At present, the scale of cryptocurrency asset has reached 350 billion dollars, and asset management of cryptocurrency has long been a rigid demand in the market. Since July, Yearn has set off a market boom in the DeFi space. Yearn is a decentralized income ‘aggregator’, which calculates the income of decentralized lending agreements (Compount, Avae, dYdX, etc.) in the market, helping users invest in these lending agreements to obtain maximum returns. After Yearn launched the governance token YFI, it has gained great popularity in the market. The price of YFI has risen rapidly and now has exceeded the price of Bitcoin. At the same time, it has helped Yearn to lock in approximately 666 million dollars, becoming the focus of DeFi and the entire cryptocurrency market.
Yearn can be regarded as the first asset management agreement in the DeFi field, but it still has the following shortcomings:
1) Single investment strategy
Yearn only invests in decentralized lending protocols, such as Compound, and has no other options. This is related to the current market conditions of DeFi. A single strategy inevitably cannot meet the needs of investors, nor can it satisfy investors with different risk preferences at the same time. Providing personalized investment strategy services for different investors will definitely become the mainstream of the market in the future. A single strategy is itself a risk. A drop in the yield of the lending agreement or loss will hurt Yearn’s users and reduce Yearn’s attractiveness to investors.
2) Single investment product
Since the current decentralized lending agreement is mainly for stable coins, Yearn’s investors can only invest in stable coins, but the market size of stable coins is only 1/40 of the overall cryptocurrency asset, and other cryptocurrencies also have the need in decentralized investment products. It is necessary to innovate in the DeFi field to create safe investment products for a large number of cryptocurrencies.
3) Security
Security is one of the most concerned issues for investors. Security issues in the cryptocurrency market are emerging one after another. In the case of PlusToken in 2019, investors lost 95,228 bitcoins. In the field of DeFi, the artificial factors that cause this result are relatively few, but the management team still own lots of authority. If they do evil, they will also bring huge losses to investors. For example: the authority of Yearn’s investment strategy is controlled by the administrator. If the administrator want, he can steal the assets of all users in the Vault. Therefore, decentralized governance is very important.
