Behind the Crazy Collaboration: YFI Founder’s DeFi Universe

Since announcing the upcoming launch of Yearn Vaults v2, Yearn.Finance has announced collaborations with 10 projects including Hegic, Alpha, Pickle, Cream, PowerPool, Cover, Bounce, Akropolis, Sushiswap and Chainlink to improve capital efficiency, share development resources and jointly build a DeFi ecosystem.

Among the 10 projects participating in the collaborative cooperation, some are aimed at on-chain options trading, some are good at centralized governance, and some involve auctions and oracles. AC has "cooperated" on almost all concepts in the DeFi field.

So can Yearn further promote the development of the Yearn ecosystem through collaboration with these projects? Below we will analyze these 10 projects to analyze Yearn's layout and planning in the future DeFi field.

"On-chain options trading platform Hegic"

On November 10, Andre posted a message saying that Yearn was collaborating with Hegic (although Hegic founder Molly recently tweeted that the two parties had not officially cooperated).

Hegic is an Ethereum on-chain options protocol. Its unique feature is that the seller is a large liquidity pool (LP), and users directly "bet" against the liquidity pool. However, Hegic's on-chain options have some limitations: 1. It is not tokenized, it is not an ERC20 token, and cannot be bought, sold or transferred; 2. Hegic uses implied volatility for option pricing. Scientists can buy options before IV fluctuates violently, causing sellers (liquidity providers) to suffer losses; 3. The code was hacked twice after it was open sourced; 4. It only supports LP pools of WBTC and ETH, etc.

Andre implemented his own logic of free option trading on Hegic's underlying on-chain option technology - "mapped" to ERC721 NFT, options can be freely transferred, bought and sold as NFTs, and support all Uni trading pairs. The option pricing model was changed from the previous Black Scholes to Realizing Smiles, using actual volatility pricing.

Yearn Vaults v2 will adopt Hegic option strategies, using option hedging to reduce the uncompensated losses of liquidity providers and improve their capital efficiency.

"DeFi liquidity mining and lending agreement Alpha Homora"

Alpha is a project focused on building a cross-chain DeFi product ecosystem. Its Alpha Homora supports liquidity mining using leverage, and has loss minimization and gas preservation functions, transaction optimization functions, and automatic reinvestment functions.

On November 24, Andre initiated and passed a proposal to migrate KP3R's Uniswap liquidity (about 9,500 ETH, more than 11 million US dollars) to Alpha Homora's proposal to increase the return on funds.

In addition, Alpha Homora v2 is about to be launched. Its main features of LP and income tokenization (ERC1155) are similar to Andre’s upcoming Deriswap - option tokenization (ERC721).

"DeFi Aggregation Yield Protocol Pickle.Finance"

On November 24, Andre stated in the article that Pickle will be brought into the Yearn ecosystem, including the merger of TVL, strategy, security expertise and talents. From the perspective of job functions, Pickle core developers will focus on strategy, and Yearn will provide additional security, peer review, auditing and discussion. Not long ago, Pickle was hacked and lost nearly $20 million in Dai.

If Yearn is a machine gun pool based on Curve, then Pickle is a machine gun pool based on Uniswap . Andre introduced the concept of Reward Gauge (similar to Curve's Gauge) and launched the DILL (vePickle) governance token. The shares in the Yearn Vaults v2 machine gun pool can be put into the Pickle Gauge to obtain more DILL, and holding DILL can also increase the yield of the Vaults v2 shares in the Gauge.

"DeFi lending protocol Cream.Finance"

On November 26, Yearn and Cream developers announced that they would collaborate to launch Cream v2, focusing primarily on lending and leveraged products.

Specifically, Cream v2 allows users to increase their yields through leverage, among which Yearn's Vaults strategy can use its share tokens as collateral for Cream and obtain leverage services. Cream v2 will also be the launchpad for StableCredit (StableCredit is one of Yearn's core projects, which aims to create a single protocol for decentralized lending, AMM, and stablecoins ). The synergies between the two development teams include promoting inter-protocol reserve services and enabling other protocols such as Aave, Compound, dYdX, Synthetix, and Alpha Homora to obtain more capital without limiting their resources.

"DeFi centralized governance protocol Power Pool "

On November 27, Power Pool officially announced that it will integrate PowerIndex with the Yearn governance system by building a two-party market. PowerIndex is a decentralized DeFi index similar to an ETF, consisting of 8 different governance tokens (GT), Yearn being one of them. This means that the YFI tokens in the index contract will participate in voting on Yearn proposals based on the decisions of CVP token holders.

On December 7, the Yearn ecosystem token index YETI proposal was officially launched , including YFI, SUSHI, CREAM, AKRO, COVER, KP3R, CVP and PICKLE.

"DeFi Insurance Protocol Cover Protocol"

Cover's predecessor (SAFE) was an insurance-related mining protocol, while Cover is a protocol that allows users to mint, redeem and purchase insurance to guard against smart contract risks. It allows anyone to purchase insurance for anything.

On November 28, just 10 days after the official launch of Cover, the two parties officially announced their collaboration. The merger with Cover allows Yearn to secure its own ecosystem , allowing Yearn's insurance vault to gain more protection from yield to hedging risks, without any upfront user costs.

