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Will the Impact of Yearn Finance's yETH Vault on the DeFi Space Last Long?

Yearn.finance, a decentralized finance (DeFi) protocol, has recently launched yETH vault, its core product. The yETH vault enables the process of seeking the best returns for yield farmers, pooling funds to reduce Ethereum gas fees.

Yield farming in the DeFi space has been seeing a growth in popularity, as crypto whales have been leveraging DeFi protocols to generate high rates of return. Although DeFi enables an ecosystem of decentralized applications to have access to financial products including cryptocurrencies, yield farming is most profitable only to crypto whales, who are able to have a high amount of crypto locked up in DeFi.

yETH was launched as a part of Yearn.finance’s yVault strategies, which are a set of predefined actions that allow users to deposit funds and automatically send them to liquidity pools. This will then enable high-yield interest where more token rewards are earned by the user.

The yETH vault strategy involves four steps. Ether (ETH) is first deposited and used as collateral to acquire MakerDAO’s DAI at a 200 percent collateralization rate. Interested would then be earned and the DAI will then be sent to DeFi stablecoin liquidity protocol, Curve Finance (CRV).

After the DAI is sent to Curve Finance, DAI is locked and interest from extra CRV tokens are received, which is then sent to Ether, back to the yETH vault. An analyst recently explained that MakerDAO’s collateralized debt positions (CDPs) are used as a bridge for ETH to be used for yield farming on DeFi.

What does this mean for DeFi tokens?

According to the analyst, yETH “demonstrates how composable protocols within Ethereum’s ecosystem have become.” He added that yETH accelerates the productivity of idle Ether.

As the yETH vault strategy involves some of the DeFi tokens, the process would then be bullish for Ethereum (ETH), MakerDAO (DAI), and Yearn.finance (YFI). However, Curve Finance (CRV)’s price would be driven down, as CRV is sold to buy ETH, adding the selling pressure to the token. The analyst added:

“It’s pretty impressive to see how much ETH has already been locked up. yETH’s impact on the space will be long-lasting.”

The Yearn.finance token has already seen multiple all-time highs in the past month, reaching $39,600 recently, more than three times the value of Bitcoin. Analysts and the crypto community previously suspected that the anticipated launch of yETH will drive a bull run in the Ether market.

Bitcoin Price and Crypto Market Analysis: Opportunities or Risks Ahead?

Reasons why the overall crypto market going up

The overall crypto market has performed well over the weekend. The rise of Bitcoin’s price is mainly driven by the DeFi craze.

The Sushiswap (SUSHI) founder Chef Nomi has returned $14M worth of Ether back to the project fund. This will increase confidence in decentralized exchanges and help relieve the downtrend of the SUSHI token. Now the price moves in a horizontal channel.

Source: Binance

Facing the threat of decentralized exchanges, Binance moved swiftly and is building a decentralized finance ecosystem around its own blockchain. Binance is establishing a $100 million seed fund to empower emerging projects built on its Binance Smart Chain. Its chain ecosystem will support the farming of mainstream tokens such as Ripple (XRP), Litecoin (LTC), and Polkadot (DOT). It was one of the reasons that ignited the crypto market.

According to CoinMarketCap, at press time, Binance token (BNB) is up 21.63% over the last 24 hours and 63.68% over the last 7 days. Polkadot is up 17.00% over the last 24 hours and 24.44% over the last 7 days. Ethereum is up 4.91% over the last 24 hours and 16.66% over the last 7 days. Another DeFi token Yearn.finance (YFI) continues its craze which is up 7.56% over the last 24 hours and 94.19% over the last 7 days.

However, earlier today, the BNB token surged but had a much higher trade volume which indicated the rise can not last long. If there are no alternative driving forces, the whole crypto market correction may occur soon.

Bitcoin price analysis

Bitcoin’s price has risen slightly due to the rise of the overall crypto market. Bitcoin’s price is up 1.90% over the last 24 hours and 3.53% over the last 7 days. As reported by Blockchain.News, Bitcoin has fluctuated in a horizontal channel since its crash. Bitcoin’s high was at $10,627 on the following day after it plunged on Sep. 3. Bitcoin seems to have broken above the horizontal channel today. The resistance line of the horizontal channel is around $10,400. To confirm the uptrend of a small scale, it needs to meet two requirements: Bitcoin needs to exceed its highest price since the crash; the upper line of the horizontal channel becoming a support line needs to be tested.

