Yearn Finance Launches Ethereum Vaults; Here’s Why Its Bullish for ETH

Yearn Finance is now allowing people to stake their Ethereum holdings to earn higher yields via its new product yETH.

The vault, which went live on Monday following a community vote, expects to attract a large amount of ETH tokens, with many observers noting that the migration would leave the Ethereum market with a supply-side liquidity shock. They are already counting on a bullish response from the ETH traders based on supply-demand economics.

Alex Saunders tweeted earlier Monday that he sees the demand for ETH tokens go high in the coming days. The Nugget News founder called the launch of yETH a “bullish” event, adding:

“Anyone who owns ETH can earn the best yield automatically by HODLing yETH. It could also mean other protocols find it harder to compete with Ethereum when offering staking rewards.”

Ethereum Boom Ahead?

In retrospect, Yearn Finance is a protocol that finds the best available yields available on the tokens one holds. It requires users to deposit their coins into their system, for which they return a native cryptocurrency. In the case of Ethereum, that token is yETH.

As traders–who are looking to put their ETH holdings to use–decide to deposit them with Yearn Finance, they would automatically remove a portion of ETH supply from the market. Meanwhile, rising demand for the Ethereum cryptocurrency for its application across payments, DeFi, and stablecoin sector, would most likely push its prices higher.

“ETH vaults typically draw in the most liquidity,” stated one analyst. “YFI has been a monster liquidity vacuum without them, imagine the addition… This will accelerate things far beyond current TVL.”

Another daytrader commented:


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