Yearn Finance introduced the Ethereum vaults feature and now allows users to stake their ETH holdings and to earn yields via the new product so let’s find out more in today’s ethereum news.
Yearn Finance introduced a new product that allows people to stake their ETH holdings to earn higher yields via its new product yETH. The vault went live on Monday after the community vote and the platform expects to attract a large amount of ETH tokens with many observing that the migration will leave the ETH market with a supply-side liquidity shock. They are already counting on the bullish response for the ETH traders based on supply-demand economics. Alex Saunders believes that the ETH token demand will go high in the upcoming days saying that this is a bullish event:
“Anyone who owns ETH can earn the best yield automatically by HODLing yETH. It could also mean other protocols find it harder to compete with Ethereum when offering staking rewards.”
It's quite clear there's a supply-side liquidity crisis forming here. yETH and Phase 0 will compound this. pic.twitter.com/2qlQwRLjMu
— 0xNick (@0xEther) August 28, 2020
Yearn Finance is a protocol that finds the best available yields on the tokens that a user holds. It requires users to deposit their coins into the system and they will return a native cryptocurrency, in Ethereum’s case yETH. As traders that want to put their holdings into use, they can automatically remove a portion of ETH supply on the market while the rising demand for the ETH cryptocurrency and its application across payments will push the prices higher:
“ETH vaults typically draw in the most liquidity. YFI has been a monster liquidity vacuum without them, imagine the addition… This will accelerate things far beyond current TVL.”
Another trader commented:
“The sheer amount of ETH is going to get locked up in [Yearn Finance] yETH vault. I feel [it] will be astronomical – not only bullish for $yfi but the juggernaut $eth itself. I’m long both and I’m f***** excited.”
The Yearn finance didn’t leave a sudden impact on the ETH/USD markets as the pair was trading 0.43 percent lower at $426. One chart watcher even noted that the traders could start moving their BTC capital into the Ethereum market after the launch. In the meantime, Michael van de Poppe said that ETH/USD will remain bullish as long as the pair holds above $370. So far, ETH surged by 226% in 2020 after the latest FED million dollar injection into the US economy. The second-biggest cryptocurrency is eyeing a break above $450 or as some believe, $50.
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