As we are preparing to launch the liquidity pools on Yearner Finance, here's a development update plus our take on some of the recent events in DeFi.
Many of you have asked what's taking us so long to launch the pools. The main reason is that we're going to have quite a few liquidity pools, and for each of them there's a lot of testing to do. We literally have to go through every line of code several times. After what happened to Percent Finance a few weeks ago, we've become even more convinced that DeFi requires very meticulous bug testing.
By the way, we're also in talks with a professional blockchain security agency for a full-scale audit of our contracts – hopefully it's coming in January 2021. Ideally, we'd like to do the audit before the launch, but by this point we're 99% sure that the code is secure – an official audit report would be just an extra proof for the community.
Anyhow, a lot has happened in DeFi in these couple of weeks. The biggest news is obviously Bitcoin at above $22,500, but since it also pushed the price of ether to $650, the total value locked in DeFi protocols jumped above $10 billion. We're very happy about this, of course, because that means a lot of new users will soon flow to DeFi – and Yearner Finance will be there to serve them. We couldn't have chosen a better moment for launch!
Of course, there's also an element of risk to the BTC and ETH rally. If the price continues to go up, many investors might choose to take their funds out of DeFi protocols and buy Bitcoin or ether instead. But we believe that only larger holders will do this, as withdrawing money from a protocol with the current gas fees is impractical for a small investor.
Another interesting thing that happened and that affects Yearner Finance (though indirectly) is the $85m liquidation on Compound that affected 120 users. Something happened on Coinbase to push the price of DAI to $1.30 – most probably it was someone very consciously exploiting a vulnerability and targeting Compound, because Coinbase is the only price oracle used for DAI by this DeFi protocol. In any case, when the price jumped, there was a wave of liquidations as people's collateral wasn't enough to cover their now-expensive loans in DAI. The victims later submitted an improvement proposal that would compensate them, but the rest of DAI holders voted against it.
Why does it matter to Yearner Finance? Because it shows that even the biggest DeFi protocols are vulnerable and that you have to diversify your funds. You shouldn't just put everything you have in Compound, or Aave, or any other platform. Yearner Finance will do the diversification for you: our algorithm redistributes funds across several protocols to maximize the returns. Even if there's a problem on one platform, your losses will be minimal.
Finally, we have to talk about the Graph mainnet launch. It's not exactly a DeFi project, though it can be used for DeFi. Graph queries blockchain network for data, so, for example, you can build an API that returns the value locked on different platforms. We at Yearner Finance love the idea and are already looking how to implement Graph into our interface. For example, we'd like our users to be able to see how much of the funds deposited in Yearner Finance are allocated to different protocols, what percentage they constitute there, what the current APY is for each, and so on. This would help us show that our allocation algorithm really ensures the highest possible rewards.
But before we can work on our own subgraph on Graph, we should launch the liquidity pools, so we'd better get back to work. Remember that you can still join our amazing bounty program and earn 5 ETH! You'll find all the details on https://yearner.finance/.
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