Source: Binance

We can hardly say the bull market is coming back. In contrast, the risking of correction is increasing, which would pull Bitcoin’s price back in the horizontal channel.

In addition, the failed second economic stimulus bill indicated that there is a lack of money supply in the market, which has not been fully reflected in the stock and crypto market yet.

Ethereum and DeFi Tokens Plummet Amid High Selling Pressure

Ethereum recently took a dip, after almost reaching the highs at $390. Ethereum is currently trading at $343, taking an 8.4 percent dive in the past 24 hours. Popular DeFi tokens, including Yearn.finance (YFI), and Uniswap (UNI) have also witnessed strong corrections in the past few days.

The decentralized finance market has previously outperformed Bitcoin (BTC) and Ethereum (ETH) in August, however, DeFi tokens have been plummeting recently. Yearn.finance and Uniswap have both witnessed a 46 to 48 percent drop, after reaching its monthly high.

Uniswap’s UNI token saw a huge price spike from its launch, as major exchanges listed the token, including Coinbase Pro, Binance, and FTX exchange. Shortly after the launch of the UNI token, Ethereum’s transaction fees have also reached new highs. Gas prices were recorded as high as 700 gwei, due to the network congestion faced due to users claiming Uniswap tokens. Average gas prices are around 416 gwei.

The Yearn.finance (YFI) token has previously reached its all-time high of $38,000, before plunging down to $24,200 at press time. The anticipation of a DeFi market correction, due to profit-taking has been expected, however, the Ether is still struggling to gain momentum.

Ethereum usually led altcoin rallies, including DeFi tokens, however, Ether has struggled to maintain its performance compared to Bitcoin. Ether remained below $400, while BTC recently rallied to $11,100 before retracing back to under $11,000.

Ether’s price has declined most likely due to the selling pressure of the DeFi tokens, as the UNI and YFI tokens have suffered a 50 percent correction, most likely due to profit-taking.

Many DeFi tokens have also slid, with Aave’s LEND token, Synthetic Network Token, also seeing drops in their prices in the past few days as selling pressure increased.

However, with the stock markets flooding red, and the US dollar losing its grip against foreign currencies, Ethereum, Bitcoin, and the DeFi market could still see the light of day from the push of the traditional markets.

The stock market faced a sharp sell-off on Monday, led by correcting the hopes and expectations that the economy would be recovering. While the US continues to struggle with the coronavirus pandemic, Europe has also started to see a sharp increase in COVID-19 cases, indicating a second wave.

Yearn.finance (YFI) Takes a Hit After Eminence Finance (EMN) Bug—Is this the End for DeFi?

Andre Cronje, the founder of Yearn.finance has recently deployed a series of new contracts relating to a new game called Eminence Finance, which has still yet to launch. Although Eminence Finance has no website and has not officially launched yet, Yearn.finance token YFI holders have already deployed capital into the Eminence contracts.

While the Eminence game project is still under development, Cronje deployed smart contracts as part of his personal process of testing his products on the Ethereum mainnet. The founder noted that the launch of Eminence was still expected to be around three weeks away.

Many YFI holders who bought the Eminence platform’s token, EMN wanted to get ahead of other investors, to acquire the token early, and wait for the token to rally and sell it at a higher price on the market. Cronje explained:

“The exploit itself was a very simple one, mint a lot of EMN at the tight curve, burn the EMN for one of the other currencies, sell the currency for EMN.”

There was an unfortunate bug in the deployed contracts, allowing a user to withdraw $15 million worth of DAI from the contracts, although the user put in much less. After the $15 million were exploited, $8 million was sent to Cronje’s yearn account. The founder explained that he will be returning the funds to the affect users. Shortly after, due to a vast amount of criticism and threats received, the return process has been handed over to the Yearn treasury. Cronje said:

“The multisig is safer and as such I feel more comfortable with them having the funds. Funds will be returned to holders pre-hack snapshot.”

After the $15 million hack, many YFI holders sold their tokens, and YFI remains to be down by 6 percent in the past 24 hours. YFI is currently trading at $24,132, around 15 percent below the price YFI was trading at before the bug was exploited.

