beginner guide how to use yearn finance to earn crypto interest defi yield farming tutorial

How to use Yearn.Finance to earn crypto interest: a guide for newbies

Following this beginner’s guide, you’ll be able to semi-confidently make your first Yearn.Finance transaction and start using crypto to earn some really high interest rates. This fancy term for this is yield farming.

Here’s a super brief version of the steps I took to use Yearn. Read on to see these steps in detail with screenshots to guide you.

The tl;dr guide to make a Yearn.Finance transaction

  1. Buy USDC and ETH on a crypto exchange like Coinbase. I’ll explain why later.
  2. Transfer your crypto to a crypto wallet like Metamask
  3. Navigate to Yearn.finance/vaults
  4. Under assets, select “USDC v2.” If there’s a newer version by the time you read this, use that. It should display the interest rate next to it.
  5. Connect your wallet (Metamask, Coinbase) to Yearn.Finance. Check that USDC shows up in the “Available to deposit” column.
  6. Click “Deposit USDC” and approve the transaction from your crypto wallet.
  7. Wait nervously…until your USDC transaction shows up in the “Deposited” column.

There you go! You *should* be able to withdraw crypto that you’ve deposited any time.

Got all that? Okay good luck.

Kidding. Now time for a proper intro.


You’ve heard all about newfangled DeFi tools like Yearn.Finance that can generate mouth-watering yields on crypto. But you’re afraid to dip in because the process looks byzantine at best, and unsafe at worst. I mean, how are you supposed to make sense screens like this?

Let’s back up a minute. Why play with fire in the first place?

Goal
Earn crypto interest using Yearn.Finance, an automated money maker (“AMM”) that automatically matches your crypto to the highest interest yields

Reality
One of the most confusing transactions I’ve had to make in crypto. Thank you shitcoin ICOs of 2017 for preparing me.

The result? I have now have some USDC stablecoin is sitting in a Yearn vault that yields ~14% APR as of this writing. I’ll show you how to do the same in this guide. Here’s the desired end state:

Consider me your financial guinea pig who figured out how to make a simple transaction on Yearn.Finance without my brain exploding.

Some caveats before we dive in

  • None of this is intended as investment advice. Crypto and DeFi are risky and you can lose your funds.
  • This post assumes you already understand crypto basics and want to use Yearn.Finance to earn interest. Listen to this podcast with the founder who explains Yearn.Finance at a high level.
  • Conceptually, USDC was the easiest transaction for me to get started with. Deposit stablecoin, get stablecoin back. I still haven’t wrapped my head around more complicated looking opportunities like “yveCRV – ETH.”
  • The crypto & DeFi world changes quickly. For better or worse, the screenshots and process outlined here may get outdated. Hopefully that’s for the better as the UX of this process improves.

In depth walkthrough of a Yearn.Finance transaction

Step 1: Get your crypto and set up a crypto wallet

For the sake of this illustration, just buy USDC stablecoin and ETH from Coinbase if you don’t have them already. Using USDC means you don’t need to worry about price fluctuations and the 1:1 ratio with the dollar helps avoid costly mental math mistakes. (There’s a big difference between 0.1 ETH and 0.01 ETH.)

I recommend buying USDC with Coinbase because they often give users instant fund availability. Your mileage may vary depending on your account history with Coinbase.

You’ll also want to pick up some Ethereum (ETH) to cover any gas fees in the transaction.

Since I haven’t done this type of transaction in a while, I forgot that I needed ETH to cover gas fees from this transaction. I incorrectly thought that using my USDC balance (send 500 USDC, use up 5 USDC for the transaction) would suffice. It didn’t, and the screen kept hanging like this.

So make sure you have some ETH. It’s the gateway currency to the DeFi world.

Step 2: Set up your crypto wallet and transfer funds

While Yearn.Finance accepts various wallet types, I’ll stick to the most popular: MetaMask. It’s a popular crypto wallet that lets you connect to thousands of decentralized apps (“dApps”) just like Yearn.

The set up instructions are easy to follow once you install the Metamask browser extension or mobile app. If you already use the Coinbase wallet, use that.

