Yearn Finance Releases Permissionless Vault Factory

Factory Vaults To Include Preset Strategies and Reduced Fees

As DeFi winter grinds on, Yearn Finance, one of the space’s most venerable protocols and a pioneer of yield aggregation with $363M in total value locked, continues to push forward with its roadmap.

The latest release from the protocol is called the Permissionless Vault Factory, which will enable anyone to create a vault, which is, in essence, a place to deposit a crypto asset to accrue yield through various investment strategies. 

Initially, users will only be able to make vaults for liquidity provider (LP) tokens of Curve Finance, which represent deposits in the automated market maker (AMM). 

The factory vaults will come equipped with preset strategies from the Yearn team. The strategies leverage Yearn’s pile of veCRV tokens, which give the protocol a boost on yields, essentially allowing increased yields for any liquidity provider on Curve. 

“The Factory is a step into the direction of more automation, where Yearn vaults would be fully automated,” Dark Ghosty, a pseudonymous contributor at Yearn, told The Defiant. 

The Factory launched on Jan. 9, and 20 vaults have been deployed already. 

Autocompounded Yields

“Our [vaults] compound the yield into the base deposit token, so individuals don’t have to sell their farmed tokens manually; they can sit back, relax and enjoy the best risk-adjusted yield in DeFi,” Dark Ghosty added. 

Yearn is in the process of moving towards its third iteration, called V3, which aims to become more robust by reducing its dependence on established contributors to maintain the vaults and strategies at the core of the protocol.

Instead, products like Factory will be launched with an eye toward making vault development a “permissionless profitable task,” according to a post on V3. In theory, this should make Yearn more decentralized – able to exist without the internal controls typical of a traditional company. 

“The Vault Factory is a massive step forward in automation which has enabled us to significantly reduce our cost of operations,” claims Yearn’s documentation on the product. 

Reduced Fees

In this vein, the product also nixes the 2% management fees on vaults. “Smart contracts don’t send kids to private school,” quips a video Yearn put out in a nod to cutting out middlemen, which crypto is supposed to enable. 

Performance fees on Factory-made vaults will also be reduced from 20% to 10%.

Yearn’s YFI token has trailed behind major digital assets over the last three months — it’s down 25% in that span, while Bitcoin is down 11%, and smart contact platform assets like ETH and BNB have eked out minor gains.

ETH Price + YFI Price + BNB Price + BTC Price, Source: The Defiant Terminal

Factory’s launch doesn’t mean Yearn is going to quit its bread and butter vault business, Dark Ghosty said. “This doesn’t mean that Yearn won’t keep adding and contributors coming up with strategies that produce great risk-adjusted yield for the user.”