Decentralized finance (DeFi) aggregator Yearn has had a great month for earnings in April as fees for its version 2 vaults pile up.
Yearn Finance lead developer “banteg” has posted some figures for earnings in April and they have been impressive. The platform has earned $5.44 million in April, which is an increase of 67% month on month. This translates to around $65 million in annualized earnings, the developer added.
He continued to state that the total value locked for the month had grown from $1.77 billion to $3.33 billion, a gain of 87% month-on-month.
That is not to say that March was a slouch for earnings. According to the Q1 earnings report published on GitHub on April 27, it made $3.16 million in March which was almost as much as its operational six months for the previous year.
Yearn Reported Q1, 2021 earnings before interest, taxes, depreciation, and amortization at $4.88 million which is less than it has made in April.
No quick returns for farmers
Yearn derives its revenues from withdrawal fees on v1 vaults and management and performance fees for v2 vaults, which were launched in mid-January. The protocol takes a 0.5% cut when collateral is withdrawn from v1 vaults regardless of whether it’s made a profit or not.
When the fee structure was revamped just after the v2 vault launch, it eliminated the withdrawal fee but added a 2% management fee for v2, and on top of that a performance fee which can be as much as 20% depending on how well the strategy is doing.
Liquidity providers depositing collateral into v2 vaults, such as the yETH pool, will actually lose money after paying the gas fee and management fee, so their balance will be less than what they started with until the earnings start to kick in. Currently, yETH is only yielding 4% so it may be some time before investors can withdraw at a profit, and that’s without considering impermanent losses.
These vaults are clearly intended to encourage longer-term deposits and not the quick bucks that the liquidity farmers have been following.
YFI cools from ATH
Yearn’s native YFI token has taken a 6% hit on the day at the time of writing. CoinGecko was reporting a price of $51,387 for the DeFi token.
YFI is currently pulling back slightly from its all-time high, made just a few hours ago in late trading on May 6, of $57,585.
TVL for the platform was hovering around a record $3.8 billion according to DappRadar.