on the deployed strategies.

💡
Note: Since strategies change at any time, so can the reward levels of a Vault. So keep an aye on the APR to see if your deposited asset is earning as much as it should be.

How Yearn Vaults help you to earn more with the crypto you hold

Yield farming is a passive investment strategy that allows you to lock your assets in a protocol and earn more crypto with your crypto. Yearn Vaults give you access to robo-farming strategies and allow you to maximize returns on your assets. You do not need to have a deep understanding of the underlying protocols involved, which makes it easy for beginners to participate and start earning.

When liquidity providers add funds to liquidity pools, which operate on smart contracts, the liquidity pools automatically generate yield based on opportunities present in the market and shift capital as different opportunities arise. Think of Vaults like savings accounts for your crypto. All you have to do is deposit your funds and then they are routed through strategies which seek out the highest yield available in DeFi. Immediately upon depositing, your funds first go to the vault contract and then are deployed to one or more strategy contracts. Guardians and strategists monitor deposits in order ensure optimal returns and to be available during critical situations.

You will earn rewards for providing liquidity to any given pool in the form of Vault Tokens. These tokens are essentially deposit receipts and represent a share of the Vault you are participating in. If the Vault you are participating in earns profit, then the price of your tokens will increase.

The socialization of gas costs provided by Vaults minimizes the high cost of transactions on Ethereum. Since capital is pooled through one account, only that account (the controller of the Vault) has to pay gas fees to yield farm. This mechanism allows all users to earn at the same time and reduce cost, regardless of how much money they’re putting into the protocol.

Calculating your estimated returns

Yield farming returns are calculated annualized, so returns are estimated based on how much you could earn over the course of a year. Annual Percentage Rate (APR) does not take into account the effect of compounding, while Annual Percentage Yield (APY) does. Compounding refers to reinvesting profits to generate even higher returns. APY analyzes lending protocols and gives users an estimation of the amount of returns they should expect to earn annually for a specific amount of money. Being that yield farming is such a fast paced market, it’s important to know that these APYs are difficult to calculate and the projections can fluctuate rapidly.

This sounds similar to staking...

Even though staking and yield farming are both passive investment strategies in crypto, they are not the same technique. Unlike yield farming, staking does not provide liquidity to a protocol. Rather, you lock up your assets in a network to uphold and help secure the network by acting as a node that confirms blocks, and earn rewards for doing so. Generally, staking is less risky compared to yield farming. However, Yearn vaults have proven to be very secure and low risk.

 

Steakwallet takes the simplicity of earning yield through Yearn a step further by allowing users to deposit funds into pools with the click of a button on mobile. Simply choose the vault you’re interested in and confirm your deposit. Once your transaction is approved, your Steakwallet will contain a token that represents your stake in the Vault (for example, you will receive yvSNX when you deposit $SNX) — there will be nothing else you need to do except sit back and watch your yields accumulate, hassle free.

 

 
This web page (including the articles contained herein), is for informational purposes only. Please do not construe any such information or other material contained on this web page as legal, tax, investment, financial, or other advice. This web page and the information contained herein is not a recommendation or endorsement of any digital asset, protocol, network, or project. However, Steakwallet (including its affiliates and/or employees) may have, or may in the future have, a significant financial interest in, and may receive compensation for services related to, one or more of the digital assets, protocols, networks, entities, projects, and/or ventures discussed herein.
The risk of loss in cryptocurrency, including staking, can be substantial and nothing herein is intended to be a guarantee against the possibility of loss. This web page and the content contained herein are based on information which is believed to be reliable and has been obtained from sources believed to be reliable, but steakwallet makes no representation or warranty, express or implied, as to the fairness, accuracy, adequacy, reasonableness, or completeness of such information. Steakwallet cannot be responsible, in any way whatsoever, for your use of the information contained in or linked from this web page. Do not rely upon any information found on blog.steakwallet.fi or support.steakwallet.fi without independent verification.
Did this answer your question?
😞
😐
🤩