---
title: Yearn Finance
date: '2026-04-14'
draft: false
description: "A Decentralized Finance project which transitioned to user governance via a ‘fair launch’ token distribution."
status: ongoing
tags:
- crypto
- ongoing
- success
external_url: https://yearn.fi/
image: /img/logos/yfi.png
banner: /img/banners/yfi.png
author: "Tara Merk"
---
### Summary

Yearn Finance launched with a "fair launch" in 2020, distributing all governance tokens to users rather than reserving any for founder Andre Cronje. Despite formal decentralization, Cronje's informal influence persisted; when he announced leaving DeFi in 2022, the token price crashed. The case illustrates how founder dependence can outlast formal ownership transitions.

### Motivation and Readiness

Three key factors seem to have driven Yearn’s decision to distribute governance and ownership rights to its community. Firstly, as a decentralized finance project, the goal was always to be credibly decentralized. This required Cronje to cede control. Secondly, the project benefitted from the user influx created through the incentive of its new governance token. And third, YFI launched at a time where launching a governance token simply seemed to be the ‘thing to do’ within the blockchain industry.

It is difficult to make statements about the project’s readiness to transition. Cronje frequently stated that he had built the project for his personal use, that he was ‘testing in production’, that it was likely there would be bugs in the code and that anyone using the application would be doing so at their own risk. As such, the intention was never for the software to be mature or ‘ready’ in any way. Instead, this narrative tried to encourage participation from individuals who were willing to take risks. This culture of ‘living dangerously’ is explicitly heralded in the Yearn Manifesto as something the community embraces.

### Process and Tensions

A core tension throughout YFI’s E2C is that despite its formal independence from Cronje, the founder still retains outsized informal influence. This became clear when Cronje’s [announcement of leaving the DeFi](https://thedefiant.io/news/markets/yearn-cronje-fantom-exit-defi) space in March 2022 sent the YFI token plummeting, despite the maturation of the ecosystem and the fact that Cronje had not worked on the project for over a year. This indicates that in the minds of many, Yearn continued to be connected to its founder. Furthermore, and perhaps unsurprisingly given the culture of ‘living dangerously’, the project has faced numerous [hacks](https://www.web3isgoinggreat.com/?id=yearn-finance-exploit-4) and crises over the past years. Finally, an interesting tension that arose shortly after community members acquired YFI tokens via the fair launch, they voted to halt token distribution, thus making YFI governance tokens a more scarce resource than initially envisioned.

### Results

Through its E2C and evolution since 2020, Yearn has clearly progressed on becoming more decentralized as its community now handles major decisions and Cronje has since decoupled himself from the project and moved onto other projects (remaining in DeFi). Nevertheless, Yearn sees its E2C as an ongoing process. Yearn Finance 3 [whitepaper](https://caladex.io/api/files/papers/Yearn%20Finance%20white%20paper.pdf) describes: “we’ve got a firm goal in mind: become a truly community driven Decentralized Finance platform (DeFi), where our investors can make their voices heard and the Yearn Finance 3 team just provides the foundations and a framework to create a real governance over the token YFI3.” This indicates that Yearn understands its community as being one of investors, thus emphasizing the financial relationship that people have with the project rather than anything else.

In late 2025 the community also adopted a [proposal](https://gov.yearn.fi/t/yip-88-governance-overhaul-dao-restructuring/14553) for another governance overhaul which changed yTeams from being relatively independent, functionally organized squads, to becoming self-contained, revenue earning units. To receive a budget, these units have to justify their needs by showing their revenue on-chain. Maintenance work is kept minimal and constrained to tightly scoped, time-bound projects executed within the ‘DAO Ops Team’. The new yTeams also mandatorily need to adopt a split contract to automatically allocate rewards amongst their contributors.

### Sources

- [The Yearn blue pill](https://yfistory.org/thebluepill)

- [About Andre Cronje](https://coinmarketcap.com/academy/article/who-is-andre-cronje)

- [YFI profile](https://www.gemini.com/cryptopedia/what-is-yearn-finance-yfi-coin-yearnfinance)

- [Yearn Governance 2.0](https://gov.yearn.fi/t/yip-61-governance-2-0/10460)

- [YFI Governance overhaul proposal passed in 2025](https://gov.yearn.fi/t/yip-88-governance-overhaul-dao-restructuring/14553)

- [Yearn Finance 3 whitepaper](https://caladex.io/api/files/papers/Yearn%20Finance%20white%20paper.pdf)

- [Token-Centric Work Practices in Fluid Organizations: The Cases of Yearn and MakerDAO](https://www.researchgate.net/profile/Nina-Schirrmacher/publication/356490357_Token-Centric_Work_Practices_in_Fluid_Organizations_The_Cases_of_Yearn_and_MakerDAO/links/619da071d7d1af224b2010ec/Token-Centric-Work-Practices-in-Fluid-Organizations-The-Cases-of-Yearn-and-MakerDAO.pdf)
