Anthony Lynch

Sep 14, 2020

6 min read

How To Buy Yearn.Finance (YFI) | Best Crypto Exchange To Buy YFI 2020

Trading and investing in cryptocurrencies solely relies on how well you perceive the digital asset based on its market industry. First of all, this guide doesn’t give any investment advice. Given the fact that the market value of Yearn Finance’s native token YFI doesn’t satisfy others’ expectations. It is worth noting, however, that outside of these sometimes spectacular runs from low market cap coins, often see little gains. More often than not they stagnate for the majority of the market cycle, maintaining their price if not moving in a bearish trajectory. But it is this low valuation that allows for major gains, for those savvy enough.

The present DeFi surge is motivated in part by the advent of reward incentives in lending and the fast-growing popularity of yield farming. The method involves users operating the protocol to “mine” reward tokens by switching from one asset to the most lucrative one. This appears to have been kicked off by lending and credit protocols like Compound rewarding lenders with COMP tokens, along with the base interest rate in an effort to improve liquidity. This seems to have been sparked off from lending and credit protocols, such as Compound, which reward lenders with COMP tokens, along with the base interest rate in an attempt to increase liquidity. In July, a new yield aggregator project took over the mainstage by tapping into the existing DeFi liquidity and helping maximize the maximum yields.

Image from Yearn.Finance

Yearn is an increasing collection of DeFi tools, built to serve as a quick portal to the broader DeFi landscape. Its cornerstone is the potential to deposit user funds automatically via Yearn Vaults in the highest value positions open in the DeFi ecosystem. Users deposit funds into the vault, and those funds will then be automatically assigned towards the most profitable yield farming possible, and the returns from these are allocated evenly to users, accumulating to the yTokens users are given when they make deposits.

Similarly, Yearn can help people make stablecoin deposits directly available to the highest yielding lending platform to gain attractive returns on stablecoins. This also helps in saving batch transactions on Ethereum gas prices, in addition to the ease of usage. However, the service does not come cheap, as performance fees as well as other expenses are collected across the process. These payments can be charged as dividends to YFI token holders, in a sum the token holders community settles on.

Yearn purports to become the key to the Ethereum Ecosystem multitude of yield-generating products. Unlike most other DeFi platforms and protocols, Yearn Finance in itself is an ecosystem. The platform provides its investors the benefits of “yield farming” by uniting various elements of the DeFi sector in one place. In that context, Yearn is one of the groundbreaking yield farming platforms since launch.

Yearn pioneered a new type of decentralized distribution. Only 30k YFI tokens were distributed to early users during a week and that’s it. Not one person or entity owns a lot of it, and those that were able to farm more or buy early are involved in the community and have little incentive to sell because of its other uses (see below).

Stake: When you stake to participate in governance (voting) you earn a part of yearn’s profits. Currently that is $5–10 per day (~15% APY) but will increase significantly as AUM grows.

Deposit in yVault: This vault is currently generating no returns, but it used to have ~40% APY a week ago and there’s word that a new strategy is coming out soon. This is very accretive to price because all profits are automatically reinvested in YFI, which creates strong organic demand and drives up price.

Use as collateral in Aave: you can deposit in Aave and borrow with a 40% collateral ratio. Therefore there is no need to sell to apply part of the capital elsewhere.

If you are entirely out of the loop, Yield farming and its insane APR are the big thing in DeFi right now. The goal was to have YFI used for voting and not as a means of exchange. YFI hodlers can vote on issues regarding all the protocols in the Yearn.Finance ecosystem. Holding the YFI governance token is essentially like owning a share in a kind of bank. Yearn.Finance has various pooled vaults (bank accounts) into which users can deposit stablecoins or other tokens such as Link, then automatically letting them “farm”, for example, governance tokens of other projects for profit, depending on whatever yields the biggest annual returns (e.g. comp, crv, etc). These profits will then be used to buy more tokens of the type the user deposited from the market, automatically increasing his stack. This means if you deposit 100 Link, it will automatically look for the yield farming / investment opportunity delivering the best returns.

There are many exchanges that claim the title of “best” exchange. While this may all seem simple enough, however, in choosing the best crypto exchange to invest in, you’ll have to pay attention to a myriad of considerations like fees, reputation, security, verification processes, and geographical restrictions an exchange platform has to offer.

To better understand most of the exchanges, as well as some of them that are working actively towards this goal, first, we need to understand some several factors that these crypto exchanges are currently working on:

  • Security: Safety should always come first. A good exchange will place great emphasis on the security of their users’ accounts, personal information, and the system in general. The majority of the assets should be stored offline in a cold storage system. Also be on the lookout for additional security features such as Two-factor authentication, withdrawal confirmations, etc.
  • Reputation: A well established, long-standing exchange is a much safer option.
  • 24/7 Support: The support should be responsive, friendly, professional, and ideally reachable through several different channels. A call center is a big plus as it’s comforting to know you have the option to speak to someone in person.
  • Payment methods: Take into consideration which payment methods are available — do they support credit card purchases, p2p fiat trades, and other methods of payment.
  • Fees: Fees can vary substantially between different exchanges. The fee schedule has to be provided on the site.
  • Interface: The site should be easy to navigate, even for crypto beginners.
  • Geographical restrictions: Some exchanges are locally restricted and their service might not be available in your area.
  • Uptime: Avoid exchanges with lots of downtimes.
  • Verification: Even though some users find verification and KYC procedures a hassle, you should look at it from another perspective. They are done with the best intention to protect the exchange from money laundering and all sorts of scams.

Taking everything into consideration, KuCoin is one of the many cryptocurrency exchanges who explored the concept of what the future of cryptocurrency trading looks like. It is also a reputable exchange that adds high-quality projects, hence, where you can buy YFI.

Image from KuCoin

KuCoin has a highly trained research department that looks for top-quality projects throughout the crypto industry. The exchange has over 6 million registered users across 207 countries and regions around the world with 450+ trading pairs to date. KuCoin provides a highly secure and easy-to-use platform for users to engage in cryptocurrency trades and transactions efficiently and safely.

KuCoin also launched a series of other products in the past year designed to further help out crypto users, including futures markets, public chain, one-stop exchange solution, creating a platform for how your crypto can yield interest, as well as some upgrades to the main exchange to uphold its principle of security and transparency. KuCoin since its inception has insisted on taking the tech as its backbone to build a better trader relationship while constantly pushing for the sustainable development of the digital currency trading ecosystem as the ultimate goal.

There are several exchanges, in fact, catering to different requirements and varying in terms of safety and security, convenience, accessibility, and so on. But unlike most of them, KuCoin is unique in its approach. From their timely upgrades, reports, and recently introduced products & features like KuChain, Margin, KuCoin Futures, Soft Staking, and Pool-X is what I think helping them build a better ecosystem for us, traders. Significantly, the structure of Kucoin is utterly fascinating, which shows they are more interested in long term growth. I’d say with their competitive services and reputable brand, KuCoin is already one of the leading cryptocurrency exchanges today.