LIKE Shiba Inu and Bonfire, Yearn Finance is the latest cryptocurrency to hit the market.
It's recent arrival comes as a flurry of new coins have boomed in value recently, battling to become the next Bitcoin success story.
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But be warned: buying cryptocurrencies is a very risky business.
Investing is not a guaranteed way to make money – so make sure you know the risks and can afford to lose money.
Cryptocurrencies are highly volatile, so while your cash can go up, it can just as easily go down in the blink of an eye.
As always, you shouldn’t invest in something you don’t understand.
We explain what Yearn Finance is, and why the price is going up.
What is Yearn Finance?
Yearn Finance is a cryptocurrency, and its coins are referred to as YFIs.
It’s also a decentralised currency – which is a very complex notion, but essentially aims to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
It was launched in February 2020 according to CoinMarketCap, and was founded by Andre Cronje.
There is reportedly a fixed supply of YFI tokens.
Around 30,000 coins are in circulation.
Why is Yearn Finance’s value going up?
At the time of writing, Yearn Finance is worth around $75,175 – a record breaking high.
It has rocketed in value since the start of the year, up by over 220% since the start of January this year when it stood at $22,809.
It’s up around 5% over the past 24 hours.
It’s not clear why Yearn Finance has reached a new record today, while rival coins such as Ethereum, Dogecoin and Bitcoin have dropped.
But as cryptocurrencies can surge one day, they can also fall dramatically another – so it’s possible that Yearn Finance could just as easily tumble too.
Is Yearn Finance risky?
Investing in ANY cryptocurrency is very risky.
It’s essentially gambling and there are no guarantees that you will see what you pay in go up in value.
It's a speculative investment, with limited track records and no underlying value.
There is also no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market.
Plus, investing in newer cryptocurrencies rather than Bitcoin, for example, is even riskier and makes you more open to scams and many experts advise against them.
As crypto investing is not regulated in the UK you don't have the same protection as you do with investing.
For example, you can't claim to an ombudsman if something goes wrong. Fees and charges may also be higher.
Many crypto coins are built on pyramid scheme-style marketing strategies, which means that they can suddenly collapse in value.
Cryptocurrency specialist trader and author Lisa Edwards said the main risks are for DIY investors, looking to cash in on the cryptocurrency hype.
“That is essentially like going to a casino and putting everything on red on the roulette wheel,” she said.
Meanwhile, Asktraders.com lead analyst Nigel Frith has urged Brits to be cautious when investing.
“As with all things crypto investors should be aware of the risks,” he said. “Bad news and changes in market behaviour can trigger huge crashes.”
What is EOS and why is the price going up? We explain.
Brits are being warned they risk losing all of their money if they invest in bitcoin and other cryptocurrencies.
It comes after a ban on some crypto-related investment products.
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