Some investors expressed their loss of faith in Yearn.finance, however, this analyst believes that this “gross negligence” would be quickly forgotten. Alex Kruger commented:

“Fanaticism towards Cronje makes me think the impact of last night’s events will be much less pronounced than it should, and the market will move on fast. But could easily be wrong there. What happened with $EMN represents gross negligence, I’m not the only one who thinks this way.”

Yearn.finance (YFI) Plunges Again Amid Sell-Off Pressure from Strong Drop in yVault Yields

Yearn.finance (YFI) has faced a steep correction lately and has been one of the worst performers in the top 100 cryptocurrencies. Bitcoin has been able to gain 0.7 percent in the past 24 hours. YFI is currently trading at $18,009, according to CoinGecko, and has seen a 41 percent loss in the past week.

YFI, which is based on Ethereum, has faced a huge plunge as the users of Yearn.finance’s vault’s returns have been facing a strong drop. Yearn.finance’s yETH vault, its core product was launched in early September. The yETH vault enables the process of seeking the best returns for yield farmers, pooling funds to reduce Ethereum gas fees.

In the past few weeks, Ethereum-based coins have been dropping due to the yields offered to users through farming have plunged. Venture capital firms have launched industrial-scale farms, which led to a halt in the DeFi farming industry. Yearn.finance’s yCRV/yUSD vault, is offering around 15 percent of an annualized yield, which is a large difference from the 60-100 percent offered previously.

Yearn.finance’s price is currently at its lowest period since it peaked at highs at over $40,000. The massive sell-off of YFI has been affected by the sell-side pressure from its perpetual swaps on platforms including FTX exchange.

A crypto analyst pointed out that YFI’s next support level to look out for is at $10,000. If the Ethereum-based token breaks beyond this level, Yearn.finance could be valued lower than Bitcoin’s current price, plunging towards $6,000. The analyst said:

“Not a good look for $YFI. Target at least $10k range, but horizontal support down there is at $6k.”

Yearn.finance plunges after EMN bug

Around a week earlier, Andre Cronje, the founder of Yearn.finance has deployed a series of new contracts relating to a new game called Eminence Finance, which later led to a massive loss in capital due to a bug.

A user withdrew $15 million worth of DAI from the contracts, although the user put in much less. After the $15 million hack, many YFI holders sold their tokens, and YFI was down by over 6 percent after the bug was announced.

Yearn.Finance (YFI) Loses Over 45% in a Week, Further Correction Expected

For the past few weeks, the DeFi market has seen major losses, including Yearn.finance’s YFI token, Uniswap’s UNI token, SushiSwap’s SUSHI token, and Curve’s CRV token.

Yearn.finance’s YFI token has seen multiple all-time highs this year, first surpassing Bitcoin’s value at the time, surging to over $18,000 in late August, and even reaching $39,600 in early September, 3 times Bitcoin’s value at the time.

This came at a time where the DeFi market had $8 billion in the total value of cryptocurrencies locked, and according to DeFi Pulse, the DeFi market is currently at over $10 billion. Yearn.finance currently has over $600 million in total value locked.

Two recent events that have led to Yearn.finance’s dips

Yearn.finance has recently witnessed two events that have taken the Ethereum-based token down even further. Two weeks ago, Andre Cronje, the founder of Yearn.finance deployed a series of new contracts relating to a game called Eminence Finance, which, unfortunately, experienced a bug.

YFI token holders quickly deployed capital into the Eminence contracts, believing that they would be able to make a swift profit as soon as the project launches. Eminence Finance has no website and has not officially launched at the time.

The unfortunate bug on the deployed contracts led to a loss of $15 million worth of DAI, while the fraudulent user put in much less. Soon after the hack was announced, many YFI holders sold their tokens, leading to a 6 percent drop within 24 hours.Yearn.finance’s YFI token continued to plunge due to a high sell-off pressure, as the users of the Yearn.finance’s vault returns have faced a steep drop. Yearn.finance’s yETH vault, its core product was launched in early September. The yETH vault enables the process of seeking the best returns for yield farmers, pooling funds to reduce Ethereum gas fees.

YFI to continually drop

Another trader recently tweeted, predicting that YFI would soon drop to $12,000. YFI is currently trading at $12,958. He emphasized that while YFI fell beyond $14,000, it was an important support level hinting further decline to YFI’s price.

