Yearn TVL has grown 11 times this year. Analysis of the driving factors of the two growth periods
We all know Year, which is a revenue aggregator running on DeFi’s revenue generation protocols (such as Compound, Aave, Curve, and Convex). Users only need to click a button to passively gain revenue. In Year’s Vaults, strategists are constantly competing to write strategies with the highest rate of return because they can get a 50% return reward. Over time, the agreement has become a leading source of risk minimization benefits.
But, what do we know about Yearn? Since 2021, Yearn’s TVL has increased by 11 times, but where does this increase come from? This is an important question to understand, because in traditional theory, the valuation of token investment is nothing more than the discounted value of future cash flows. And future growth is defined at the edge-so who are Year’s edge depositors?
Anatomy of Yearn
Let’s first break down the multiple products of Year.
- **Vaults: **As the flagship protocol used by most users, vaults account for 67% of Yearn TVL. The user deposits funds in a vault defined by assets, and implements the relevant rate of return strategy to deploy the capital. As the first iteration, the V1 vault was limited to a single strategy, which has since been deprecated. V2 was launched at the beginning of this year to provide more complex revenue aggregation, because the treasury can be supported by multiple revenue strategies.
- **Eran:** In essence, it is similar to a vault, but simpler. It initially focused on stable assets that users can deposit, and assets are transferred between money market agreements, depending on which agreement provides the highest return.
- **Iron Bank (IB): **IB is a money market agreement that focuses on providing services to users and agreements. Users can deposit approved assets as collateral, earn income from borrowers or borrow other assets themselves. Agreement users can be whitelisted to promote under-collateralized borrowing.
- **Special: **This is a general term for non-core businesses, which includes yGov and yvec curve TVL.
From March to May, Yearn TVL grew substantially, adding more than $4 billion in TVL. Of the new TVL, 68% (approximately $2.8 billion) came from the new V2 Vaults. However, since May, the V2 vault has been basically flat, until mid-September, the vault TVL began to climb again, and by mid-October it increased by more than 31%.
Here you can see that the V2 vault has two distinct growth periods. One is the beginning of the year, approximately from March to May, and the other is the recent move beginning in mid-September. As anyone engaged in cryptocurrency can tell you with certainty, these two periods are periods when the prices of ETH and BTC have risen sharply. This begs the question, is this growth due to organic, new deposits, or simply because of potential price appreciation?
Yearn has a different vault for each asset it supports. Seven vaults hold more than US$100 million in deposits, accounting for more than 76% of the TVL of V2 vaults. The assets supported by these vaults include stable coins such as USDC , DAI, USDT, as well as ETH, stabilized ETH, and WBTC. Dividing these vaults into stable assets and volatile assets and focusing on the number of original tokens shows that deposits are growing organically regardless of price.
From March to June, the first stage of V2 growth shows that deposits of stablecoins and volatile assets have increased significantly. Stablecoins have grown nearly five times during this time, adding nearly $1 billion in new TVL. Deposits in ETH and stETH (yvCurve-stETH) increased by nearly three times, and TVL increased by 400,000 USD.
The growth in the second period is significantly different. From mid-September to mid-October, the number of stablecoin tokens in the vault actually declined, while the ETH-denominated vault, especially the new token deposits in the yvCurve-stETH vault, increased sharply. Between September 15th and October 15th, more than $670 million (170,000 ETH) has been added to the stETH vault. Increased 6 times in 30 days.
Breaking down the TVL of V2 vaults (vaults with a TVL of more than 100 million US dollars, accounting for more than 76% of V2 TVL in total), the recent growth trend is obvious. USDC’s TVL has decreased by 9% in the past 90 days. DAI increased slightly by 2%. However, ETH and stETH TVL increased by more than 118% and 109% respectively in the same time period.
Therefore, the basic driving forces for the two growth periods of the Year V2 vault are different. The first phase was severely affected by stablecoin deposits, while the second phase was completely driven by ETH and stETH. However, despite the different sources of growth, these two stages have a characteristic-the sharpness of growth.
Throughout April, stable currency deposits increased almost vertically. Since mid-September, stETH and ETH have been doing the same thing. The same has been true for stETH and ETH since mid-September. With such a concentrated and rapid growth momentum, another question has been raised-is it the influx of a large number of new depositors, or the result of a small number of large depositors?
After understanding the wealth distribution of the V2 vault, according to the number of TVL deposited from a unique address, different groups of depositors are divided into several groups. For example, one depositor is between US$1 and US$100,000, another is between US$100,000 and US$500,000, and then there is a group of US$500,000 to US$1 million, and so on. Doing so reveals a clear relationship between the types of depositors in Yearn’s V2 vault: wealth concentration.
