yvUSD Emerges Unscathed from rsETH Hack Fallout

A new strategy for bridging between Mainnet and Katana relies exclusively on Katana's native ZK bridge, deliberately avoiding third-party solutions like LayerZero. **Key Decision:** - Strategy avoids additional trust assumptions by using only native infrastructure - Reference made to past bridge failures as justification **About Katana:** - Productive Layer 2 where assets earn yield immediately upon bridging - Chain-Owned Liquidity (CoL) converts sequencer fees into permanent liquidity reserves - Features curated ecosystem with Sushi, Morpho, and Vertex - EVM-compatible ZK-rollup, ranked top three for TVL growth in 2025

Yearn has introduced a new **Katana yvUSDC Compounder** strategy as part of its yvUSD vault allocation. **How it works:** - Deposits into the USDC Yearn vault on [Katana](https://katana.xyz) - Reinvests KAT rewards alongside native vault yield - Underlying vault lends to Morpho markets curated by Yearn and [Gauntlet](https://gauntlet.xyz) - Also deploys to SushiSwap LP pools managed by [Steer Protocol](https://steerprotocol.xyz) **Background:** Katana is a new EVM layer 2 incubated by Polygon and GSR, featuring an innovative incentive mechanism that directs token emissions and bridged asset yield toward DeFi applications. Yearn, Morpho, and SushiSwap are launch partners. This strategy represents a return to normal operations after funds were temporarily deployed to Sky Ecosystem USDS staking during a recent crisis.

Yearn Finance has begun distributing revenues to YFI token holders who stake their tokens. Users can stake through three methods: - **Direct veYFI staking** - Lock YFI tokens to receive veYFI and earn rewards - **Liquid locker protocols** - Stake through platforms like 1up, Cove, or StakeDAO - **Boosted vault deposits** - Earn enhanced yields on vault deposits **How rewards work:** Every two weeks, veYFI holders vote to direct dYFI rewards to specific vaults. Your reward rate depends on your veYFI balance: - Base rate: 10% of possible rewards (1x boost) with no veYFI - Maximum: 100% of rewards (10x boost) with sufficient veYFI Liquid lockers allow YFI holders to rent out their voting power to vault depositors. Depositors pay a small fee but receive significantly higher yields through borrowed boost power. Rewards are paid in dYFI, which can be converted to YFI or sold on the market. Vault rewards auto-compound, while dYFI rewards require manual claiming through the liquid locker interface. A [boost calculator](https://docs.yearn.fi/contributing/governance/veyfi-calculator) helps users determine optimal veYFI amounts for their deposits.

**Yearn's OEV-boosted USDC vault on Morpho has received an A rating**, joining highly-rated vaults from Stakehouse and Gauntlet. The vault utilizes **Oracle Extractable Value (OEV) technology** to recapture value that would otherwise be lost to MEV bots, redirecting it back to depositors as enhanced yield. **Key highlights:** - A-grade rating validates vault's risk management and performance - Part of Yearn's expanding curation services on Morpho - OEV-boosting technology provides sustainable yield enhancement - Previously surpassed $10M in deposits milestone Yearn continues to demonstrate its **best-in-class vault curation and monitoring capabilities** across the Morpho ecosystem, offering institutional-grade DeFi products with enhanced risk assessment.