$369.69 -2.61%
ETH · 3w (YFI) yields are plunging: is this a risk for the Ethereum DeFi darling?

It’s fair to say that it’s been a slow past few weeks for the decentralized finance space. Due to a confluence of trends including but not limited to DeFi becoming crowded, venture capital firms launching “industrial-scale farms,” and Ethereum-based coins dropping, the yields offered through the top “farms”  have plunged.

Case in point:‘s yCRV/yUSD vault, one of the protocol’s most popular products, now offers an annualized yield of around 15 percent — far below the 60-100 percent offered just weeks ago.

That’s not to say 15 percent is bad — it’s at least ten times the yield you could get at a traditional bank. But, some fear that YFI could decline because its valuation is somewhat dependent on high yields.

DeFi yields are dropping: Is threatened?

At launch, YFI was a coin with zero intrinsic value. But the market rapidly bid the coin to the point where it traded as high as $44,000 per coin at recent highs. The reason why the market was so bullish on was because fees were implemented that would effectively allow holders to obtain dividends on their coins.

But as these yields have dropped, so have those dividends.

That’s an issue when many in the space were buying YFI in hopes of using it as a yielding investment.

According to Andrew Kang of Mechanism Capital, though, dropping yields aren’t a pressing concern.

He noted in a recent Twitter thread that Vaults, currently the product that is known for, is only one of many products inside an ecosystem being built by the Ethereum protocol’s developers.

Lead developer Andre Cronje is currently working on StableCredit, yInsure, yTrade, and others, which will enable YFI holders to capture yield through fees charged on decentralized trading, insurance, and lending.

A common misconception is that @iearnfinance is reliant on high DeFi yields which obviously taper off. Remember that: 1. Vaults are only one pr...
Continue on
Recent news