Two suffocating streets from Bitcoin Miami’s gated entrance, I managed to locate a primary contributor for one of the largest projects in decentralized finance (DeFi). Flanked on all sides by clueless Bitcoiners, Yearn Finance vault security pseudonym “Doggy B” chatted with Cointelegraph about the future of the performance vault protocol: anoles running through our feet so oblivious to the leak. alpha like the maxi chatting about Tony. Hawk and Floyd Mayweather.
Describing without doxxing is a delicate exercise, but here it goes: think of the late Che Guevara’s beard, Unibomber sunglasses, and his outfit that gives off a pragmatically bland, “undercover FBI agent” vibe, a contrast to his pleasant demeanor and nice.
In the 25 minutes it took to walk through the door, Doggy smashed protocol expansion, new products, and Yearn’s unique moat of brainpower, all of which point to steady growth for a project that has been going full blast lately. .
New chains, new products
As with many DeFi protocols, Layer 2 has been a focus of attention for Yearn’s developers and vault strategists.
“A lot of the strategists have been playing with sidechains, redeploying vaults on sidechains,” Doggy told Cointelegraph. “The vault would still be in ETH, but it would get liquidity through a bridge from the side chain.”
The only remaining barrier is that the bridges between chains can often be “unstable,” as Doggy put it, taking hours or even days to process, making merchants and developers anxious. In the end, think that the accumulated solutions is where the space will migrate to a large extent.
“I see it as a practice for more ‘intense’ layers two like Optimism and ZK-sync. Hopefully that’s where Ethereum is heading for the long term. ”
He also shared that strategies are being worked on using decentralized exchange liquidity stock positions, a long-awaited product fraught with complications.
“We have been working for a while to try to make DEX strategies work, because you have to deal with impermanent losses,” he said.
The difficulty with these positions lies in limiting the downside, especially in times of market volatility. Option derivatives for hedging positions was a strategy that was tested initially, but decentralized option platforms are largely illiquid and price makes it an impractical solution.
The current working model uses liquidity from two vaults, for example ETH and WBTC, and combines them to create a DEX group position as part of the underlying vault strategies, he said.
Regardless of the exact method, finding a viable DEX strategy is a priority given that it is one of the few sectors Yearn has yet to explore.
“Obviously, it is an order of magnitude more complex, but DEXs are the only vertical where there are billions of dollars that we have not yet tapped.”
Growth and tokens
In addition to expanding the functionality of the vaults, Yearn joins many other teams to explore new verticals and products. While the market continues to rebound from a 50% reduction across the board, DeFi protocols are shipping at an alarming rate, with Sushiswap, 1-inch, and Aave expanding to new chains and protocols.
However, it remains an open question as to how best to expand projects from a global economic point of view. Synthetix, for example, is planning four new protocols that will feature their own new token.
Doggy said Yearn’s team is more conservative with the money printer.
“The idea of a token is a conceptual focal point: you can join it. There’s something to be said if it makes sense to have it, you can do it, we just haven’t found many things that makes sense to have one besides printing more money. “
He pointed to Keep3r as an example where the project required a new token, and teased that the team could mint one for Yearn’s next insurance offering, although the decision is still being discussed internally and Doggy’s feeling is that they won’t, after all. , a new product could also generate value for the YFI token.
“There is something to be said in favor of Aave, where its token is an insurance endorsement for the money market. That could drive the use of YFI, generate value for YFI, without just printing new tokens. […] Andre has done a few things and we are waiting for him to be ready for production. ”
Following the dissolution of a merger with the Cover insurance / coverage protocol, Yearn needed an insurance solution, along with the rest of the market. Although users frequently request more coverage solutions, few products have managed to get off the ground. The largest is Nexus with 500 million in TVL, although they may soon grow through the dissolution of their legal entity and the need for KYC charges.
Doggy declined to give an estimate on the launch timeframe for Yearn’s insurance product.
“It could be in a few months, it could be tomorrow,” he joked.
The protocol is growing rapidly, with March being an exceptional month, as the vaults generated $ 4.88 million in revenue. Similarly, according to DefiLlama’s vault, TVL appears to be entering parabolic growth, eclipsing $ 4.3 billion and placing the protocol in the top 10 by size.
However, the metric Doggy pointed to was hiring. Currently, the team has 35 people in the midst of a series of new additions, and more “every day.”
He noted that raw human talent is especially important for a protocol that sees a new fork almost monthly; in fact, it’s what will keep them competitive in the long run.
“The code is free, the brains are not.”