DEFI MARKET

【Dapp Pocket】DeFi Weekly Report - Week 1 of September: YFI Price Skyrockets, What is Its Hidden Value?

2020/9/2

Dear DeFi enthusiasts,

The hottest topic this week is still YFI, which has not only surpassed the current price of Bitcoin but also exceeded Bitcoin's all-time high price. Is it the power of community FOMO or does yearn.finance truly have something special? Our perspective brings in-depth discussion on this.

In the news this week, USDC is introducing new features where users will no longer need to pay gas fees themselves; MakerDAO is adding yearn to its whitelist, and we can look forward to the launch of yETH Vault in the future; Chainlink acquires the privacy oracle solution DECO; and Binance Smart Chain's first liquidity incentive protocol, Spartan Protocol, is officially launched, and more.

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Our experts have selected insights from Anthony of Set Protocol, warning everyone that YFI will blow everyone's face off; Kain from Synthetix believes Bitcoin may be left behind in this wave; and how does everyone's good friend Ryan view the arrival of USDC 2.0?

Table of Contents

1. Our Perspective | YFI Price Soaring: What Sets It Apart Besides FOMO?

After a week of liquidity mining in July, the community mined 100% of YFI. Following this, its price skyrocketed—breaking a thousand, ten thousand, surpassing Bitcoin, and even surpassing historical Bitcoin prices. No one can see where YFI's ceiling is, and gradually, no one seems to care about its underlying technology and services—the real value of yearn.finance "yearn." From the first day YFI was launched, its founder Andre Cronje "AC" warned everyone that this token is worthless; in a recent interview, AC mentioned again that from a fundamental earnings distribution perspective, a YFI is probably worth about 3 USD. Is it really just community FOMO mentality, or does yearn indeed have its unique strengths?

Complete DeFi Ecosystem

Most well-known DeFi protocols focus on a few services, such as interest-bearing lending or DEX, AMM, and more. However, yearn is different. In AC's blueprint, yearn will expand to include lending, trading, liquidation, leverage, AMM, Delegate Vault, insurance, and more. In other words, after yearn is fully constructed, it is likely to become the most comprehensive system in the DeFi field, with the most extensive integration projects. Therefore, the expected returns for YFI holders will naturally not be lacking.

Complete Governance Rights Allocation

1inch only allocated 2% to liquidity providers LP, Curve management once held 70% governance rights... Most DeFi platforms, due to commitments to investors and team profit considerations, will reserve a large portion of tokens. Even the eminent Compound only allocates around 40% to the community. However, this is good or bad for the long-term development of the protocol, anyone supporting decentralized finance probably has an idea. YFI is different; the divine AC announced on the first day that he didn't want to manage the platform, so not a single token was pre-mined. This makes the community trust yearn more and consider it A better Bitcoin for those who support fully decentralized governance.

Prosperous Profit Model

As of the deadline, the annual yield on the yEarn Vault is roughly yCRV 89.74%; Dai 43.17%; aLINK 49.04%, and so on. In addition to regular deposit integration protocols automatically transferring funds in the Vault to platforms with the highest profit, these Vaults will also continuously purchase corresponding tokens with profits and repeat the profit process.

In other words, if aLINK Vault earns 1000 USDC today, the smart contract will automatically use the profit to buy aLINK on the market, then put it back into the Vault and lend it out to the platform with the highest profit. Therefore, users will not only receive the best market deposit interest rates but also gain profit from the appreciation of aLink assets purchased automatically.

If you notice, this actually means that establishing a Vault in yearn will bring advantages to the asset itself. For example, with the upcoming yETH Vault, if this Vault earns 1000 USD per day, it means there will be an automatic buy order of 1000 USD worth of ETH per day; if the daily profit is 10,000 USD, it's a buy order of 10,000 USD. In other words, by depositing assets into the ETH Vault, users indirectly help raise the price of ETH. It can be seen as a profitable model that mutually benefits the DeFi ecosystem.

