Step aside Bitcoin, there is a higher valued crypto-asset in town at the moment!
Yearn.Finance, a governance token that was created to power the decentralized finance protocol yEarn is worth over $30,000 at press time. Clocking in at $32,300 at the moment, the asset’s valuation has risen by 139% over the past week, and close to 67% over the past day.
The sheer growth of DeFi has been there for everyone to see that the YFI token is taking its value to the next level. There is no doubt that YFI is a speculative asset, but its utilization has been central to the “yield farming” method, where various DeFi lending protocols distribute governance tokens as incentives for using them.
In simple terms, yEarn is a yield aggregating platform on Ethereum where users can decide and compare yields between different DeFi lending protocols and earn incentives by placing their crypto in “vaults”.
Now, since YFI is the governance token of this platform, users want to hold more of it so that they can cast their votes on policies and proposals that dictate the future of the yEarn network.
How is it Yearn.Finance surviving and growing so fast?
Now, one of the main reasons why YFI’s value has undergone a price explosion is due to its limited supply of only 30,000. Close to 29,680 are already in circulation, making it a very scarce asset in the ecosystem. Each vault allows users to deposit a particular token and the protocol yields farms with it.
However, it is important to note that Andre Cronje, founder of Yearn.Finance emphasized that YFI is to be provided to liquidity providers who supply other ytokens and be used for voting.
Cronje stressed multiple times that YFI token is valueless but after being listed on Binance and Uniswap, and presently on AAVE, the token has been bought by at a frightening rate on exchanges.
Partnerships with AAVE has certainly helped as after being listed on 28th August, the price has been up by 75%, and right now, the momentum does not look like to slow down anytime soon.
However, people and potential investors should vary from YFI tokens because the sole purpose of the token is to manage the platform and not hodl. Once Yield Farming runs its course, YFI tokens may undergo an unceremonious price dump and there will be no-one to recoup the lost value. Andre Cronje mentioned it from day one, that YFI is “valueless” and people should keep that in mind.