Yearn Finance is a DeFi protocol launched just before the DeFi boom of the previous bull cycle in July 2020.
With 192 liquidity pools and an average APY of 9.27%, Yearn Finance represents one of DeFi’s top yield aggregators, enabling individuals, DAOs and other protocols to deposit digital assets and receive returns.
YFI is Yearn’s ecosystem token, that holders use to earn yield and vote on proposals.
Risks of Yearn Finance
Yearn has suffered two attacks in the past.
It first experienced a security breach on 5th February 2021 – earning it the unenviable title as the first DeFi attack of 2021 – when attackers exploited a flash loan price oracle attack, resulting in losses of ~$11 million.
Two years later, on 13th April 2023, Yearn Finance fell victim to another exploit, this time losing $11.54 million through a flash loan misconfiguration vulnerability.
In addition to these attacks, the protocol lost $1.4 million from its treasury in 2023 after a flawed script executed an erroneous trade, though user funds remained unaffected. The incident occurred during routine treasury operations when a defective multisig script mistakenly converted 3.8 million lp-yCRVv2 tokens into just 779,958 yvDAI tokens—representing 63% of Yearn’s position in that asset. Preventative measures planned included separating protocol-owned liquidity into dedicated manager contracts, implementing clearer output messages on trading scripts, and enforcing stricter price impact limits to prevent similar incidents.
However, Yearn Finance is an active protocol – and none of the exploits (or fat fingers) dealt serious blows to it – with updates on their website, social media accounts and voting proposals demonstrating this.
Cronje’s Departure: Regulatory Pressure Behind Yearn’s Exit
Yearn’s creator, André Cronje, abruptly departed from Yearn Finance in 2022, sending shockwaves through the community. Cronje creator lifted the veil on the regulatory pressures that ultimately drove him away from the project that had become one of DeFi’s most successful platforms.
From the protocol’s launch in January 2020, Cronje had taken deliberate steps to avoid potential securities law violations. He refrained from fundraising, token sales, or direct profit-taking, whilst maintaining open-source code throughout. “To ensure I stay on the right side of regulatory requirements, I did not raise money, I did not sell tokens, I did not do anything that could be considered a violation of any country’s securities laws,” he explained.
However, this cautious approach couldn’t shield him from the Securities and Exchange Commission’s attention. In 2021, the first of several letters arrived, demanding detailed information about YFI’s investors and beneficiaries. The data gathering process proved herculean, requiring weeks of work to reconstruct information that had never been formally recorded—a reflection of DeFi’s informal, decentralised nature.
Cronje expressed particular frustration at being targeted despite being neither a US citizen nor resident, and not selling to American customers. Under Gary Gensler’s leadership, the SEC’s focus shifted from examining the protocol’s growth to attacking its yield vaults as ‘investment vehicles’.
The mounting legal complexity, combined with the immense responsibility of maintaining such an influential protocol, ultimately proved overwhelming. Co-founder Anton Nell departed alongside Cronje, highlighting the magnitude of pressures facing DeFi pioneers. Their joint exit marked a watershed moment, demonstrating how regulatory uncertainty can drive even successful projects’ founders to abandon their creations.
Cronje is also the founder of keep3r.network and Home | Flying Tulip.
Is Yearn Finance Undervalued?
In crypto, it can be difficult to identify what is undervalued as there are less fundamentals to identify.
However, this is less true in DeFi. We can ascertain a rough value by looking at the market cap and total value locked (the MC/TVL ratio). Anything below 1.0 is considered undervalued.
In Yearn.Finance’s case, the MC/TVL ratio is a measly 0.27. This is as of 16th September 2025 – according to DefiLlama – with a fully diluted market cap of $198 million and a total value locked of $731 million. What is also notable about the funds locked into the protocol is that they are split relatively evenly between Ether and Katana.
Price action of YFI shows a sideways channel that tends to peak around the 1.0 ratio.
YFI’s ALT in May 2021 was $93,435. Currently, the token trades at just $5,412, a -94.2% drawdown. Although it remains to be seen whether
The Speculatour’s Disclosure: Not financial advice. No guidance is provided for any particular investor, asset prices can fall as well as rise. The Speculatour is not a licensed securities dealer, broker, investment bank or advisor.
Speculatour 