Yearn.finance Proposal to Create ETH 2.0 Validator Vault Could be a Game-Changer for Staking

Ethereum developers have recently announced the launch of ETH 2.0, expected on Dec. 1. Retail investors could soon have the opportunity to earn on ETH 2.0 if a proposal on Ethereum 2.0 validator vault on Yearn.finance passes.

Ethereum 2.0 Phase 0 is expected on Dec. 1, and the ETH community has already begun staking ETH via deposit contracts. The contract requires 524,288 ETH in order to proceed with the launch. If the required amount has not been reached a week before the launch date, the launch will then be delayed to seven days after the threshold has been reached.

So far, 50,273 Ether has been deposited, worth around $22.3 million. In order to attract more ETH stakers, the Yearn governance community has proposed an ETH 2.0 validator vault.

This vault would enable staking rewards for investors via liquidity provider (LP) tokens. When investors deposit an amount of ETH to these vaults, they would receive the same amount in yBETH in return, Yearn’s beacon Ethereum pool token.

The proposed ETH 2.0 validator vault works in a similar way to a mining pool on the proof-of-work network, where hash rates are pooled together. This process would allow retail investors to deposit ETH in smaller amounts, while still being able to participate in staking.

Ahead of Ethereum’s beacon chain to be launched on Dec. 1, ETH holders have been depositing ETH, and exactly 32 ETH to accumulate the sum needed to reach the limit before Dec. 1. 32 ETH is not a small amount, and this has been a high cost of entry, which could very much limit the number of investors from staking.

Vitalik has contributed around $1.3 million in ETH, and he has contributed via different Ethereum addresses. While ETH has been pouring in for staking, large amounts of ETH has been pulled off of exchanges.

The Yearn ETH 2.0 validator vault could add incentives for retail investors to stake on the network, and could also create secondary markets for Ethereum 2.0, which could also provide liquidity, and lending, which could fuel the DeFi community. These added incentives not only attract retail investors but also other investors that hold large amounts of ETH who are looking to remain liquid while supporting the launch of ETH 2.0

Yearn.finance (YFI) Sees Massive Price Spike, Analyst says a Bubble is not Possible in the New Paradigm

Yearn.finance (YFI) price has been surging in the past week, as the rest of the cryptocurrency market has been witnessing massive bullish momentum as Bitcoin has been leading the market.

The YFI token has seen a 16.8 percent surge in the past 24 hours, and almost a 30 percent climb in the past week. The decentralized finance (DeFi) token has surged from under $20,000, to trading at $23,294 at press time.

YFI managed to climb around $4,000 in less than an hour, which liquidated many short position holders on margin exchanges including Binance. In the past month, YFI’s price has seen high volatility, due to the high futures volume of the DeFi token.

Hsaka, a cryptocurrency trader recently commented on the recent YFI price moves, saying:

“$YFI is now at $23,000. Those of you in the old school who believe this is a bubble simply have not understood the new mathematics, or you did not care enough to try. Bubbles are mathematically impossible in this new paradigm. So are corrections and all else.”

The trader also believes that DeFi tokens, such as YFI and AAVE have been underexposed by traders in the cryptocurrency market. The trader explained:

“Lot of chatter about an alts carnage. Alts have shat the bed harder on $150 $BTC sneezes. Think it’s mostly a narrative desperately trying to be shoehorned in from those sidelined/ underexposed. My pocket rockets, $YFI and $AAVE are up 3x & 2x since Initial Shill Offering.”

Yearn.finance improvement protocols

Yearn.finance improvement protocols expected could take the YFI token to the next level. Regarding the new few structures, as part of the Yearn improvement protocol (YIP), there would be a removal of a 0.5% withdrawal fee, which rewarded YFI for capital flight.

As strategists are the key value drivers of Yearn, the improvement protocol suggests that they now earn 50 percent of the strategy rewards rather than 10 percent of the 5 percent performance fee.

Although YFI’s price is currently still far away from $44,000, its all-time high, but the rally in the DeFi market could take the Yearn.finance token higher. The steadily growing amount of total value locked in Yearn’s yVaults and an increase in yields are influencing the YFI rally.

Yearn.finance Announces Partnership With Cream and New Lending Project: Stable Credit

Yearn.finance founder Andre Cronje has recently published details of an upcoming integration with Cream, a lending protocol in the decentralized finance (DeFi) ecosystem. For the launch of Cream V2, Cronje explains the integration of the two protocols in a blog post.

