Yearn ETH Vault locks 370,000 ETH, targets ~60% APY

Yearn’s ETH vault (yETH) has already amassed 370,000 ETH, making it the largest CDP on MakerDAO and delivering an advertised ~60% annualised return by leveraging Maker collateral, DAI borrowing, and Curve liquidity mining [1].

How the yETH strategy generates yield

When a user deposits ETH, the vault locks the ETH as collateral on MakerDAO and borrows DAI at a 200% collateralisation ratio. The borrowed DAI is then placed into Yearn’s DAI vault, which supplies the DAI to Curve’s stable‑coin pool (DAI, USDC, USDT, TUSD). Curve’s liquidity‑mining program rewards the pool with CRV tokens; the vault periodically sells CRV for ETH and reinvests the proceeds, compounding the yield. This multi‑step process can currently produce returns near 60% on the underlying ETH [1].

Risks and fee structure

The vault charges a 0.5% fee if withdrawals must be sourced from the active strategy, plus a 5% performance fee that covers gas costs—10% of which goes to the strategy creator. The remaining fee revenue flows to the Yearn DAO treasury, and excess treasury balances over $500 k are redirected to the governance staking contract [1]. A key risk is the collateralisation ratio: if ETH falls below $375 (assuming a $500 baseline), the CDP could be liquidated after a one‑hour grace period, though the vault’s integration with MakerDAO’s Oracle Security Module allows it to rebalance automatically [1].

What to watch

• ETH price threshold – A drop below $375 could trigger liquidation risk for the vault’s Maker positions.
• Curve CRV incentive changes – The 60% APY hinges on the current CRV liquidity‑mining program; any reduction or termination would likely lower yields.
• Vault fee updates – Adjustments to the 0.5% withdrawal or 5% performance fees would affect net returns for depositors.

The yETH vault’s rapid growth shows strong demand for automated yield strategies, but its sustainability depends on the continuation of external incentives and the health of the underlying collateral. Whether the vault can continue to “suck” ETH out of circulation and support higher ETH prices remains an open question.