High Profit, High Risk

Of course, another layer of meaning to prospering with DeFi is that when DeFi development stagnates, or even encounters a crisis, yearn's profit model will be directly affected. If tokens continue to be purchased during a downturn, profits are expected to decrease. Additionally, most of yearn's services have not been audited, and the Vault platform is still in beta. Users should be aware of the risks associated with smart contracts and the likelihood of malicious attacks potentially being higher than on more mature platforms. After all, high profit comes with high risk, and allocating funds to yearn Vault or even acquiring YFI requires a careful evaluation of one's risk tolerance.

References:

2. Major Events of the Week

Aave Supports YFI! Price Nears $40,000, Breaking Bitcoin's 2017 Record

On Friday, the 28th, decentralized lending protocol Aave announced its support for YFI. This means that YFI holders can use the token as collateral to borrow other digital assets on the platform. As Aave is currently the largest DeFi protocol, its support for YFI gives YFI more utility and consensus value. This is uplifting news for the entire Yearn.finance ecosystem, with a total of $56 million worth of YFI locked in the Aave platform. Following this announcement, YFI surged all the way to over $37,000.

MakerDAO Votes to Whitelist yEarn

On Sunday, MakerDAO's community vote passed to include yEarn in the ETH/USD Oracle. This will allow yEarn to add the yETH Vault.

USDC 2.0 Officially Launched! Send On-Chain Transactions Without ETH

USDC is a stablecoin supported by many DeFi platforms. With the DeFi craze, USDC's market cap has exceeded $1.4 billion, with on-chain transaction volume surpassing $90 billion. To further enhance convenience and security, issuer Circle will perform a major upgrade on the USDC protocol and smart contracts. The new USDC 2.0 will allow users to complete on-chain transactions without holding Ether. "This allows developers to provide gas fee payment services themselves or have them handled by third-party service providers. In other words, developers can help clients pay gas fees or allow users to pay gas fees in USDC."

Chainlink Acquires Privacy Oracle Solution DECO

Decentralized oracle provider Chainlink acquired the privacy oracle solution DECO from Cornell University at an undisclosed price. This is the second acquisition after Chainlink announced the acquisition of Town Crier at the end of 2018. DECO is a privacy oracle solution created by the former Chief Scientist of RSA, Ari Juel, and other IC3 students and professors. With Chainlink's acquisition, Ari Juel has joined Chainlink Labs.

Binance Smart Chain's First Liquidity Incentive Protocol Spartan Protocol Officially Launched

Liquidity incentive and synthetic asset protocol Spartan Protocol announced its launch, supported by Binance and token holders of 30 existing Binance Chain projects. SPARTA assets will be used as liquidity assets in the pool and as collateral for synthetic tokens to ensure high liquidity and frequent secure liquidations of unsafe positions. To acquire SPARTA tokens, users must burn BNB and BEP2 assets at a predetermined rate, and SPARTA tokens will be minted and sent to the corresponding address. Synthetix founder Kain Warwick tweeted that the project not only copied Synthetix's code and UI design but even memes, crossing a line.

And More:

3. Data Indicators

The data for this week is from 8/25 to 8/31, with price captured at 10:00 PM as a principle. TVL stands for Total Value Locked, representing how much value is locked in the platform. Data Source: DeFi Pulse, CoinGecko.

Lending Platform Scale

DEX Scale

DeFi Coin Prices (Farmer's Zone)

4. Expert Opinions

Anthony Sassano: YFI Will Blow Your Face Off.

Anthony Sassano of Set Protocol shared his expectations for YFI on Twitter. He said it will happen—YFI will blow your face off, no matter how many tokens you hold—and your only redemption will be a face reconstruction that will cost you only 0.01 YFI.

Kain Warwick: This Bull Market Might Leave Bitcoin Behind

Synthetix founder Kain Warwick recently posted a tweet. He mentioned that the BTC price is unlikely to change much in this bull market. The days when BTC stood at the forefront of cryptocurrencies are over because now, a lot of funds enter the market directly through stablecoins.

Ryan Sean Adams: Programmable Money Will Get Better and Better

Bankless advocate Ryan Sean Adams shared his thoughts on the USDC upgrade on Twitter. He believes that having third parties, not users, pay gas fees will make the payment concept easier to understand and provide a better user experience. Programmable money refers to these ERC20 Tokens becoming more user-friendly, ultimately leading to Ethereum engulfing banks.