Yearn’s LINK yVaults Are Good News for Ethereum, DeFi, & Chainlink

yearn.finance, for “You Earn,” kicked the decentralized finance sector’s yield farming craze into high gear back in June when it rolled out new automated yield strategies around rising DeFi governance tokens like COMP, CRV, and BAL.

Suffice to say, these strategies have proven to be a big hit among more than a few Ethereum users, and Yearn’s since evolved and gained popularity at an astonishing rate. One of the project’s first big evolutions-on-the-fly was the introduction of YFI, Yearn’s own governance token.

Through YFI, the fledgling Yearn community has been able to collaborate with the platform’s wiz builder, Andre Cronje, to advance and optimize the project in new directions.

The community passed its first YFI governance proposal late last month. Fast forward two weeks and 32 proposals later, and Yearn’s stakeholders just passed “YIP-33: Add LINK to yVaults.” This tie-up brings two of DeFi’s most exciting projects, Yearn and Chainlink, together in a mutualistic way. It’s an exciting meld, and here’s why.

Yearn LINKS Us Up

Yearn just introduced a new “delegated vault” system. Simply put, and using the example of the system’s first supported token, LINK, the vault’s yield process works like this:

  • Provide liquidity in the form of LINK
  • Use that LINK liquidity as collateral via depositing into the Aave protocol
  • Borrow stablecoins, e.g. USDC
  • Deposit said USDC (etc.) into yVault to generate APY returns
  • USDC profits sold for LINK, LINK accordingly grows in vault 

And the best part? All those steps above are automated by Yearn, which makes the process vastly easier and faster than doing it manually. That’s the power of composability among Ethereum’s decentralized applications.

As such, one of the reasons the new LINK yVault solution is so interesting is because it shows 1) what a young Yearn can already do in the here and now, and 2) the kinds of promising solutions Yearn will be putting out in the future. It’s a good time to be a yield…

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