Step 2a: Transfer funds to your crypto wallet

Skip this if you use the Coinbase Wallet, since that should already connect to your crypto funds inside Coinbase. The rest of this post will use Metamask examples.

Open Metamask, select “Add tokens,” and add USDC and Ethereum to your Metamask account. You’ll need to do this to generate wallet addresses for those cryptocurrencies so that you can transact with them using Metamask.

Copy those addresses and set them as the destination when sending from Coinbase (or wherever your crypto sits).

Before this step is over, you’ll want to make sure your ETH and USDC have fully transferred to Metamask.

coinbase to metamask wallet

Step 3. Connect wallet to Yearn.Finance

Finally, we visit Yearn, where humble DeFi farming dreams come true. Yes, Yearn.Finance is the actual URL to type into the browser because crypto is hipster.

Skip the barebones homepage and go straight to https://yearn.finance/vaults. The vaults page shows a long list list of interest-yielding opportunities. Each of these either require the underlying crypto asset to deposit. In this example, we’ll use USDC. But you can deposit YFI to earn interest on YFI, SNX to earn SNX and so on.

Advanced note: If you want something fancy like crvLINK, then you’ll need to get the LINK token, deposit it into another automated market maker called Curve.fi. That deposit will give you crvLINK in return, and then you can deposit that into Yearn to earn interest. Yeah, it’s as confusing AF. That’s why I’m sticking to USDC for this example.

Now, here’s where your setup effort comes into play. Connect your wallet to Yearn.Finance.

Scroll to USDC and you should see the “Available to deposit” amount from your Metamask has appeared.

Now, put in the amount of USDC and smash that approve button.

Your wallet / MetaMask will pop up with a confirmation dialog:

Click confirm and profit wait!

Step 4. Twiddle thumbs. You may have some more stuff to do.

The wait is weird. You expect things to happen automatically, but it needs to be piped through the Ethereum network. This should get faster and cheaper once Ethereum moves to proof-of-stake.

Yearn.Finance UI showed that my transaction has started. It hung in there for about 7 nerve-wracking minutes.

Impatient and curious, I pulled up Metamask. It showed the transaction as pending, but my funds haven’t left my wallet and landed in Yearn.Finance yet.

Apparently, you can press “Speed up” and choose different gas fees (more ETH) to speed up the transaction. I’m not familiar with doing this and just waited.

Hurrah! The deed was done. My USDC is now parked in Yearn.Finance.

yearn-finance-usdc-interest-rate-yield-farming

I hope this experiment yields results by having Yearn.Finance do what it’s supposed to do as an automated market maker—find and earn the best rates.

Epilogue: transaction costs and chasing higher returns

If you had to go through the setup steps with Metamask and buying USDC, then the process can seem extra intimidating. It sure was for me, and that’s why I wrote this guide.

The transaction also has a cost.

  • Buying USDC on Coinbase: No fee. (Coinbase is co-creator of USDC. Paired with the instant fund eligibility, this is why I rely exclusively on Coinbase for USDC purchases).
  • Sending USDC from Coinbase to Metamask: 3.351474 USDC
  • Sending USDC from Metamask to Yearn: $6.73 USDC

That’s a total of of $10.08 to move $500 USDC for an expense ratio of ~2%, which eats into the ~14% APY I was seeking. However, these fees get proportionally smaller the more crypto you move at once. Meaning it would’ve cost me about the same to move $5000 worth of USDC.

The day after I made my first USDC transaction, I thought fuck it, why not try a higher yielding option?

I scrolled around to a high interest bearing asset that didn’t seem complicated, and landed on SNX, the token for the Synthetix protocol that’s currently yielding 67% on Yearn.

Good news: SNX is readily available for purchase on Coinbase. If I’m lucky enough, that 10 SNX will become 15 or more SNX in one year if rates hold up.

I hope my guide has given you the confidence to dip your feet in Yearn. I also hope that the length of this post has impressed upon you that it’s still early days in the Decentralized Finance world, and there are risks involved. Don’t invest more than you can afford to lose.


Further reading

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