YFI Opening the ‘Floodgates for BTC Hodlers into DeFi’ as it Adds ‘Curve sBTC yVault’ to Yearn.Finance
YFI has passed the latest proposal “YIP 39 – Curve sBTC Pool LIP-Tokens yVault” with 98% votes and 40.48% quorum. The weight of Curve sBTC will increase from 17% to 48% on Thursday.
This development would bring a lot of Bitcoin to Ethereum, which has already reached 46,694 BTC worth $534 million.
The idea of the YIP-39 proposal is to capture the $214 billion in AUM from bitcoin holders by allowing them to “passively grow their BTC holdings.” This would be done by using voting power to increase sBTC pool CRV returns and create a Vault for sBTC Curve Pool LP-token holders — which works almost identically to the yYFI and yCRV vault — who deposit renBTC / wBTC / sBTC in Curve Pool.
“Harvest CRV, sell it for more LP-tokens or renBTC, which is then re-deposited to create, distribute and compound LP-token growth,” states the proposal.
With the YIP-39, the YFI community aims to generate “significant goodwill from Bitcoin holders,” by presenting them with other use cases of the holdings.
It also mentions how currently the most confident BTC holders are only depositing and recycling or farming CRV.
“This can become a black hole for BTC deposits into Curve via renBTC and LP tokens into yVault for passive returns and governance fees,” it adds.
Move where the Money Is
For quite some time now, the YFI community has been discussing bringing BTC, the standard in the crypto world, to Yearn.Finance, which “would open the floodgates for BTC hodlers into defi.”
The rationale behind this has also been to bring a “greater” share of CRV rewards and wBTC revenue into the fold and to maximize AUM to get “governance control of other platforms.”
It's just going to take a few $BTC maxis to defect into $renBTC (which is equally trustless and limited), tempted by easy low risk 200% yield whilst keeping their precious $BTC.
Then the whole edifice falls down and billions of dollars flows into defi.$YFI $REN $CRV
— Cryptoyieldinfo.YFI (@Cryptoyieldinfo) August 16, 2020
While “pure” bitcoiners will prefer to keep their BTC in multi-sig and not earn yield and some will go for crypto lenders BlockFi and Aave's Lend, “there is a huge cohort of btc holders who want yield and will move to where the money is,” noted analyst Ceteris Paribus.
However, there are risks given that the “experimental” projects of DeFi continue to see a loss of funds along with the “Ethereum/smart-contract/synthetic risk.”
But there is also the advantage of higher yield, currently ~50%, maybe >100% soon, and not to mention there is no need for KYC.