Defi Lego connects as Yearn Finance announces five mergers in a week

Yearn Finance is a decentralized platform that helps users optimize yields on their crypto holdings through the use of DeFi lending services such as Aave, Compound, Dydx, and Fulcrum.

On December 1st, Yearn.Finance announced that it would explore a merger with decentralized finance protocol SushiSwap. SushiSwap is an Ethereum (ETH) token swapping platform and Uniswap fork that functions with an Automated Market Maker (AMM) liquidity model.

The deal is one of five synergistic integrations that the Yearn.Finance platform has announced in the last two weeks. Yearn and the merged projects will now be able to consolidate their development resources, combine the Total Value of assets Locked (TVL) on their platforms, add to their treasuries, and introduce new human resources to their governance process.

Defi Pulse reports that the total value of Ethereum assets locked in the Yearn.Finance protocol currently sits at USD451.9 million. SushiSwap will be the largest DeFi platform Yearn has merged with to date. The exchange protocol is currently listed as having a total value of USD847.6 million in locked assets. The deal will go through if it is approved by the communities of the two respective money market governance platforms.

As part of the deal, SushiSwap will help Yearn launch Deriswap, a protocol that will combine swaps, options, and loans with a focus on capital efficiency, and help with the development of another stealth project that is yet to be announced. Other synergies that will arise from the merger include the creation of new SUSHI token Yearn vaults and the implementation of on-chain limit orders, stop loss, and take profits for SushiSwap liquidity providers.

The other mergers announced by Yearn, each of which will include new products and integrations, are:

• November 25th: Horizontal integration with fellow yield maximizer pickle.finance Yearn and Pickle Finance, two protocols that offer similar yield maximization investment vehicles for DeFi users, announced a deal to “reduce duplicate work, increase specialization and to leverage shared experiences.” As part of the deal, Pickle Jars & Yearn’s v2 Vaults, the respective yield optimizer products offered by the two protocols, will merge and a new token called DILL will be launched. DILL tokens are earned when Pickle is vote locked. Holders of DILL can participate in Pickle governance and earn boosted rewards from Yearn vaults. Yearn will also help Pickle introduce a gauge system for the native PICKLE token system. The gauges will measure how much liquidity users provide to Pickle jars. Based on the gauges, PICKLE token inflation will go to users who provide liquidity.
• November 26th: Vertical integration with lending and leverage platform Cream Yearn and Cream developers will team up to launch Cream v2. It will enable users to earn yield and be a launchpad for future Yearn and Cream collaborative lending products. Yearn vault strategies will also get access to leverage through Cream and Yearn Vault shares will act as collateral for lending in the Cream protocol.
• November 28th: Vertical integration with decentralized insurance provider Cover Protocol The blog post announcing the merger says the partnership will allow Yearn to focus on its best-in-class vaults, while Cover becomes the backstop coverage provider for the Yearn product suite, and for DeFi as a whole. Cover will provide a wider range of coverage and accept more types of collateral. Yearn gets coverage for vaults and can offer users a reduced risk product. The Yearn team will also help to launch Cover1.1. As part of this new release Cover will be launching services like perpetual coverage, a model that allows coverage seekers to have continuous protection, without expiration. This is different from the current model that offers insurance solutions with fixed expiry and requires active management.
• December 1st: Vertical integration with Akropolis, a platform for building community-led decentralized savings and lending pools The blog post says the merger will allow Akropolis to become the institutional front-of-house service provider for Yearn’s best-in-class vault and Lending protocol solutions. The deal will see a new pivoted version of Akropolis launched. Akropolis vaults will merge with Yearn v2 vaults and be eligible to earn Pickle through the new Pickle gauge models and have access to leverage through the Cream lending protocol. It will launch a new institutional service targeted app that combines the Yearn & Akropolis product suite and will integrate with Cream v2.

The aggressive approach taken by Yearn to connect with smaller DeFi enterprises in the space appears to be a win-win. Smaller teams connecting with the project get access to its community, liquidity, and developer insights while Yearn gets exclusive access to the tools and capabilities of the smaller projects. It can use these to improve its own suite of products.

The smaller projects will maintain their own native tokens, products, and governance regimes following the mergers. These teams also have the option to plug into the larger Yearn network of Defi protocols and accrue new value from its suite of capabilities. DeFi token investors can use these governance tokens to invest in the aspect of the wider Yearn network they see value in. If an investor thinks the Yearn vault model has too many moving parts or is too risky, they can simply invest in SUSHI and capture the AMM slice that plugs into the wider Yearn network.

Incredibly these partnerships between money market protocols handling millions of US dollars worth of locked assets have taken place with no money changing hands and no drawn-out legal processes. The deals flip the traditional investment bank M&A deals on their head and are helping to establish the Yearn.finance native token YFI as the go-to DeFi-blue chip or as a DeFi index proxy token. Since November 26th the price of YFI has spiked significantly jumping by 65% from USD18,805 to its current price of ~USD31,127.