Yearn.Finance (YFI) has gone from relatively unknown lending aggregator to the most explosive projects trending in the crypto industry. YFI has seen an incredible price surge from very low financial value to the highest value of $38,883 surpassing BTC price.
The trading value of YFI token is also been increasing from an average of $200,000 to the current peak of $1 billion. The basic idea behind Yearn.Finance is quite simple where you stake your funds for yield and YFI coins.
The total supply of YFI tokens is 30,000 YFI, among which 29,963 YFI are in circulation. YFI is used as a governance token and it is used to vote on changes occurring in the yearn.finance protocol.
YFI has good potential and its primary factor of success is its simplicity. YFI is already trading on top exchanges like Binance.
Is YFI too pumped-up?
A general interpretation of YFI from the DeFi enthusiasts remains positive. IDEOVD’s Ian Lee perceived that Andre Cronje’s fast-paced product, YFi is a long-term catalyst. Apart from Lee, various other investors including Paradigm’s Fred Ehrsam, claimed that the potential of DeFi insurance will emerge into the next big market.
Ian Lee said,
“We are witnessing something even bigger. Due to Andre Cronje’s build & ship speed, YFI is the fastest evolving self-improving / innovating asset, period.”
— Ian Lee (@ianjohnlee) August 29, 2020
There are some analysts who predict that the valuation of yearn.finance will reach several billion dollars in future. Analyst, Tyler Reynolds predicts that YFI has a possibility to reach a $15 billion market cap based on cash flow analysis. Tyler said:
“500k $YFI = $15B mcap If it traded at 50x FCF, then it would need to generate $300M for holders It’s already generating $20M and that will go up as yUSD/yCRV grows Add in other new arb opportunities & products (eg insurance) and we’re not far from $300M in FCF.”
500k $YFI = $15B mcap
If it traded at 50x FCF, then it would need to generate $300M for holders
It’s already generating $20M and that will go up as yUSD/yCRV grows
Add in other new arb opportunities & products (eg insurance) and we’re not far from $300M in FCF
— Tyler Reynolds (@tbr90) August 29, 2020
Bitmex CEO, Arthur Hayes, has also supported Yearn.Finance (YFI) as he predicts 1 $YFI=$100,000 soon.
— Arthur Hayes (@CryptoHayes) August 29, 2020
Are there any risks associated with YFI?
While the YFI coin has a good future, it is also associated with several risks in a long term trend of YFI. One of the obvious risks will be heavy dependence of YFI on its creator Cronje. So, there is pressure on the developer to consistently release new products and new features.
All the DeFi tokens rely on yield. It means if the overall yield in the DeFi market declines, the demand for YFI and yearn.finance may also drop. The biggest threat to the yield in DeFi is the price of Ether. If the price of Ether declines continuously and causes governance tokens to slip, the yield may drop substantially.
YFI coin is bullish and outshining most of the other token assets. But, people should understand the fact that YFI has crossed BTC’s all-time high in 2017, which was $19,600. Also, they should be aware that there are only 30,000 YFI when compared to BTC’s 21 million.