Decentralized Finance (Defi) has been a hot topic for most of 2020. The current boom in digital asset markets is, undoubtedly, being carried on the back of Defi. While many looked to Bitcoin to lead the way in terms of All Time Highs, it was Yearn.Finance’s little-known governance token, YFI, which stole the benchmark digital asset’s thunder – outdoing BTC by reaching the $20k mark (and tearing past it, to price above $36k) before a bullrun had even been fully established.
Accidental ”Bitcoin killer”, YFI, started it’s life as a governance token with no value (well, at least that was the issuers’ intent.) It’s host platform? An Ethereum based smart contract that is designed to be a Defi gateway. By DeFi gateway, we mean a yield farming platform, where folks can stake various DeFi tokens and earn interest on their value. Yield farming, as it is called.
The platform enables non-savvy investors to make the most of their asset holding activity, by offering high yield staking and lending services. Yearn.Finance, briefly, became the top DeFI platform in July, coinciding with the coin causing a stir in the markets.
It apparently was not the intention of founder, André Cronje, and the team of developers behind the platform to issue a beast of a token. It’s actually a confluence of a number of factors that did it; The current decentralized finance token buying frenzy, the fact that the token is rare, and blatant speculation, all played a role in raising YFI to the digital asset pantheon.
Made public in July, the token grew over 11,000% in value, from a debut price of $32- in about a week. The token – though ranked 44th in terms of market capitalization – is (at time of writing) worth $13,963. This is well below an All Time High of $43,262 just before the August market correction, when altseason was brought to a screeching halt by a sharp drop in Bitcoin’s price, following a feverish July trading month.
There are only 30,000 YFI tokens in circulation, all generated before release, as this is (meant to be) a voting coin. Speculators likely were immediately attracted to the token by it’s rarity. What happened next was unprecedented. First climbing from $3, to $32 in value on Defi-centred decentralized exchange platform, Uniswap, the Yearn token went on to take on a life of its own and began to bullet up the price charts after popular centralized exchanges started listing the token.
The Yearn.finance platform offers such an attractive array of yield farming products that it currently has about $458 million (down from a high of nearly $10 million) in value currently locked in the decentralized investment house’s contract. Wrapped ETH (over $22.7 million’s worth) and various stablecoins appear to be the most popular assets to invest in, on the platform, as many crypto investors seem to like to know just how much – in dollar value – they’re investing. The transition to using Bitcoin as a base value is taking time, as folks are probably accustomed to using traditional, fiat based, investment products. Stablecoins (basically, fiat currency that behaves like crypto) seem to ease the psychological transition into crypto.
Earlier in October, an unfinished project the lead developer, André Cronje, had been working on suffered a security breach which saw funds in the project’s wallet, pilfered by code crackers. This, somehow sparked a rumor that Cronje was abandoning the Yearn project altogether. To which he responded, “Still here. Still building. Nothing has changed. Anyone that says otherwise f*** off. I’m just done tweeting and being on social media.”
Cronje’s rockstar attitude could be part of the reason YFI has received such attention. That, and the simple brilliance behind the Yearn platform.