The yearn.finance ecosystem earns rewards. These include, but are not limited to yearn.finance interest, COMP from compound, CRV from curve.fi, curve.fi/y trading fees, ytrade.finance leverage fees and liquidation bonuses, yswap.exchange underlying system fees, yliquidate.finance liquidation bonuses, system dust (unassigned interest or fees).

These fees will be collected on a daily/weekly basis and can be requested by the governance contract. Once claimed they are distributed to the vault contract. The vault contract normalizes the rewards to aDAI (Aave’s wrapped interest-bearing DAI) via 1split.eth (1inch.exchange’s on-chain dex) and sends the funds to the rewards contract.

The rewards contract can be found at;

0xcc9EFea3ac5Df6AD6A656235Ef955fBfEF65B862

At any given point in time, YFI holders can claim their share of rewards by burning their YFI tokens. The amount redeemed is equivalent to the share being burned / total supply of the token. So if there is 1 aDAI in the contract, and 1 token, burning the 1 token will reward 1 aDAI.

It is the choice of the YFI holder when they wish to redeem. As the system AUM and usage grows, so does the fees, and respectively the rewards pool.