The Frenzy Behind Yield Aggregators: YFI's 1300x Surge Back in the Day

You might have heard the hot DeFi buzzword "yield aggregator" – it sounds like some high-tech weapon, yet it leaves you utterly confused: What exactly is it? How can it make your crypto assets automatically "sweep" the market like a machine gun, capturing the highest yields without your manual intervention?

Rewind to the DeFi Summer of 2020, a token called YFI started from a mere $32 and skyrocketed to an astonishing peak of $43,000 within just a few months, turning early investors into millionaires overnight. The core mechanism driving this was none other than the "yield aggregator."

The origin of all this can be traced back to a legendary developer dubbed the "Godfather of DeFi" – Andre Cronje (AC). His creation, Yearn Finance, not only propelled its Total Value Locked (TVL) from $8 million to a peak of nearly $4 billion but also reshaped the industry, transforming yield optimization from a high-barrier game into an accessible everyday tool for everyone.

This article will unveil the secrets of "yield aggregators" from an educational perspective.

What is a Yield Aggregator?

From the perspective of DeFi farming, Yearn's yield aggregator is essentially a fully automated, collective "fund manager." Before its advent, DeFi farmers had to manually search for high-yield protocols, stake their assets, frequently harvest rewards, then sell those rewards, and re-invest the principal. This entire process was not only tedious but also incurred high gas fees for every step. Yield aggregators solved this core pain point by pooling funds from thousands of users, creating economies of scale, and thus diluting the cost of individual operations.

The core operation of a yield aggregator revolves around a set of pre-defined, rigorously audited smart contract strategies:

When a user deposits funds (e.g., USDC), the yield aggregator automatically deploys these funds into the optimal farming strategy. For instance, it might provide liquidity in the Curve protocol to earn trading fees and CRV token rewards.

Its most crucial innovation lies in the automated "harvest and compound" mechanism: it regularly sells the harvested reward tokens (like CRV) back into USDC and then re-invests these profits along with the principal back into the strategy.

This automatic compounding process allows funds to snowball, growing much faster than manual operations. Users' returns are ultimately reflected in the net asset value growth of their yield aggregator share tokens (e.g., yvUSDC), achieving "one-click deposit, passive high-yield investment."

The Evolution of Yield Aggregators: Focusing on Yearn

Yearn v1, launched in February 2020 and originally named iearn.finance, was developed by Andre Cronje alone, primarily focusing on stablecoin yield aggregation. It automatically allocated user funds to lending protocols like Compound and Aave via smart contracts, enabling switching to the highest APY and automatic compounding. This version introduced the "yield aggregator" concept, allowing ordinary users to participate in liquidity mining without manually monitoring the market. Its TVL rapidly grew from zero to hundreds of millions of dollars, though strategies were relatively simple and relied on manual maintenance.

Later, Yearn v2 launched in January 2021, marking a significant upgrade for yield aggregators. It introduced multi-strategy vaults, supporting more complex investment paths such as leveraged lending and liquidity provision, while optimizing Gas fees and risk management. Through the "strategist" mechanism, community developers could submit and vote on new strategies, allowing for dynamic market adaptation. The v2 version also pushed TVL to a peak of nearly $4 billion.

Currently, Yearn v3, launched in 2023 and continuously updated in 2025, includes features like "Tokenized Strategies," multi-strategy vaults, the veYFI governance model, and the USDS-1 vault in collaboration with SparkFi, enabling automated allocation to lending protocols and liquid staking. V3 emphasizes sustainability and security, mitigating risks through insurance integration and automated audits. Its current TVL is stable at hundreds of millions of dollars, reflecting the shift of yield aggregators from high-risk speculation to reliable financial tools.

What Else Can Yield Aggregators Do？

Although the yield aggregator model has been around for many years, players no longer have the same enthusiasm for it as they once did. However, this doesn't mean the sector is "dead."

Let's reflect: What is the core of a yield aggregator? Of course, it's the capital allocation mechanism and the source of yield. Leaving aside the fund distribution mechanism for a moment, in the current phase where stablecoins and RWA are gaining popularity, there is certainly great potential for project parties to innovate on the yield source side, and each has its own approach.

Superform: Cross-Chain + All-Yield, a Yield Aggregator within a Yield Aggregator

Superform V2 combines the concept of chain abstraction: extending the yield scope of yield aggregators to high-quality protocols across multiple chains, and reducing user participation barriers through chain abstraction technology.

Additionally, Superform has proposed a SuperUSD stablecoin-driven yield aggregator, aiming to provide users with optimal stablecoin yields while helping stablecoin projects accumulate initial liquidity through SuperVaults built on top-tier protocols, acting as a bridge between project parties and users.

infiniFi: Combining Stablecoins, Re-distribution After Yield Fusion

infiniFi also leverages the power of stablecoins. However, unlike Superform, infiniFi focuses on yield distribution. The protocol issues a collateralized stablecoin, iUSD, and users can earn different yields through liquid staking and illiquid staking. Among these, illiquid staking and some liquid staking assets participate in high-yield strategies related to Pendle. Ultimately, when profits are distributed, the yield for illiquid staking will be higher, while the yield for liquid staking assets will be relatively lower.

HyperBeat: The Ultimate Expression of Yield Diversity

HyperBeat leverages HyperLiquid's deep liquidity and trading volume to maximize yield diversity. Taking the USDT liquidity pool as an example, a single pool executes as many as 20 different strategies, including basis trading for mainstream cryptocurrencies, "deposit-to-earn" farming for various ecosystem protocols, Pendle-based strategies, traditional DEX LP strategies, and more...

Even further, in some pools, the concept of a yield aggregator can be abstractly extended to CeFi: entrusting users' funds to centralized custodians to execute various market-making strategies.

Automated Yield Risks: Complete Hands-Off?

Yield aggregators sound like a "perfect lazy person's investment tool" – once you deposit, it automatically manages your assets. But the reality is, behind the automation, risks don't disappear; they are repackaged and hidden.

First, there's stacking risk. A yield aggregator is itself a layer of smart contracts, which then re-distributes funds to multiple underlying protocols. For users, this means being exposed to two or even multiple layers of risk simultaneously: the aggregator itself might be hacked, or the underlying protocols could experience vulnerabilities or liquidation events. The Yearn DAI Vault attack in 2021 and Harvest's flash loan attack are vivid examples.

Secondly, there's strategy opacity (black box risk). Most users only see the APY but find it difficult to truly understand the underlying strategy details. For instance, a 20% yield displayed by a Vault might come from stablecoin lending, or it could be high-risk leveraged liquidity mining. Once users choose a centralized "black box" strategy for high yields, they essentially give up transparent knowledge of where their funds are going and control over security.

In other words, a yield aggregator does not mean "risk-free passive income." It merely allows you to earn returns with minimal cognitive and operational costs, while the underlying risk exposure is often underestimated.

End

Yield aggregators, starting with AC's Yearn, have evolved through automatic compounding and multi-strategy integration, to new forms like Superform, infiniFi, and HyperBeat. They are no longer just "automated harvesting" tools but on-chain capital allocation infrastructure.

But don't forget, automation doesn't mean no risk; it just repackages risk in a different way.

Disclaimer: This content is for educational purposes only and does not constitute financial advice. DeFi protocols carry significant market and technical risks. Token prices and yields are highly volatile, and participating in DeFi may result in the loss of all invested capital. Always do your own research, understand the legal requirements in your jurisdiction, and evaluate risks carefully before getting involved.