Yield Aggregator Protocols: Surveying the Top Projects for DeFi Farmers

You put your money in, and the protocol you put it in automatically (and permissionlessly, with no trusted intermediaries) gets to work in fetching you attractive returns via that investment.

This is the promise of Ethereum’s rising “yield aggregator” projects. You deposit your tokens into these dApps, and thereafter they proceed to put these assets to use throughout decentralized finance to generate you the best profits possible according to specific DeFi strategies.

In today’s post, then, let’s survey the top 10 yield aggregator projects atop Ethereum so we can get a better feel for how this rising scene is working in the here and now.

Harvest Finance

• Harvest Finance is currently the largest yield aggregator in DeFi and the 9th largest dApp in general with its total value locked (TVL) at $659.7 million presently.
• The protocol offers a straightforward way for yield farmers to generate profits by depositing tokens like Dai, USDC, and beyond.
• When users deposit funds in Harvest Finance they receive fAssets (e.g. fDai or fUSDC) that can be redeemed later for yield farming revenues.
• Last month, Harvest Finance was the victim of a flash loan attack that saw the protocol drained of ~$30 million worth of crypto. The project’s made a bit of a comeback since then, but the incident is certainly still fresh.

Yearn

• Yearn is arguably DeFi’s most darling yield aggregator at the moment; while its $419 million TVL is smaller than Harvest Finance’s right now, the Yearn project has organically developed a community whose passion and collaborations are almost totally unparalleled in DeFi. To this end, community and talent are Yearn’s X factors.
• Yearn uses specialized strategies via “Vaults” that give users various ways to approach generating DeFi yields. The project is notably on the cusp of releasing its optimized V2 Vaults system, where yield generation will be improved and streamlined.

Value DeFi

• Yield aggregator project Value DeFi is currently the 31st largest dApp with a TVL of 48.5 million.
• Formerly known as YFV.Finance, the rebranded Value DeFi is another Vault-based project wherein users deposit funds that are thereafter put to work by the Value DeFi team in optimized earning strategies.
• Another upstart and thus vulnerable protocol, Value DeFi was also blitzed by a flash loan attack earlier this month. The attacker made off with $6 million in funds. The yield aggregator project has since turned to decentralized oracle project Chainlink to better insulate itself from such attacks in the future.

APY.Finance

• APY.Finance is a yield aggregator project that bills itself as a DeFi “robo-advisor.”
• In Sept. 2020, the team behind the protocol raised $3.6 million in funds from investors like Alameda Research, Arrington XRP Capital, Coingecko, and more.
• APY.Finance focuses on providing its users excellent risk-adjusted returns. To this end, the project makes yield farming passive and incentivized, since the APY.Finance team has been incentivizing its users with an APY liquidity mining campaign.
• The project proved popular fast: within its first hour of being active, more than $67 million worth of liquidity flowed in.

Alpha Homora

• Alpha Homora is a novel yield aggregator project that lets you farm in DeFi using leverage.
• The 2nd product released by the Alpha Finance Labs team, Alpha Homora is focused on letting traders farm throughout DeFi via leveraged positions (up to 3x leverage, in fact!).
• The Alpha Homora ecosystem is diverse and entails stakeholders like yield farmers, bounty hunters, liquidators, and ETH lenders.
• The project’s ETH lenders lend to the project in exchange for interest-bearing ibETH tokens, which can fetch up to 10% APY depending on borrowing conditions.
• The native token of Alpha Homoroa is ALPHA, which is used as a yield token for the protocol.

Idle Finance

• Idle Finance is a yield aggregator project that seeks to “maximize profits and minimize risk with Idle [i.e. passive] strategies” that are performed on “autopilot.”
• This week, Idle Finance raised $1.2 million in a seed funding round that saw investments from groups like The LAO, BlockRock Capital, and more.
• “Idle Finance is a solution that combines the attention to security typical of the traditional financial world with the return seek of the DeFi world but with a careful and unique risk management strategy […] We are excited to support them in their growth path to become a decentralized asset management company that combines diversification with layering a set of yield-generating capital allocation strategies” – longtime Ethereum stakeholder Ryan Zurrer. 

Pickle Finance

• Pickle Finance is a yield aggregator project centered around “Pickle Jars,” or special crypto vaults.
• The project has centered around providing users with a friendly (albeit experimental) yield farming experience.
• Unfortunately, this week the protocol was the victim of an extremely sophisticated DeFi attack that saw $20 million Dai drained from the project. The attacker apparently used a series of vulnerabilities to exploit the project.
• The incident comes on the heels of Pickle Finance having become a premier yield farming venue atop Ethereum in recent weeks.

Robo-Advisor for Yield (RAY)

• Created by the Staked team, the Robo-Advisor for Yield (RAY) is a yield aggregator project that aims to help users easily gain DeFi profits.
• Specifically, RAY is a “set of smart contracts” on Ethereum that “automatically allocate crypto assets to the highest yielding opportunities.”
• RAY leverages other major Ethereum “money lego” DeFi projects like bZx, Compound, and dYdX to generate its yields.  RAY also offers support for the DAI Savings Rate (DSR), which MakerDAO offers through its Multi-Collateral Dai (MCD) system.
• The project is notable for prioritizing security as one of its premier features.

dForce

• dForce is a yield aggregator protocol that “advocates for building an integrated and interoperable open finance and monetary protocol matrix.”
• Whereas the previously mentioned dApps have significant footprints across the Western Hemisphere, dForce is a project that has considerable traction in the East, e.g. China and other Asian economic powerhouses.
• dForce is currently the 18th largest DeFi dApp with its present TVL being $68.5 million. That’s pretty impressive for a protocol that’s mainly popular in just Asia.
• The project launched a liquidity mining campaign around its DF token back in August, a move that significantly helped boost liquidity in the protocol.

Rari Capital

• Rari Capital is a DeFi project that’s focused on compounding wealth for its users.
• Another Robo-Advisor protocol, Rari Capital offers users conservative and aggressive DeFi earning opportunities, so traders can tailor strategies to their own personal taste.
• The governance token of Rari Capital is RGT, which can be used by holders to steer development issues around the project.
• The protocol launched three pools through which users can farm RGT: the Rari ETH Pool, the Rari Stable Pool, and the Rari Yield Pool. RGT rewards are distributed on a pro-rata basis depending on how much liquidity users lend to the protocol.

Conclusion

Yield aggregator projects are some of the most interesting efforts around DeFi right now, because they take the best about DeFi (novel profit opportunities) and they simplify and automate the underlying processes.

That’s why it’s a safe bet to assume that yield aggregator projects are only going to grow in clout from here on out: they provide a service that many folks want.

Yet we’ve also seen yield aggregator projects increasingly targeted by hackers because they’re becoming more and more promising. They’re mostly experimental for now, but these projects stand to gain considerable traction if they can provide even more secure experiences going forward.