yEarn Expanding its Ecosystem to Bring in Hot DeFi Tokens into the Mix
DeFi craze continues to get hotter as the system grows.
yEarn’s zero supply valueless token YFI climbed to a new high today at $5,300 and is currently trading at $4,700.
Built on the Aave platform, “Credit Delegation supports smart contract to smart contract.” Delegate to a yVault and farm yield with the borrowing asset you prefer.”
Credit Delegation is a transaction where an Aave protocol depositor delegates a credit line to someone they trust; it can also be delegated to another contract that executes predefined functions.
“Credit Delegation might be a way to source liquidity from Aave Protocol across DeFi and into traditional finance without demanding borrower side collateral,” states Aave in its official announcement.
yVaults to have significant market implications
This is just the latest of what yEarn is offering to the DeFi users. Back in June, yEarn was also the one that further pushed the yield farming craze into high gear by rolling out automated yields for hot tokens like COMP, BAL, and CRV.
Now, with yVaults, Yearn is ready to welcome even more exciting DeFi projects into the mix. LINK is the first project the yEarn community has chosen to go with to provide liquidity with a delegated vault.
How this works is; first, a liquidity provider (LP) deposits LINK into the vault and receives yLINK. In the next step, the LINK is deposited into Aave and activated to be used as collateral. In the third step, borrowing a stablecoin, which is then deposited into yVault to generate APY returns. Now, any stablecoin earned above the debt, that is, profits, are sold for LINK, which then increases the LINK in yVault.
If these yVaults gain steam, “they are going to have significant market implications,” said analyst Ceteris Paribus as he explains, “‘Fundamental’ value, P/E, etc. don't matter as much if you have a significant amount of supply locked up by long-term holders passively auto-buying every day.”
This will also mean LINK would be bought in the open market, giving a constant daily dollar bid to LINK, which will continue to become more pronounced. Also, “LINK vault users are effectively long Link with compounding returns,” he said.