Reasons for bearish sentiment on YFI: Larry Cermak's comments, Will Binance's launch of leveraged contracts materialize?

The Block's research director Larry Cermak is known for making comments that mainstream communities may not appreciate, such as revealing negative news about Binance or expressing skepticism about certain DeFi trends. This time, Larry discussed YFI, the token that has seen an incredible surge and outperformed Bitcoin in terms of price. Will YFI continue to skyrocket endlessly, or will it eventually lose steam?

Why Short YFI? Larry Cermak Explains

Larry Cermak stated, "Everyone is talking about the bullish side of YFI. However, the reasons to short YFI are also very clear: includingCurve and other yield farming tokens will vote to prevent yearn from farming in their pools." He believes that if one is a stakeholder in CRV, it would be difficult not to pass this proposal because of the significant selling pressure from CRV."

Everyone talks about the bull case for YFI. The bear case is pretty clear as well – farmable tokens including Curve vote to blacklist yEarn from farming on their pools.

— Larry Cermak 🫡 (@lawmaster) August 30, 2020

However, Larry believes that the most obvious downside of doing so is losing a substantial amount of liquidity immediately and potentially angering YFI's founder, Andre Cronje, who may choose to fork Curve directly.

Counterargument: The Risk Seems Low

In response to Larry, a user said, "Bro, if the scenario you describe is bearish for YFI, then it seems like the current risk versus reward is quite favorable." Because based on what Larry said, there doesn't seem to be much downside for yearn.

https://twitter.com/floxl1445/status/1300060471287050242

Larry also responded, "Yes, but another reason to be bearish is that liquidity mining will eventually die. And these rates are not sustainable in the long term. That's the long-term bearish case."

Another user agreed with Larry's view, but responded, "I agree. But as long as stablecoins maintain high demand for leveraged bets against Bitcoin and Ethereum, liquidity mining will persist. I don't see it ending in the short term." The user also didn't see any reason for these yield farming tokens to try to stop yearn from farming.

In response to these discussions,Curve only replied, "There have been many mutually destructive protocols emerging recently." Various users had differing opinions; some said yearn is monopolizing DeFi, while others believe that yearn will weaken as competitors emerge. Additionally, one user made a valid point, stating that Andre Cronje and Curve are unlikely to disrupt DeFi composability as they would risk being ousted by the community themselves.

yearn Actively Participating in Curve Governance

YFI founder Andre Cronje proposed on August 25th to allow Instadapp, Zapper, and yearn.finance to participate directly in Curve governance through a proxy server. The current voting results are in favor, and the voting will soon conclude.

Curve officials also view this proposal as a demonstration of decentralized governance and express their approval. It seems that both parties are satisfied with their relationship, making it challenging for Curve to vote against yearn farming.

Another Variable: Binance Launches 50x Leveraged YFI Contract

On the 31st, Binance launched a perpetual contract for YFI/USDT, with up to 50x leverage. With the introduction of derivatives, it remains to be seen whether the infinite upward trend of YFI will change.