Top Competitors of Y.Financial: Game of Long-Run

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Y Financial launched its testnet in October 2020. The entry of the platform in the world of DeFi, especially in the domain of fully automated yield farming, has garnered much attention from investors and developers alike. YFIN is the index token of Y Financial.

YFIN works as an aggregated trading gateway into four highly anticipated crypto tokens, known as Core4. Investing in Y.Finacial’s index enables the user with an automating yielding opportunity among any of the four Core4 tokens, namely YFI, YFII, UNI, and SUSHI. It reduces the scope of single token volatility and removes the need of swapping multiple times. Resultantly, investors save a significant amount on their gas fees, anywhere between 10% and 25%.

Y Financial’s index token holders also have robust opportunities to voice their opinion. Each YFIN index token holder is eligible for YDOT governance tokens at a 1:1 ratio. Moreover, every ninth day on the platform is a ‘harvest powered’ governance day, when the platform offers zero fees on transactions between Y Financial members on the platform. YDOT holders voting with the majority are additionally eligible for rewards being airdropped to them.

The staking platform of Y Financial makes it easy for people uninitiated in crypto-staking. All they need to do is hold the token on the platform. It eliminates the time-consuming and oftentimes disengaging process of having to approve the token, stake them, unstake them, etc. The major players in the field of yield aggregation are burdened with a complicated process of staking. Y Financial is a platform that frees users of that hassle. Let’s have a look at these other players in further detail.

yEarn Finance is one of the biggest names in the DeFi yield aggregation space. This yield aggregation protocol recently launched its yETH strategy for automated ETH yield farming. yEarn leverages several lending pools to carry out its automated yield farming strategy. The most popular pool of yEarn is yearn.finance. Yearn.finance swaps funds between three of the most popular crypto protocols to maximize the return on liquidity. These protocols are Compound, Aave, and dYdX.

Another lending pool of yEarn is known as Curve’s Y Pool. This pool facilitates users to leverage yEarn’s interest-earning yTokens to access four of the top stablecoins in the market: USDC, DAI, TUSD, and USDT.

Investing in yield aggregation platforms’ index tokens generally results in the simultaneous acquisition of the native governance token of the platform. yEarn has also launched a governance token named YFI. YFI can be acquired through liquidity money on several different pools. The user needs to stake his proof of liquidity. YFI is one of the very few DeFi tokens that was not preceded by any premining. There was no DEX offering as well.

Although the users are free to make a withdrawal any time, they need to pay a 0.5% fee at withdrawal. Yearn.Finance generates its revenue through this withdrawal fee and the gas-subsidization fees at 5%. When calculating the potential return from investments at Yearn.Finance, one needs to include this fee as it has to be paid by every user. Even users who withdrew their stake before the minimum time period of six weeks to break even had to pay this fee. This makes YFI withdrawal expensive and a cause of concern for new users.

While YFIN has four of the most highly anticipated tokens as underlying assets, yEarn.finance uses YFI as reward tokens. Users can claim their rewards on the platform by burning the YFI tokens. The amount that is redeemed is equivalent to the share being burned in proportion to the total supply of the token.

Harvest.Finance

Another important contender in the field of yield aggregation is Harvest.finance. Like other competitors in this space, Harvest.finance also entered the market to offer a convenient way to farm yields.

Users can deposit their tokens to Harvest.finance. These tokens may include DAI, USDC, WBTC, and other types of supported assets. The tokens or assets are then put into high yield farming opportunities by the platform. In exchange, the user receives an asset. These assets are called fAssets and may include fDAI, fUSDC, and fWBTC, depending on the type of token the user is putting in. Ownership of these fAssets makes the user automatically eligible to receive a proportional share of revenue as a return.

As an aggregated service provider, Harvest helps investors to save time on DeFi Tracking, save gas costs of regular harvesting, and move funds from one opportunity to another. Harvest.finance handles all these together through its APY tracking, strategy development, and auditing facilities.

The native token of Harvest.finance is FARM. Apart from sharing their part of the profit from the yield farming revenue, the FARM holders are eligible to receive incentives in exchange for providing trading volume in Uniswap. Further, in terms of governance rights, holders of FARM can vote on issues crucial in deciding the direction of the cooperative.

A careful examination of FARM’s contract for its pool shows that the governance of Harvest farm may not allow smart contract staking. The contract says that if it is a smart contract staking, the governance of the pool has the power to not only blacklist the smart contract but also to take all that is being staked.

APY.Finance

Aimed at democratizing yield farming, APY.Finance positions itself as a yield farming Robo- advisor. It keeps on updating the pool to optimize the return.

APY.Finance has a robust risk-management framework. The platform assigns a risk-score to each strategy to produce a composite score that includes smart contract risk, financial risk, and centralization risk. The user’s funds or liquidity is then distributed across different portfolios of farming strategies. This way the platform optimizes itself for risk-adjusted yields.

Like most of its peers in the domain of automated yield-aggregation, APY.Finance is fully community-owned. The users get APY governance tokens and subsequently can propose and vote on any system parameter.

Unlike Y Financial, APY.Finance uses a specific contract for a specific currency. The platform issues its own APT token to represent a user’s stake in the pool. Although there are separate contracts for DAI, USDC, and USDT, they are managed by the APY Manager as a single pool.

With an increase in the volume of the total value locked, or TVL, APY.Finance expects to save increasingly more on gas savings. The platform claims that gas savings may go as high as 99%. When it comes to the savings opportunities, Y Financial users don’t have to pay much fees either. The staking is done through the smart contract and rewards are delivered through airdrops. It optimizes the token acquisition process and mitigates both risk and transaction-related fees. The only fees the users pay is when they withdraw from the platform.

APY.Finance is funded by Alameda Research, Arrington Capital, Cluster Capital, CoinGecko, GenBlock Capital, and TRG Capital.

Summary

The authority to choose appropriate underlying assets by the investor himself, several diversified liquidity pools, and larger proposed savings on gas fees are some of the features that make the leading players of automated yield-aggregation distinct.

However, one has to wait for a reasonable time to see how efficient these diverse portfolios turn out to be or whether a platform can reach so large a volume of TVL that gas fees per user come down to $1 from $100.

Yet, a close examination of aggregated yield farming players show that Y Financial has so far been successful to combine the best features of this world and to deliver them in a user-friendly way. It has reduced volatility and both risk and transaction-related fees. It has given the acquirers of its index tokens a voice in the platform’s governance system. Along with airdropped rewards, the platform also incentivizes its users through Y.Family days where transactions between the members of the platform attract zero fees.

Overall, it’s one of the most effective avenues to get simpler, easier, and cheaper access to the world of yield farming trading in DeFi assets.

Having obtained a diploma in Intercultural Communication, Julia continued her studies taking a Master’s degree in Economics and Management. Becoming captured by innovative technologies, Julia turned passionate about exploring emerging techs believing in their ability to transform all spheres of our life.