Although there are more than 6,220 active depositors in the top V2 vaults, 76% of the top V2 vaults TVL (approximately US$2 billion) come from 30 addresses with deposits of more than US$10 million. Depositing $10 million from one address is agreement funds.
57% (approximately $1.5 billion) of all TVLs in the first seven V2 Vaults came from the integration of 18 confirmed partner agreements. External agreement partners are directing important TVL to Year’s vault in order to reuse the generated revenue as a design component in their agreement.
Alchemix is Yearn’s largest depositor, contributing nearly $600 million in TVL to the yvDAI and yvWETH vaults. It alone contributed more than 76% of DAI TVL and 44% of yvWETH TVL. The Alchemix agreement accepts collateral deposits, which are basically deposited into Year’s income vault. The yield generated by these collaterals will automatically be used to pay users’ outstanding loan debts in Alchemix.
Sushi’s BentoBox is the second largest contributor to the agreement, depositing more than $583 million in the yvUSDC, yvUSDT, yvWETH, and yvCurve-stETH vaults. BentoBox is an agreement under Sushi, and it serves as a base layer agreement for other agreements. Its main feature is the allocation of idle deposits to income strategies-one of which is Yearn Vaults. BentoBox is the largest depositor in the yvUSDC vault, contributing one-third of yvWETH TVL and nearly half of yvCurve-stETH’s TVL ($674 million).
ETH and stETH deposits are the most noteworthy because they can be largely linked to an Abracadabra protocol built on top of the BentoBox app Kashi. yvWETH and yvSTETH are two of the top three mortgage assets used by Abracadabra to support its stablecoin MIM.
In fact, Abracadabra (via Sushi’s BentoBox) and Alchemix played an important role in the two previously identified growth stages. Alchemix was originally launched in March with its DAI vault, and was primarily responsible for large-scale expansion of DAI on Year during the first phase of growth. Since mid-September, Abracadabra’s TVL has increased by 5 times, which is the driving factor for Yearn’s second phase of growth, which is mainly composed of new deposits of stETH and ETH.
Another connection between these two agreements is their connection to the DeFi 2.0 narrative. In order to understand how Yearn’s influence in the entire ecosystem has grown, it is important to understand the mechanisms that drive this narrative.
In addition to the protocol-controlled value (PCV) function, the protocols usually associated with DeFi 2.0 narratives mainly use Year’s revenue vault tokens (yvTokens) as a design aspect to make existing processes more effective. Abracadabra uses yield assets to back mortgage debt positions. Alchemix uses the Year rate of return from me to repay the loan. Frax uses the Year’s rate of return to provide collateral for its stablecoin. Ribbon uses Yearn yvUSDC as collateral to sell structured options strategies.
Yearn has effectively grown from a revenue aggregator for people to a major revenue partner for other agreements. Yearn found that most of its growth and product market fit are as a revenue-as-a-service agreement (B2B)) rather than an end-user agreement (B2C).
This is not entirely without design. As early as March, before the first growth stage, Year announced the Yearn partnership plan, in which agreement partners who contributed capital to Yearn’s treasury can earn back half of the revenue generated (after the strategist receives 50% of the revenue) ).
The success of the cooperation program is due to Yearn’s positioning in the ecosystem. Yearn can provide a single, reliable integration point for the benefits of other protocols, so that time will not be wasted, and integration risks of management and maintenance strategies themselves will not be introduced. As a capital allocation agreement, it is completely controlled by the user and the agreement. However, Yearn differs in the amount of value it provides to two different aspects, which is reflected in the source of Yearn’s growth figures. For users, Yearn and its benefits are the ultimate goal. For the agreement, revenue is a means to an end, a tool for creating new products, and something that creates additional value and efficiency.
The development of Yearn largely depends on its V3 user interface (UI), multi-chain strategy and the defensibility of its position.
Yearn’s V3 user interface was recently released as a beta version in September and introduced some key changes, focusing on improving user experience, scalability, multi-chain adoption, and B2B integration. So far, Year has been able to defend its position as the dominant revenue aggregator in DeFi. In the past 180 days, without any liquidity incentives, the company has realized the industry-leading 2/20 fee model and created the fourth largest DeFi agreement revenue.
Maintaining its dominant position in Ethereum, while expanding its leading position in the entire ecosystem through potential new sources of revenue, new agreement partners and new competitors, this will be the next problem to be solved by the agreement.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/yearn-tvl-has-grown-11-times-this-year-analysis-of-the-driving-factors-of-the-two-growth-periods/
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