Yield Farming Explosion: Compound & YFI
Code: NT-111
Tags: #defi #yieldfarming #compound
Language: en
Situation Report
Compound launched COMP liquidity mining in June, sparking recursive lending loops that maximized governance token rewards. Andre Cronje’s Yearn vaults and the YFI fair launch in July turned yield strategies into a full-time job for many of us.
Architecture Notes
Smart contracts stacked on one another—DAI borrowed from Compound rotated into Curve pools, then staked in Yearn vaults. Governance tokens granted voting rights over fee switches, directing future emissions and treasury usage.
Operational Impact
Gas costs skyrocketed as users harvested rewards multiple times per day, pushing smaller holders out. Teams rushed audits and introduced timelocks to calm fears about admin-key rug pulls.
Forward Watch
Metrics to watch included TVL concentration in stablecoin pools, governance participation rates, and whether reward schedules could taper without collapsing liquidity.