yfi

YFI is the native governance token of Yearn Finance, a decentralized finance (DeFi) protocol on the Ethereum blockchain that aggregates yield strategies and optimizes investments across various DeFi platforms. The token is an ERC-20 asset primarily used for on-chain governance within the Yearn ecosystem rather than as a traditional payment or collateral token.

Origin and supply: Yearn Finance launched YFI in 2020 with no pre-mine and no reserved treasury for founders or developers. The total supply is capped by the token contract and distributed through community participation in the protocol’s governance processes. This design emphasizes decentralization and community control over the protocol’s future.

Governance: YFI holders participate in on-chain governance by voting on proposals that affect the protocol’s direction, such as upgrades, treasury decisions, and parameter changes. Governance decisions are typically made on a token-weighted basis, and holders may delegate voting power to representatives if desired. Proposals are discussed and implemented through an iterative governance process within the Yearn ecosystem.

Economics and usage: YFI is not intended as a conventional investment or currency; its primary role is to empower holders to govern the Yearn Finance protocol. It is widely traded on various trading venues, and its price tends to reflect broader DeFi sentiment, expectations for Yearn’s product roadmap, and perceived protocol value. As a decentralized asset, YFI’s supply is fixed, and future issuance is not part of the design.

Overall, YFI functions as a community-driven governance token that aligns holder incentives with the development and management of Yearn Finance’s DeFi strategies.