Shortly after Yearn.finance’s YFI coin launched in July, changing the Ethereum DeFi world forever, the pseudonymous Crypto Twitter personality “Blue Kirby” began to popularize the “1 YFI = 1 BTC” meme. The theory was that the price of one YFI would hit the price of Bitcoin, then around $11,000.
After weeks of upward price action, the cryptocurrency finally achieved this milestone, leading to celebrations on Twitter and a custom website that trounced on the graves of “Bitcoin Boomers.”
For a while, these investors were euphoric. YFI shot as higher as $44,000 by the end of August in a spectacular rally that generated wealth for the early adopters that mined the coin for basically no upfront cost.
That means that at its peak, one YFI was worth around 3.6-3.8 BTC, making it the first altcoin to have reached such a high ticket price. Of course, its market cap was far from Bitcoin’s, but this was seen as an accomplishment nonetheless.
Unfortunately for YFI holders, CryptoSlate market data now shows that one YFI now equals one BTC once again. In fact, as of now, YFI, trading at $13,000, is now worth around 0.93 BTC — a far cry from the all-time highs set a few weeks ago.
Why YFI is down so far from its all-time highs
Sam Bankman-Fried, CEO of crypto trading platform FTX and fund/market maker Alameda Research, has explained that there are three key reasons why YFI has seen such a strong correction from its $44,000 all-time high:
- The rest of the DeFi market has undergone a strong correction, resulting in steep corrections in most players.
- Yearn.finance had a number of “bad PR events,” including some controversy over a side project called Eminence and a series of bugs in the protocol’s core products, called vaults.
- Yield farming yields have dropped dramatically. This hurts YFI especially because much of the token’s intrinsic value is derived from acting as a claim of a portion of the yields generated by the protocol.
“$BTC going up swiftly is not only not bullish for alts but it’s bearish reasons for this are myriad but boil down to the fact that money is a coordination game and Bitcoin is the Schelling point; this is independent of how you feel about it, community is literally irrelevant.”
The revival of Yearn.finance
Not all hope is lost for YFI, though, analysts say.
Andrew Kang, founder of Mechanism Capital, recently noted that much is on deck for Yearn.finance in the months ahead that should boost yields, driving capital to YFI holders:
“The argument that YFI / Yearn value is dependant on crazy yields is missing the forest for the trees. Yield opportunities continue to grow Future strategies: – 10x-100x leveraged short DAI – Basis/Funding trades – UNI Farming – BAL Farming – L1/L2 Liquidity Bridging – etc.”
This is already starting to take place as Yearn.finance developers roll out new vaults such as the 3pool LP vault and the gUSD vault.
These extraordinary Curve yields today (46% 3pool, 55% BUSD pool, 52% Compound pool, 57% gUSD pool) will filter down to yearn vault yields tomorrow.$YFI about to be reborn.
— Cryptoyieldinfo.YFI (@Cryptoyieldinfo) October 27, 2020