YFI, Yearn.Finance’s governance token, has been going through a pretty rough few days with major drops in its valuation. We tell you what has been happening!
YFI, what happens?
The facts are as follows: YFI reached its maximum valuation of $ 40,000 on September 14. Since then, the token has dropped approximately 55%.
In fact, its current valuation is $ 17,944 according to CoinMarketCap. The graph of the last 7 days shows a clear downward trend, with a cumulative fall of 30%. There is clearly something going on.
To understand what has been happening with the YFI assessment, we first need context.
Blue Kirby says see you later
As you well know, Yearn.finance is decentralized and therefore does not have a central figure. However, it has what are known as promoters.
One of them, arguably the most prominent, is “Blue Kirby.” He’s basically a Twitter user where he’s been supporting YFI since July when the token’s price was nothing in comparison.
The popularity of said user comes as he has been one of the loudest supporters of the token. In fact, he was the one behind the viralization of the “1 YFI = 1 BTC” meme, which quickly materialized.
The problem is that, on October 4, the anonymous user reported through his social networks that he would be leaving behind everything related to YFI.
Since its announcement, the token has dropped approximately 10%. However, Blue Kirby left the team on good terms and assured that he was leaving as he felt too tied down.
Okay, the previous event could affect. However, the volatility in YFI and its downtrend come from before and therefore occur as a consequence of conflicts within the community and weaknesses throughout the DeFi ecosystem.
One of the events that contributed to the token crash was the Eminence project, in which investors rushed to sign an incomplete smart contract that was still being developed by Andre Cronje, founder of Yearn.finance (YFI).
Users basically lost their money as they exploited a weakness in the smart contract and pointed their frustration at Cronje; as expected.
In general, sentiment in the DeFis sector has been cooling off quite a bit. In fact, Binance’s Composite Index has dropped more than 50% in just one month.
Recall that, according to Binance, said index is calculated using weighted averages of a basket of DeFi tokens and tracks the performance of the market; Among that basket is evidently YFI and other popular tokens.
In fact, since mid-September, projects like Cream, YFI, SUSHI, UNI, and CRV have been trending broadly down, each losing roughly 27% to 55% over the past week.
Larry Cermak, an analyst at The Block, explained on Twitter that apparently there are not enough people willing to buy the YFI token at current prices and, therefore, downward pressure is generated.
Also, analyst Johnny Mo, according to Decrypt, noted that the YFI chart is not promising. In fact, he projects the price to fall to at least the $ 10,000 range.