Yearn.finance is a DeFi protocol launched in July with no Premine in a decentralized setting by developer Andre Cronje. It is the first protocol on Ethereum that claims to give token holders all the power to govern the network.
Premine is a condition of some new cryptocurrencies, where the max supply has already been created before being made publicly available.
YFI Price grew naturally as the total value locked in Yearn.finance surged. YFI was noted to trade around the $1000 mark at its inception, but within a month saw a 10 times increase in its price. From then on, YFI became one of the hottest crypto assets in the DeFi space.
Crypto researcher Hasu spoke of Yearn.finance as a platform that allows users to execute different low-risk investment strategies referring to it as a smart bank account.
Compared to other tokens, the price of YFI is high due to its unique monetary supply. Its supply is capped at 30,000, which is significantly lower than most crypto assets. At its highs, the YFI market cap stands at $478 million to rank 29th largest by market valuation.
YFI has a circulating supply 29,963 prompting some DeFi investors to enunciate a potential for growth as its supply has been nearly fully minted.
YFI/USD Daily ChartIn the last 24 hours, YFI gained nearly 40% to trade at its recent price of $26,388, flipping Bitcoin’s all-time highs of $20k by setting new highs of 27,241 today.
A crypto startup investor Ian Lee sees YFI exceeding Bitcoin as arbitrary and psychological. He notes that comparing the price of YFI to Bitcoin makes little sense as BTC’s market cap is 568x larger than YFI.
Also, a growth in YFI market cap to extent of that of Aave (LEND), the largest DeFi protocol with more than $1.52 billion in total value locked and Maker (MKR) will leave its price around $30k due to its capped supply.
YFI Setting New All-Time Highs Have Been Traced to These: a potentially new partnership, Aave announcing YFI listing on Aug 28th, and strong technicals.
Arthur Hayes, the CEO of BitMEX who has been recently exploring different DeFi protocols spoke on the current DeFi mania in a blogpost “Dreams of a Peasant”.
Speaking on the positive aspect of DeFi as being a huge driver of funds into Bitcoin and other cryptos, he reinforced that the DeFi space has enormous room for growth. He also stated that there are clear risks in using these DeFi protocols which he refers to as ‘proto-banks’.
Hayes noted four main risks to DeFi “yield farming,” in his words he stated:
If you buy a DeFi token that is supposed to yield dividends from fees captured by the protocol and the token declines, you may be at a loss despite the dividends.
The loan book “takes impairment,” meaning loans are not liquidated correctly due to liquidity, thus leaving depositors at a loss.There could be defaults if undercollateralized loans are introduced and borrowers can’t pay back loans, undercollateralized loans are something that Aave is testing out right now.
A crypto hack takes place. “That is the result of an intentional or unintentional bug in the smart contract code that siphons assets out of the project, or they become inaccessible.”
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