Yearn Finance Struggles to Find its Footing as Rates Rise

Yearn Finance is being left behind.

Even as other DeFi heavyweights such as Aave, MakerDAO, and Uniswap are outperforming Ether, the pioneering yield aggregator is losing support and value. 

This week, as Yearn celebrated its two-year anniversary, the project has fallen out of the public eye as total value locked (TVL) has dropped even in ETH terms by 51% year-to-date, according to DeFi Llama. 

Crypto Prices

USD-denominated TVL has dropped by 86% in the same time span as depressed crypto prices contribute to the fall. 

Yearn’s YFI token hasn’t fared much better as it has underperformed the top five assets in the DeFi Pulse Index as well as BTC and ETH year-to-date, according to The Defiant’s newly released terminal. 

Yearn Finance has always been an outlier. Launched in 2020 by founder Andre Cronje, it was the first type of protocol designed to maximize profits for investors by automatically shuffling assets across other protocols. 

By plugging into other projects, Yearn advanced the idea of DeFi legos and the ability of a team to permissionlessly build a protocol on top of other ones’ smart contracts to create value. 

But it’s a different world now — interest rates are rising, while the eye-popping annual percentage yields (APYs) in crypto have dissolved. 

“Yields across DeFi have collapsed this year while yields in TradFi have risen significantly,” Ryan Watkins, the co-founder of the crypto hedge fund Pangea Fund…