In Cronje’s blog post, the two protocols will merge development resources for introducing interactions between the two protocols.

For Yearn.finance’s users, they would be able to use their share in a yield farming strategy fund as collateral to borrow on the Cream protocol. Users would also be able to access leverage on the platform, to increase their yield.

Through this merger, the two protocols will still remain independent, although there are many synergies that resemble a merger. This partnership would also see future releases, as Cream will be responsible for lending products.

A lending platform about to be launched that was built by Yearn.finance, called Stable Credit, will be launched through Cream. Stable Credit is a zero-collateral protocol enabling more flexibility in lending.

Although the blog post has explained many different synergies between the two protocols, the community has had concerns about not being consulted before a merger. Earlier this week, Yearn.finance and Pickle Finance had the DeFi industry’s first effective merger.

Yearn.finance announced a partnership with Pickle Finance earlier this week to boost yield farming incentives, and to solve the issue of the exploit of which Pickle Finance faced in the loss of almost $20 million in Dai.

According to Cronje, the partnership was to reduce work, increase specialization, and leverage shared expertise. The goal of the partnership is to boost returns for yield farmers with Pickle Finance strategies by enabling the earning of increased performance fees under the Yearn fee structure.

Under the new Yearn.finance framework returns accrued from yield farming with Pickle will be boosted. Furthermore, Pickle will avail reward gauges that will enable Yearn vault depositors to earn additional rewards.

These mergers highlight that although there is a governance token for the Yearn.finance protocol, the YFI token, the core team has made the move to approve the recent partnerships. This might go to show that the community could be triggered in the future by the role of the governance token YFI, as the protocol may not be as decentralized as expected.

DeFi to Reach $20 Billion in Total Value Locked by the end of 2020

The decentralized finance (DeFi) industry recently reached over $15 billion in total value locked before dropping back to $14 billion in TVL. At the time of writing, the total value locked in DeFi is currently $14.68 billion.

Considering 2020 has been a year of rapid growth for the DeFi industry, DeFi Pulse predicts that the industry could reach $20 billion in TVL by the end of 2020. DeFi Pulse further explained:

“There’d still be a decent amount of ground to cover, of course, as DeFi’s TVL has since ceded from Monday’s top to ~$14.05B currently. With $15B now notched, though, $20B and beyond seems more in reach than ever. In the meantime, let’s see if the last 3 weeks of 2020 are defined by more decline, another acute DeFi surge, or chop somewhere in between!”

In the past 24 hours, some of the DeFi tokens have made some sizable movements. Aave (AAVE) has gained over 3%, Synthetic Network Token (SNX). Other best-performing assets include IDLE, gaining over 400%, COVER 150%, Compound (COMP) 13.8%.

In a recent thread regarding crypto trends to look out for in 2021, Ryan Selkis, the CEO of crypto research firm Messari noted that DeFi has seen 15x growth this year. Decentralized exchanges and protocol native stablecoins, as well as credit markets are essential for a true parallel financial system, the CEO noted.

Messari noted that the decentralized exchanges (DEX) now comprise over 13.6% of total volumes, which increased from 2.8% at the start of the quarter. Dynamic automated market makers (AMMs) ultimately illustrate the power of composability, according to Selkis. Curve and Balancer have optimized AMMs that drive DeFi adoption. Curve allowed DeFi stablecoin markets to be ten times more liquid, while Balancer made it less risky, and more lucrative to be a market maker by pooling assets.

Yearn.finance (YFI) which has seen its token surge and eclipsing Bitcoin’s price this year, is up by 81,268% this year from its all-time low at $31.65. Selkis commented:

“Yearn is eating the entire DeFi industry. Anything that can be incorporated into the “Wealthfront of DeFi” will be. Religious (and now wealthy) early adopter community.”

Yield farming in the DeFi space has been seeing a growth in popularity, as crypto whales have been leveraging DeFi protocols to generate high rates of return. Although DeFi enables an ecosystem of decentralized applications to have access to financial products including cryptocurrencies, yield farming is most profitable only to crypto whales, who are able to have a high amount of crypto locked up in DeFi.

Yearn finance’s vaults enable the process of seeking the best returns for yield farmers, with the yETH vault, for example, pooling funds to reduce Ethereum gas fees.