At an event in 2012, the founder of Amazon (Amazon shares - ticker: AMZN) Jeff Bezos showed up on stage with his CTO Werner Vogels, explaining how his company is not built around change, but around what will never change. That is consumers, who want low prices, fast delivery and a large selection. If consumers will always care about price, speed and choice, what will be the equivalents in DeFi? Maybe: low fees, high returns and a large selection of risk profiles? This structure makes Yearn's recent moves easier to understand.
What is Yearn?
Yearn is a decentralized finance portal, a single user interface where anyone can put their assets and earn returns; this is commonly known as yield farming. To this end, it operates according to certain principles. The first and most important principle of all: the return is realized in the invested asset. This means that if a user enters DAI and Yearn decides to invest that DAI on Compound (for example), earning COMP, the user will not receive COMP; the yield will be realized in DAI.
The integrations
Each of Yearn's DeFi “mergers” fills a specific niche on its march towards Amazon status. Pickle Finance also started by focusing on stablecoins, but with the aim of helping to keep stablecoins stable. Over time, he has placed more emphasis on what he calls "jars," which work much like Yearn's vaults. So ultimately, this acquisition will make Yearn a portal with multiple strategies for returns. Pickle should be fully integrated when Yearn V2 is available.
So, more yield.
Users love Yearn because it creates easy access to very advanced strategies for earning returns through its vaults. There is a problem, though: there is no vault for every token on Ethereum. Yearn constantly needs to exchange earned tokens for each deposit's native tokens. With an AMM under the control of the developers, they should be able to reduce the number of transactions required, lowering their commission costs.
Hence, lower commissions.
SushiSwap will also help Yearn build Deriswap, a platform that will put an AMM in the same tool that allows users to compensate for the temporary loss. With an in-house AMM already in place, Yearn could start with a user base and capital. Deriswap will also enable risk management, which helps explain why Yearn partnered with Hegic, a platform built to make options easier. Options are many things, but essentially they allow advanced investors to hedge their bets (i.e. manage their own risk).
Hence, more risk profiles.
Furthermore, on the risk profile front, the acquisition of Cover by Yearn allows users to hedge the risk of failure of the smart contract and the Hegic partnership allows users participating in Yearn's debt markets to protect themselves from making the wrong "long" bet.
When viewed through an Amazon-like framework, these moves all start to make more sense.