Andre said in his medium article that Yearn needs simple, manageable, low-Gas-fee insurance coverage, and Cover is an insurance method that uses permanent money market insurance. Not only that, he also has his own expectations for Cover v2: 1. Perpetual insurance; 2. Use first and pay later insurance; 3. No restrictions on collateral (Agnostic collateral).

"DeFi auction protocol Bounce.Finance"

On November 30, the DeFi auction tool Bounce announced the integration of yGift.to, the NFT grant platform launched by Yearn, and stated that the Bounce market for yGift.to will soon be open to users. In addition, YFI will also be added as an auction trading pair. Previously, Yearn launched the NFT grant platform yGift.to, allowing users to send customized NFT collections to friends, and also attach cryptocurrencies as gifts, such as YFI, yUSD, etc.

"Polkado DeFi front-end financial service agreement Akropolis"

Akropolis aims to build a blockchain-based financial services platform. On November 30, the two parties announced their collaboration. Yearn will continue to develop DeFi protocols such as lending, while Akropolis will become its front-of-house institutional service provider and develop customized investment strategies, including: Yearn and Akropolis will merge development resources, connect Akropolis to Yearn, Pickle and Cream protocols, and Yearn will also connect to new investment strategies and business development expert systems developed by Akropolis.

「 DeFi AMM protocol Sushiswap 」

On December 1, Yearn announced a partnership with Sushiswap. Sushi will focus on expanding its AMM ecosystem and, together with Yearn, will focus on expanding its strategy. While Yearn's strategy requires more professional and customized AMM experience, Sushi is beginning to push the boundaries of yield and currency markets. The Sushi team will also contribute strategies to protocols such as Yearn, Keep3r, Cream, and Cover. In addition, Sushiswap will work with Yearn to launch the decentralized derivatives exchange Deriswap .

Andre called Yearn's cooperation with Sushiswap " more aggressive synergy ". At the same time as Andre announced the cooperation with Sushi, Hayden Adams, the founder of Uniswap, sent a tweet saying "urgently recruiting senior front-end engineers". Did the sudden cooperation make the boss of DEX panic? The long-delayed Uniswap v3 may be put on the agenda again.

「 DeFi Oracle Protocol Chainlink 」

On December 2, Andre announced that he would use the oracle project Chainlink to expand the Keep3r network, which means that Keep3r nodes (external people and or teams that perform work, i.e. Keepers) will be able to upgrade to Chainlink nodes to improve security . After that, Chainlink nodes will also be able to start running more and more Keeper work, eventually forming a network that achieves high security performance through Keeper, reliability through Chainlink, and resistance to Sybil attacks.

At present, Yearn’s collaborative partners are becoming more and more important, and the content and complexity of the cooperation are becoming increasingly higher, including the official announcement of integrating the Keep3r network into Sushiswap and Chainlink.

Andre once said that Keep3r is an independent project that is not directly affiliated with Yearn, but will contribute to Yearn and the entire DeFi ecosystem. If Yearn is a yield aggregator, then Keep3r will be a development talent aggregator.

In addition, three products running on the Keep3r network will also be released in the future: 1. Metawallet : a meta-wallet that requires no or only a small amount of gas fee; 2. Unihedge : an oracle price feeding system composed of two modules, Uniquote and Uniswap v2 Oracle; 3. Deriswap (the name is composed of the two words Derivative-Swap): a decentralized trading platform that integrates currency trading, futures, options and lending. It is also the most anticipated product by the public, designed to improve capital efficiency and hedge against uncompensated losses.

So we have to think that from the moment Keep3r was released, the "Snake" plan with Keep3r as the core component began. The ultimate form at present is to build a complete DeFi ecosystem.

Image source: The DeFi Stack from Multicoin

It is worth mentioning that, except for Chainlink, AC’s collaborative projects are basically second-tier DeFi fork projects. Since Yearn.Finance ignited the concept of DeFi, various protocols have begun to fork in turn, and the products lack innovation and are becoming increasingly homogeneous. Andre aggregates and optimizes these second-tier fork projects, builds his own unique ecosystem, and maintains a healthy competitive relationship with other leading DeFi protocols, which may provide more space for more innovative projects in the stock market.

However, while Yearn continues to expand its DeFi ecosystem, some community users have expressed concerns about the decentralization of DeFi, accusing Yearn of not informing users and not voting before announcing the merger. Looking at the details of Yearn’s public collaboration, it actually does not involve any updates to the Yearn protocol, and is limited to collaboration at the developer level. In fact, there is no need for community voting governance.

As Andre said: I’m not actually sure yet whether these are mergers, acquisitions, partnerships or collaborations. The simple answer is: a little bit of each, teams merge, align and leverage each other, vision is aligned and success is shared by all team members .

The picture shows the Yearn Vaults v2 interface in dark mode

On December 6, the contract of Yearn Vaults v2 has been officially deployed. The rapidly expanding Yearn ecological universe is bound to accelerate the improvement of capital utilization efficiency and the innovation, professionalism and security of DeFi protocols. So, taking advantage of the bull market opportunity, will the fire of DeFi be reignited?