Yearn Finance Vault Users Lock $139M: Farmers Claim Collateralized ETH Gathers 90% APY

On September 3, 2020, the well known Yearn Finance defi project “paused” the popular ethereum liquidity vault (yETH) service, after locking in a significant $139 million. Yearn’s vault feature launched on Wednesday, and saw $100 million deposited on the first day. The vault hype has also caused the Maker DAO project to make a governance call in order to allow more DAI minting.

The defi project Yearn Finance has been a topical conversation within the crypto community, as last week the project’s native YFI token climbed awfully close to $40,000 per token.

Today, YFI is swapping for $32,000 per token and the Yearn Finance team launched the anticipated vault service on Wednesday. The Yearn vault system allows users to yield farm very high yields from a number of defi applications used.

Essentially ETH collateral is used to mint the stablecoin DAI using maker by leveraging a debt position.

Yearn Finance Vault Users Lock $139M: Farmers Claim Collateralized ETH Gathers 90% APY

Then the infrastructure uses the DAI to yield high interest via the Curve.fi pool and a number of decentralized exchanges (dex) like Uniswap. According to a number of Yearn vault users, vault participants are accruing a whopping 89-92% APY on the collateralized ETH. However, some users disagree with the 89% APY estimate and believe the level is more likely between “65-75% APY.”

When millions of dollars worth of ethereum (ETH) was flowing into the vault at an exponential rate, the Maker DAO team decided to change the ETH debt ceiling by 120 million ETH to 540 million ETH. The move allows for an increase of DAI minting in order to help facilitate the Yearn vault system and other vaults.

Yearn Finance Vault Users Lock $139M: Farmers Claim Collateralized ETH Gathers 90% APY

On Thursday, Yearn Finance’s official Twitter account announced that the team has paused the vault deposits.

“Deposits to yETH have been paused,” the team wrote on Twitter. “~70 [million] DAI minted. Withdrawals unaffected. We will allow deposits again in the future. For now, this is a high enough cap to balance between best profits and best risk adjustment.”

Although not everyone…

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