Dear Yearn stakeholders and partners,
Five years ago, Yearn pioneered the idea that yield could be automated and democratized. The promise was simple: let smart contracts work so users don’t have to. That ethos has carried us through bull markets and bear markets, and it shaped everything we did in 2025. This year was neither a triumphal march nor a defeat. It was a year of disciplined execution, new product launches, and difficult lessons that will make us stronger.
Delivering on our mission
We expanded our product family to serve more users while maintaining our core principle of non‑custodial, risk‑managed yield. We incubated Resupply, a decentralized stablecoin protocol that allowed users to borrow reUSD against crvUSD and frxUSD. We launched Yearn’s Curation arm and a suite of Yearn‑curated Morpho vaults on Ethereum, Katana, Arbitrum, and Base. These Morpho vaults lend into different markets with clear risk tiers so depositors can choose between steady blue‑chip yield and higher‑return strategies. And just recently, the yLockers team released yYB, a liquid locker for Yield Basis tokens. Each product is another step toward our vision of “deposit and forget” yield.
This approach gained meaningful traction in the second half of 2025. Yearn Curation grew from zero to approximately $150 million in TVL, driven primarily by organic deposits rather than short‑term incentives. This growth reinforced our conviction that users value explicit risk frameworks, automation, and capital discipline over novelty.
We deepened integrations as well. We were an integral launch partner for Polygon’s new DeFi focused L2, Katana. Yearn provides vault 1-click vault infrastructure for depositors, market curation, and the vault tech that powers their VaultBridge, the core component of the chain’s liquidity flywheel. Over the second half of 2025, Katana vaults grew from zero to approximately $216 million in TVL, reflecting strong product‑market fit and validating our thesis that Yearn’s core value lies in trusted capital allocation rather than standalone product proliferation.
Other notable collaborations include those with Term Labs, bringing professionally curated fixed‑rate lending to DeFi. Term Vaults, built on Yearn V3, automate auction participation, reinvest maturing loans, and rebalance idle funds. We launched tokenized Stability Pool products, built on V3 vaults, for Liquity’s new BOLD stablecoin (yBOLD) and its friendly forks, sUSDaf and USND. We also have integrations with Origin, Bankr, API3, TrueMarkets, and more. We have expanded the breadth of ecosystems that rely on Yearn’s yield engine. Together, they underscore that Yearn is not a single product, but an open platform designed to adapt to changing markets.
Governance, technology, and culture
Some of the most consequential work of the year has been a comprehensive governance overhaul, now actively being implemented. These changes re‑center Yearn around sustainable revenue generation, clearer accountability, and tighter alignment between users, contributors, and tokenholders. The new framework simplifies incentives, improves capital efficiency, and introduces more rigorous on‑chain financial reporting, ensuring that resources are deployed with discipline and that performance is measurable. Read more about these changes here
On a technology front, with strong foundations in place, we continued to invest in execution. We introduced Dutch auction mechanisms integrated with CoWSwap solvers to sell reward tokens in a way that reduces slippage and MEV. These auctions replace passive market selling with competitive price discovery, reducing leakage and improving net returns for the protocol and its users. Read about the Auctions here
Yearn has been creating tooling for DeFi natives since 2020. Tools like MultiSafe, which was the first to allow easy deployment of a Safe multisig on multiple chains with 1 click. This year we created Kalani, to help manage V3 vaults, Auctionscan to improve visibility of our auctions, our APR Oracle interface to assess the yield impact of deposits, and a Multisig Security Checker to evaluate best practices of any Safe multisig.
Lessons from our setbacks
We want to be as transparent about our challenges as we are proud of our successes. On 26 June, Resupply’s price oracle had a failure in its solvency check that allowed an attacker to drain roughly $9.5 million. This incident occurred in a partner protocol rather than in Yearn’s vaults, but it reinforced how leverage and composability demand rigorous oracle design. We worked closely with Resupply on a post‑mortem and supported a debt‑repayment proposal to protect creditors.
In November, the yETH product was exploited due to design-level edge cases in a highly complex system, ultimately resulting in an infinite mint of tokens. V2 and V3 vaults were unaffected. This incident has forced an important reckoning. Maintaining a broad suite of sophisticated products increases surface area and correlated risk, and in hindsight the incremental fees generated by yETH did not justify the systemic risk it carried. It was an expensive and unfortunate decision, and it has sharpened our discipline around product scope, ongoing risk re‑underwriting, and the true cost of complexity. To address the loss, Yearn governance have voted to implementing a recovery plan where affected users are made whole through a three-way compromise: the Treasury lends its balance sheet to generate yield without spending principal, tokenholders divert a portion of protocol revenue, and users contribute patience as these sources gradually fill the deficit over time.
Our experiment with Bearn, a sub‑DAO on Berachain, further illustrated the difficulty of launching on nascent chains. While the effort generated valuable learning, the project was ultimately folded into UltraViolet. Together, these events reinforced the importance of rigorous security review, deliberate product scoping, and humility when exploring new platforms.
Looking ahead
Our priorities for 2026 are straightforward:
- Execute governance reforms that align tokenholders, contributors, and protocol economics.
- Scale curated lending and infrastructure‑led integrations where Yearn has demonstrated product‑market fit.
- Continue investing in people, tooling, and front‑end experience to make DeFi safer and more accessible.
- Create new asset-optimized multi-chain yield strategies and new primitives that allow Yearn to experiment with vertical integration of the entire yield stack.
We will also be rolling out a new website design in Q1 that will better show off our Vault products and improve conversion through new user experiences they won’t find anywhere else.
Closing
2025 tested Yearn. We launched new products, entered new ecosystems, and confronted the realities of composable finance. Through it all, we stayed true to our mission: building automated, non‑custodial yield strategies that users can trust. As we enter 2026, we will retire what no longer serves users, double down on what works, and continue to earn trust not with promises, but with audited code, transparent governance, and compounding yield.
2025 also marked Yearn’s fifth year in production — a milestone that few DeFi protocols reach. Over that time, Yearn vaults have secured billions of dollars in user assets, helped pioneer the ERC‑4626 vault standard now used across the industry, and demonstrated that non‑custodial, automated yield can endure across multiple market cycles. Longevity in DeFi is earned, not assumed. As we look ahead, our focus remains on building systems that are resilient, auditable, and worthy of long‑term trust.
— Posted on behalf of the Yearn Core Contributors