The Curious Case of the New Bubble in the ‘DeFi’ Town of Crypto
As in 2017, Initial Coin Offerings (ICO) was the craze in the crypto industry, in 2020, it’s decentralized finance (DeFi) that is rocking the world of crypto enthusiasts.
This year, DeFi has grown at a fast pace, with a record $3.5 billion value locked in this sector. Also, 4 million ETH are locked in these protocols.
Many argue that DeFi space is highly risky, which as we saw with numerous DeFi hacks this year, holds true. But at the same time, it is in its early stages, with innovations taking place every day. It is actually up to the community if it will be the start of something truly decentralized.
I’ve always said speculation might be necessary to adoption. In the lastest Defi craze,
1) People are forced to use DEXes as some tokens are only traded there.
2) To use a DEX they have to install a wallet like Metamask.
3) To buy trade on Uniswap they have to acquire ETH first.
— Qiao Wang (@QWQiao) July 24, 2020
When it comes to decentralization, amidst the DeFi frenzy has emerged a new bubble “YFI” — a “completely valueless 0 supply token.”
The latest DeFi token that boasts of 1,000% yield as a result of a rapid spike in demand, but still yEarn has previously delivered annual returns of about 10% constantly for its lending pool.
The most interesting thing about this token by yEarn protocol (previously called iEarn) is that it started with $0 value but overnight skyrocketed to $2,500, driving $150 million of deposits, as ‘farming it’ yielded a whopping 1,000% annual returns for some traders.
“Those of you in the old school who believe this is a bubble simply have not understood the new mathematics of one of the most fairly distributed project launched since BTC,” said analyst CL.
A yield aggregator, yEarn, redirects users’ deposits to lending markets with the best rates.
Unlike other projects where teams keep the majority of the token and in result voting power, the entirety of this protocol is in the hands of the community even though yEarn founder Andre Cronje shared In its official announcement that they want to give up control over its governance token “mostly because we are lazy.”
Yet another interesting aspect of this token is its supply, which the community is voting to cap at 30,000. These YFI tokens are distributed to those who deposit funds to yEarn pools, which soared by $150 million in just three days after the distribution first started.
The flow of money into its liquidity pool on the Curve DEX had the volume of yCurve surpassing $100 million.
No other alts:
A trader takes a 30 minute nap:
Misses 7 tokenomic redesign, 4 governance update, 82% TVL change, 30% price movement, and 9 random people being apart of some multisig
— CL (@CL207) July 21, 2020
Interestingly, yEarn’s unconventional approach has led the community to propose relocating tokens back to the founder. “If this proposal passes then it would be the one of the most legendary stories in crypto,” said analyst Qiao Wang.
It's been just 2 days since I posted this up but things have been changing FAST
Here's a new proposal by Substreight based on discussions;
— Daryl Lau (@Daryllautk) July 24, 2020
Even the control of YFI has been put in a multi-signature wallet, which requires 6 out of 9 participants to agree on changes, and the founder Cronje is not a member of it.