Yearn (YFI) surges over 60% in seven days! Developers hint at large-scale buyback and token model update coming soon
Yearn Finance YFI, which was almost forgotten by investors during this year's bull market, revealed its market buyback in November, with plans for even larger buybacks in the future. YFI has surged by approximately 60% in the past seven days, making it one of the top-performing projects in terms of market capitalization. Venture capitalists and analysts have also written articles explaining the reasons why YFI is undervalued.
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Yearn Finance YFI Buyback
Yearn revealed on Twitter that it has bought back 282.4 YFI tokens in the market since November at an average price of $26,651 per token, amounting to 0.77% of the total supply, surpassing the buyback volume for the entire year of 2020.
With the Yearn treasury holding over $45 million and protocol revenue expected to grow, larger-scale buybacks are anticipated in the future.
Yearn has purchased $7,526,343 worth of YFI from the open market. We got 282.4 YFI (0.77% of total supply) at an average price of $26,651. More YFI has been bought back in the past month than in the prior year.
— yearn (@iearnfinance) December 16, 2021
Is YFI Undervalued?
Cinneamhain Ventures partner Adam Cochran outlined reasons why he believes Yearn and YFI are undervalued:
- Initiation of the YFI buyback mechanism
- Megafund pool generates $100 million annually without token incentives
- Total Value Locked (TVL) exceeds $5 billion
- Market cap ranks 83rd at only $780 million
- Highest earnings/TVL ratio
- Deployment on multiple chains, L2: Arbitrum, Polygon
Cochran noted that Yearn Protocol's Price-to-Sales ratio is 3.6x, and Price-to-Earnings ratio is 7.9x, compared to Curve Protocol's 71.9x and 143x, indicating significant growth potential for the YFI token.
3/8
Their P/S ratio is 3.6x and their P/E is 7.9x.
Those numbers for other payout based protocols like Curve are 71.9x and 143x respectively.
So around times the multiple valuation for someone who has fees on. pic.twitter.com/1oT9UxJEpZ
— Adam Cochran (adamscochran.eth) (@adamscochran) December 16, 2021
Furthermore, he believes that Yearn will inevitably move towards a veCRV token economic model, where veYearn will conduct buybacks, allowing token holders to benefit from protocol revenue.
Community Perspectives
DeFi analyst 0x7d54 claimed to have purchased 128 YFI tokens, amounting to 0.34% of the total supply, and shares a positive outlook on Yearn:
- Oversold price
- Strong developers and security mechanisms
- DeFi entering the next phase with more protocols indirectly integrating with Yearn
Similar to Adam Cochran's perspective, 0x7d54 pointed out that Yearn's previous token economic model was very poor, but with an upcoming model update, he sees an opportunity for token price growth in the current market.
He believes that after the token model update, it will drive an increase in YFI's value or boost Yearn's TVL and revenue. He also revealed that apart from considering models like veCRV or xSushi, there are more dynamic token economic ideas yet to be disclosed.
xYFI
Both Cochran and 0x7d54 referred to the "YFI Tokenomics Revamp" proposal by developer Banteg, which resulted in "xYFI" through community voting, operating similarly to veYFI.
However, xYFI differs from the voting token veCRV, where users collateralize YFI to receive xYFI, and Yearn will continue its BABY mechanism "Buyback and Build Yearn," distributing a portion of the repurchased YFI rewards proportionally to xYFI holders.
The aim is to reward xYFI holders proportionately for temporarily removing YFI from circulation in the market. However, xYFI is just one direction of the token model update and is not finalized. There will be further governance proposals in the future: xyfi proposal draft.
Fueled by positive developments, YFI has surged over 60% in the past seven days, becoming one of the best-performing projects in the top 100 market cap, with the recent counter-trend surge of AVAX only at 35%.
