New DeFi Coin (YFI) More Expensive Than Bitcoin
A quite new DeFi coin called yearn.finance project token (YFI) has surpassed the price of Bitcoin since yesterday. At the time of redaction, one YFI token was worth $14,685 versus Bitcoin’s price of $11,868, a situation called flipping in the crypto world. It had risen some 1,400% in one month.
Update: yearn.finance (YFI) seems to be at $33,455.63 at the moment!
Up 1400% in 1 monthhttps://t.co/WD5CTHJu8T— zerohedge (@zerohedge) August 20, 2020
More proof of bubble formation or is there a reasonable explanation? Let’s have a closer look.
One of the best explanations for the sudden rise of YFI is of course the recent popularity of DeFi or Decentralized Finance. Although several analysts have warned of a possible bubble formation, it is clear that the popularity of the market is sweeping prices of several altcoins to unknown heights. The recent meteoric rise of Chainlink from $8 to $20 in about a month, which caused it to surge in market capitalization as well, is a case in point. In recent days, the coin has seen a considerable pullback.
Yearn Finance Token Jumps 270% in 5 Days – Defi Token YFI Worth More Than a Single Bitcoin https://t.co/Lq41Rn7Ahd— Bitcoin collectors (@Bitcoin2011) August 20, 2020
Furthermore, there was a major warning sign for DeFi with the Yam story earlier this month. That token shot from zero to a $60 million valuation in a matter of hours. The next day, another $500 million was invested in it and the coin’s value topped at $167. However, when a bug in it’s code was found, the price of Yam went back to near zero.
Crypto bloggers are claiming that Yam is the Bear Stearns story that forewarns the Lehman demise (Bear Stearns was a major bank in the US which collapse months before Lehman Brothers did. It was the warning of the 2008 financial crisis that no one seemed to take seriously).
Only 30,000 coins
YFI claims to be different though. It only launched in July, but already has more than a month of price movement in it’s charts. Not really mature or old, but in DeFi terms, a project that is a month old means that bugs should have been found by now of course.
Yearn Finance Token Jumps 270% in 5 Days – Defi Token YFI Worth More Than a Single Bitcoin https://t.co/Y6Cv3ahNVj— massive (@massiveradius) August 20, 2020
Furthermore, there is a very limited supply of only 30,000 coins (versus Bitcoin’s 21 million coins of course). You can reach higher heights with a lower supply.
The project’s white paper claims that Yearn Finance is a “profit switching lender to optimize lending yields”.
It uses other DeFi apps and then switches between these lending projects to maximize profit, aka combine multiple lending platforms.
In essence, a program that switches between virtual loans to seek out the one that can offer the best return. Allow me a moment of reflection here, but doesn’t that sound like those CDOs (Collateral Debt Obligations) from 2008, you know, like “bundling of mortgages” together, the risky ones with the non-risky ones? (Ryan Gosling explained that one in The Big Short already, see the video clip).
Hoping we’re wrong of course and that YFI is simply a genius piece of automatic moneymaking code that everyone can use.