This is a comprehensive guide on what is yCRV and how you can buy yCRV or acquire yCRV directly from Curve Finance. yCRV is used in a number of other DeFi protocols, including the popular yearn finance or YFI and some emerging DeFi protocols like Cream Finance. This post will help you understand yCRV and why it is used in so many DeFi applications, and finally how you can get some yCRV yourself.
Before we go further, it is important to note that yCRV is different from CRV. CRV is the native governance token for Curve Finance. However, yCRV as we’ll see is a liquidity provider or LP token. This post is about what yCRV is, and not CRV.
Understanding yTokens: What are yDAI, yUSDC, yUSDT, and yTUSD
Before we understand yCRV, we need to look into what yTokens broadly are. For example, what is yDAI or yUSDC? DAI is an algorithmic stablecoin from Maker (MKR) and USDC is a dollar-backed stablecoin from companies like Coinbase. These stablecoins have a corresponding “yToken” i.e. yDAI and yUSDC.
Simply put, yTokens are yield-enhanced (or yield-maximized) stablecoins. What this means is the yToken version of a stablecoin actually pays you interest! And not just any interest – it pays you the most interest in the safest possible way. Let’s dig further.
There are several DeFi lending protocols out there, such as Compound. (COMP) and Aave (LEND). If you deposit stablecoins into these protocols, you get some interest on your deposit – currently anywhere from 2% to 15% depending on the protocol, stablecoin, and market demand.
The lending protocols function similar to a bank in that they take deposits from depositors and lend them out to borrowers who want to borrow your stablecoins. You as a lender are protected because the loans are overcollateralized i.e. the borrowers are putting in assets more than they borrow.
yTokens are essentially wrappers around these base stablecoins, so they increase in value over time. For example, yDAI is currently around 1.05 DAI and goes up in value each day. The holder of yDAI doesn’t need to do anything or interact with the lending protocols at all – all that is abstracted from the end user.
The best part about yTokens is that it is not tied to a single lending protocol but instead will move your money around the best possible lending protocol maximizing your returns. This is what makes them “yield enhanced”.
In an ideal world, all DeFi protocols would simply interact with the yTokens instead of the native stablecoins since they accrue value over time.
What is Curve Finance
Curve finance is an automated market maker (AMM) specially for stablecoins. The way it is designed is that unlike a regular AMM like Uniswap, the slippage is very low around the stable price point and higher elsewhere. Assuming the stablecoins don’t deviate too much from their $1 price, Curve offers by far the best trading price. This makes curve very attractive for stablecoins and it has trading volume of billions of dollars a month currently.
Curve finance uses the wrapped versions of stablecoins since they are yield accruing. Therefore whenever your deposit DAI or USDC into the “Y pool” in Curve, it automatically converts it into yDAI or yUSDC. If you hold them for the long-term, you can earn 10-15% on your money simply by holding the yToken version of the stablecoin.
What is yCRV
Curve finance has a y Pool that trades yTokens against each other. The liquidity provider, or LP tokens of this y Pool is called yCRV.
When you hold yCRV, you get returns in three distinct ways:
- By using yTokens, you get enhanced yield as explained above. This can by anywhere from 2-20% a year in the current market.
- By providing liquidity to the pool, you earn fees (fee on Curve is currently 0.04%, split among the LPs). This is currently anywhere from 2-5% per year on an average.
- CRV, the governance token of Curve, is also distributed to the LPs on Curve, which currently provides a yield of anywhere from 80-200% a year on average.
As you can see, yCRV is an attractive token to hold.
How to get yCRV
There are a few days in which you can get yCRV. They are described below.
Method-1: Directly from Curve Finance
Go to Curve Finance and enter the y Pool, then click Deposit. Here is the direct link. Now supply any of the following assets: DAI, USDC, USDT, or TUSD.
Curve will automatically convert this into the LP token by buying the rest of the tokens at the current price on Curve. After you have approved the final transaction, your wallet will have yCRV.
If you don’t have the assets above, the easiest way would be to buy USDC from Coinbase and withdraw them to your Web3 Ethereum wallet like MetaMask. Alternately, you can trade your crypto for DAI or USDC on 1inch, which aggregates the best price for you via all Decentralized Exchanges (DEXes) on Ethereum.
The downside of this method is that gas for this transaction can be very expensive.
Method-2: Buy yCRV from the Market
You can also buy yCRV directly from the Decentralized Exchange ecosystem on Ethereum. To find the best prices, go to 1inch and check their execution. You can also start from a non-ETH token, so if you have say LINK, YFI, LEND, SNX, MKR, etc. and want to buy yCRV with that, 1inch will take care of the best conversion for you. You don’t need to check all exchanges like Uniswap, Mooniswap, Balancer, Dodo, etc. manually anymore.
If you prefer Uniswap, this is the pair on Uniswap to buy yCRV with ETH. Note that Uniswap calls this pair by its “full name” i.e. Curve.fi yDAI+yUSDC+yUSDT+yTUSD. Now you know why yCRV was adopted!