Currently Yahoo! is using a couple different factors to calculate their webrank:


1. Mainly, their webrank #s are based on visits to a site by surfers with the Yahoo! toolbar installed on their browser. The more toolbar users visit a site, the higher its webrank goes.
2. There is the possibility that backlinks are factored in as well, a la Google pagerank. But it would be a nominal part of the equation, in relation to toolbar user traffic especially. This is a guess, though, as we're not really sure that backlinks are factored in to it. But in studying their response to Google's tactics and systems and the degree of competition between the two, it'd be a decent assumption to make that Yahoo! is incorporating a bit of that in to their own offerings.

So pretty much, it's what Alexa's ranking system is.
Surfers install the Yahoo! toolbar on to their browser - IE only - and when they visit a site, Yahoo! records that visit, compiles the information from all surfers, and comes out with their webrank #.