Ether outperformed Bitcoin during the ICO mania of 2017, as it was the most popular platform on which these projects were built on.
Now, during the DeFi mania, ETH is again surpassing Bitcoin, the largest digital asset with a fixed supply. In 2020 so far, ETH has recorded 238% positive returns compared to BTC’s just 56.05%.
According to on-chain analyst Willy Woo, Ethereum is actually “very close to BTC in terms of risk-reward.”
Thanks to the DeFi craze, Ether’s supply has also been shrinking as a record 6.4 million ETH is already locked in the sector. Now, Ether’s supply is going to be even more contracted thanks to DeFi darling Yearn Finance.
The project has finally added yETH vault along with yWETH and other digital assets. Obviously, these debt-based vaults carry extremely high risk like any other DeFi project and also charges a 0.5% withdrawal fee, not to mention the record transaction fees on the second largest network.
In simple terms, lock in your ETH in a vault and take out more than you put in thanks to the 65% APY.
The community is extremely excited about this development, with some calling it “the world's first autonomous on-chain hedge fund.”
“Could be a block hole for ETH, super bullish,” said another trader.
Huge moment in finance just happened with the @iearnfinance ETH vault launch. What this means is someone essentially deployed a single asset fund strategy on #ethereum. Complete with management fee and performance fees. Currently yielding ~90% APY in ETH w/ ~$6M ETH in it already
— Joey Krug (@joeykrug) September 2, 2020
“YFI yETH vault will lead to a supply sink from ETH deposited to mint DAI, but also ETH buy pressure from yield farming earnings converted to ETH. Another timely benefit is that gas costs are pooled,” stated Alex Gedevani, who handles research at Delphi Digital.
With ETH leveraged in DeFi, staking coming in Phase 0 of ETH 2.0, and yETH vault here, the supply-side liquidity crisis is coming for Ethereum, which is expected to send the digital asset’s prices higher.