Inside iearn.finance: a DeFi Aggregator for Optimized Yield Opportunities

The Ethereum ecosystem is experiencing rapid growth, and a non-trivial portion of that blooming is being driven by a surge of interest around its decentralized finance, or DeFi, apps.

Indeed, it’s precisely the permissionless programmability and composability that Ethereum’s DeFi sector affords that makes the pace of innovation the space is currently seeing possible.

This dynamic is where the Ethereum community’s “money legos” meme comes from: projects big, medium, and small are increasingly able to interconnect in a variety of ways to provide new kinds of apps to users.

iearn.finance is one of those smaller apps in the DeFi arena, but it’s an interesting project, and its creation and maintenance is emblematic of the open, can-do atmosphere of the DeFi user.

What Is iearn?

Perhaps the simplest description of iearn has been offered by ConsenSys Product Lead Jordan Lyall, who has previously and aptly described the platform as “an aggregator of interest-earning DeFi opportunities.”

With that said, iearn makes DeFi simplified insofar as it’s a free, non-custodial, and open-sourced tool that aims to help users maximize yields. Inspired by DeFi Zap, the platform lets its users automatically leverage lending and liquidity provider rates through multiple DeFi providers simultaneously, e.g. Uniswap, Compound, Fulcrum, Aave, dYdX, and DDEX.

Who Was It Made By?

iearn was created by Andre Cronje, who daylights as the chief crypto code reviewer at industry publication CryptoBriefing.

“I was spending half of my day watching lending provider rates and liquidity pools,
constantly moving around funds to maximize yield,” Cronje has remarked of his motivations.

After taking a look at some of the idiosyncratic limitations of other DeFi management services, Cronje decided to take a crack at making his own automated money lego system. The result was iearn, which Cronje has constructed to tap into the best DeFi offerings at any given time, as the developer has explained in the project’s documentation:

iearn.finance is a set of protocols with simplicity in mind. You provide the asset you wish to earn on, swap it for it’s representative token (ETH to iETH), and the underlying ETH will be invested based on the current most optimal strategy. This engine is not a rates aggregator that then puts your ETH into Fulcrum, because it has the highest rate. Instead it analyzes strategies across different spheres. It takes into consideration pool liquidity in Uniswap, and if there might be a better strategy for fees since this is a hedged position. It will look for swap opportunities between multiple exchanges for the least amount of slippage.”

Moreover, as iearn has been open sourced, Cronje has encouraged and even demonstrated how others can uses the system’s underlying infrastructure to create new, similarly devised platforms.

The Y Token

In order to make the collection of interest a straightforward affair, iearn makes use of its own wrapped “Y” tokens, e.g. yDAI and yUSDC, that are used to automatically track and dispense interest from the DeFi activities that happen under iearn’s hood.

This dynamic is good for the user experience factor: to start taking advantage of iearn’s Dai yield possibilities, you only need to purchase your desired amount of yDai.

One limitation to this design is a certain level of inflexibility, as Cronje has explained in the past:

“There is a problem with using iearn.finance though, [which is that] with iearn.finance you are part of a shared pool of liquidity. This means smaller investments can’t take importunity of flash interest moments.”

However, since iearn’s infrastructure is public, users can deploy their own private versions of the platform if they wish to enjoy more flexibility and customization possibilities.

On the User Interface

The user dashboard of iearn brings to mind Uniswap in its simplicity and and tasteful aesthetic design. On the platform’s landing page, users are immediately presented the best reigning earning opportunities, e.g. from Dai, USDC, or USDT activities.

Supported Cryptocurrencies

Right now, iearn supports the following cryptocurrencies: ETH, wBTC, DAI, USDC, USDT, TUSD, USDT, and sUSD.

In the future, Cronje is looking to add further support for MKR, SNX, LINK, KNC, BAT, REP, and ZRX.

Related Projects for Comparison

iearn is in the same ballpark as other DeFi efforts like DeFi Saver, the Topo project, Staked’s Robo-Advisor for Yield (RAY), and Idle Finance.

It’s not that these alternatives aren’t worth using — it’s rather that with iearn, Cronje simply set out to create a platform that would support a wider variety of tokens and interest opportunities.

How Big Is iearn Now?

Right now iearn is still pretty small, but that’s not surprising since it’s relatively new.

Specifically, there appears to be more than $500,000 USD worth of tokens locked up within the iearn platform at press time. If that sum is accurate and if we compare it to the value locked within other DeFi projects, then iearn would presently come in at 19th place on the leaderboard tracker site DeFi Pulse, namely between decentralized predictions platform Augur ($767,000) and digital asset management project Melon ($355,000).

Of course, being in the top 20 DeFi projects wouldn’t be bad for a project whose fledgling traction has only been via word of mouth to date.

No Business or Investors, Just Users

iearn isn’t a for-profit venture for Cronje. “There is no business model,” the developer has explained.

In this sense, the platform is best understood as another DeFi money lego that can be used, built on, or modified by anyone as they please. raccordingly open-sourced the project’s various smart contracts, including the contracts for yDAI and beyond.

Creator Revokes Control

A growing point of discussion around the Ethereum DeFi ecosystem has been around the topic of admin keys, i.e. just how decentralized are projects whose admins can enforce unilateral changes to a platform at will. “DeFi” ventures with problematic admin setups are best understood as custodial platforms, like a centralized crypto exchange.

With that said, there are more than a few DeFi projects that aren’t totally decentralized. Of course, there are various tradeoffs and progressions for any team to consider, but there are foils alive in the wild like Uniswap, whose contracts can’t be controlled by anyone.

As for iearn, Cronje has apparently joined the ranks of projects like Uniswap, as the developer reported in February 2020 that he relinquished the control of iearn platform’s ownership, a move that effectively decentralized the service in perpetuity.

As Cronje further explained in that same Twitter thread:

“[The base contracts] are permanent. New features need new contracts, but I have a built in “swap” protocol to swap from v1 contracts to v2 contracts. Just 1 extra approval in the wallet. New contracts have onlyOwner functions removed by default. No forced upgrades.”

The move should help to generate more confidence around the reliability of the project.

Now on Dune Analytics

Dune Analytics is one of the best new analytics platforms in the Ethereum community. Notably it has a dedicated iearn page, so if you’re interested in tracking iearn going forward, this is a great data portal to bookmark.

Conclusion

iearn is among the latest in a recent flurry of new automation-focused DeFi projects. If these services grow more popular, iearn seems potentially poised to ascend with the rising tide. Since the platform has been opened up to the community in the way that it has, don’t be surprised to see other projects starting to build off of iearn’s infrastructure in the months ahead.

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