Yearn Finance’s newly launched yield-farming using Treasury assets is generating “significant amounts” of revenue, according to the Q1 report.
The team reported USD 6.16m in total revenue, USD 12.48m net loss, and USD 4.8m adjusted EBITDA (Earnings before Interest, Taxes and Amortization). March saw USD 3.1m (nearly the same amount as the five months in the fiscal year 2020). These results were not audited by professional accounting firms.
In early 2020, the YFI token governing this protocol was released. yVaults soon became Yearn’s core business. This allows users to deposit capital into smart contract and “specialized yield farming specialists” known as Strategists, to earn yield for depositors.
Vaults allow you to store tokens in order to make money. Vaults enable users to keep a token and increase their value. Yearn Finance lends stablecoins to secure their deposits. Users can make income by depositing tokens into vaults. Liquidity providers get a token that represents their participation in this pool.
According to the report, “yVault revenue was key driver of adjusted EBITDA. However, we expect Treasury yield-farming will contribute an increasing amount revenue in the future.”
Although yVault revenue was the main driver of Q1 adjusted EBITDA, Yearn began yield-farming with Treasury assets in February. This is “generating significant amounts […] and earning approximately USD 500,000 each month.
Cash flows from Treasury yield farming are expected to continue. However, based on the March 31 run-rate data, Yearn yield-farming was estimated to earn USD 5.55m annually.
Version 2 of yVaults, which were launched in March, are expected to drive “meaningful revenue growth” in the future. Q1-2021 revenue data annualized indicated approximately [USD] 21.9m in revenue from yVaults,” the report stated.
Other financial drivers include noncash expenses (contributor vesteding) as well as non-recurring items like airdrops, donations and capital gains/losses. The yYFI vault also saw a significant increase in revenue for March, as depositors were encouraged and encouraged to move to the v2 vault.
Yearn’s Total Value Locked exceeded USD 2bn during Q1, and USD 3bn by April 15.
It has USD 195m of assets, primarily YFI. Additionally, it owes USD 25m to two decentralized finance ( DeFi) protocols.
Ryan Watkins is a Yearn Governance Forum participant and an analyst at Messari, a crypto research firm. The dashboard shows Yearn Finance’s vault revenues in real time. Yearn Finance’s April revenues annuallyized put Yearn Finance at over USD 50m. If treasury farming activity are added, Yearn Finance’s revenue would be more than USD 60m.
“All organic. Watkins commented that Yearn is the second-highest-earning DeFi protocol after MakerDAO (MKR).