The YFI bull case: why some researchers are becoming more optimistic on Yearn.finance ๐จ This article is 4 years old...
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The YFI bull case: why some researchers are becoming more optimistic on Yearn.finance
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Updated: Dec. 3, 2020 at 12:34 pm UTC
Photo by Richard Gatley on Unsplash
In recent weeks, Yearn.finance, the decentralized finance (DeFi) giant valued at $854 million, made major acquisitions of other DeFi projects. The aggressive acquisitions and mergers have buoyed the overall market sentiment around YFI.
The Great Unbundling $YFI
? How โThe Great Unbundlingโ applies to YFI
? Why Iโd rather own YFI vs its โacquiredโ tokens
? Value accrual for YFI vs acquired tokens and why the former is a better risk adjusted bet IMOhttps://t.co/2GtDODYa4X @Delphi_Digital @iearnfinance
— Tom Shaughnessy ? (@Shaughnessy119) December 2, 2020
The increase in the price of YFI in the past week shows the market’s optimism towards Yearn.finance expanding its ecosystem.
Yearn.finance mergers only make YFI more appealing
Yearn.finance has been merging with projects that would strategically bring more value to the ecosystem. For instance, in its merger with SushiSwap, the popular decentralized exchange, Yearn.finance creator Andre Cronje emphasized the synergy between the two projects.
The Yearn.finance team has been seeking out projects to merge with by exploring areas it can synergize with. In the case of SushiSwap, Cronje emphasized that Yearn.finance needs custom automated market maker (AMM) experiences, which SushiSwap can provide. He said:
“As Sushi focused on expanding their AMM ecosystem, and as Yearn focused on expanding their strategies, more and more overlap became apparent, Yearn needed custom AMM experiences for their strategies, and Sushi started pushing the boundaries of yield and money markets. With these overlaps, more and more work started to become mutualistic, and at this point, it makes to take the relationship to the next level.”
Researchers believe that these mergers further bolster the attractiveness of YFI.
Tom Shaughnessy, the co-founder of institutional cryptocurrency research firm Delphi Digital, said he would rather own YFI than the underlying tokens of the projects Yearn.finance merges with.
The researcher explained that the value cap to acquired tokens by Yearn.finance is uncertain over the long term. He also noted that YFI would likely be perceived as the go-to DeFi bluechip. He explained:
“Why I would rather own YFI – YFI captures value as these projects help build outs its ecosystem – Value cap to ‘acq’ gov tokens is TBD, not clear over the long term, and Yearn isn’t married to them. If they aren’t used or swapped out for better tech later, even worse. I believe large traditional investors will enter the space and look at YFI as both the go-to DeFi blue-chip and as a DeFi index or proxy given it’s DeFi ecosystem.
What’s next for YFI?
Technically, in terms of market structure, YFI is on track to break out of a three-week trading range if it remains above $28,000.
The technical resistance levels for YFI in the near term are found at $34,000, $36,700, and ultimately its $43,000 peak.
In the past several weeks, DeFi bluechips, in the likes of YFI and AAVE have performed strongly despite BTC’s extreme volatility.
Aave, as an example, is trading at $84 after achieving a new all-time high above $86 on December 2.
The strength of DeFi tokens is noteworthy because altcoins typically perform poorly when BTC sees massive price swings.
yearn.finance Market Data
At the time of press 12:34 pm UTC on Dec. 3, 2020, yearn.finance is ranked #32 by market cap and the price is up 5.36% over the past 24 hours. yearn.finance has a market capitalization of $909.82 million with a 24-hour trading volume of $804.7 million. Learn more about yearn.finance ›
Crypto Market Summary
At the time of press 12:34 pm UTC on Dec. 3, 2020, the total crypto market is valued at at $574.91 billion with a 24-hour volume of $160.08 billion. Bitcoin dominance is currently at 62.30%. Learn more about the crypto market ›
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Aave
$168.457
Aave is an open source and non-custodial protocol enabling the creation of money markets.
SushiSwap
$0.78785
SushiSwap is an automated market-making (AMM) decentralized exchange (DEX) currently on the Ethereum blockchain.