The crypto industry is known for its dramatic price action, euphoria and bubbles. In the latest sustained fad since the 2017 initial coin offering, or the ICO boom, the decentralized finance niche of the industry now captivates the attention of many participants. One particular asset within this niche, YFI, has pumped to amazing price heights, totaling at least 4,400% gains inside a two-month span. Is this price action warranted, and does the token have actual value?
“YFI’s value lies in its design as a governance token, allowing the community to vote and decide on the direction of the Yearn Finance project,” Jason Lau, the chief operating officer of the OKCoin crypto exchange, told Cointelegraph. “As activity within the project and vaults grow, YFI holders can change strategies, launch new vaults, and potentially even redirect treasury or fees to themselves at a later date.”
“While YFI currently does not offer any returns, there are proposals in the works that could see YFI holders that stake their YFI for governance, [they] would get a portion of the performance fees — and potentially even redirect treasury or fees to themselves at a later date,” Lau added, pointing to a relevant blog post.
Although crypto exchanges see value in YFI, their appraisals of the token may be biased because of the profits they gather by hosting trading for a popular asset. Binance, OKCoin and numerous other exchanges provide YFI trading on their respective exchanges.
Setting the scene
YFI is the token associated with the DeFi yield aggregation platform Yearn.finance. Essentially, the project stands as another opportunity for DeFi participants to shift their money around by borrowing and loaning assets for collateral and earning interest on holdings while also trading various pumping assets.
Between late July and the first half of September 2020, YFI ballooned from $850 to $43,000, according to CoinMarketCap, tapping a $1-billion market cap at one point in its price journey. It currently ranks 24th on CoinMarketCap’s list of the world’s largest assets at press time. The asset also holds a very small supply — just 30,000 tokens — which serves as a factor contributing to the speed of the price rally.
Although the token has rocketed in price, Andre Cronje, the person responsible for building Yearn.finance, said YFI holds no real value, according to his comments in July. Cointelegraph reached out to Cronje for updated comments, but he did not respond as of press time.
“This statement probably has to be understood in its context,” a representative from Binance Research, the analysis and data wing of the Binance crypto exchange, told Cointelegraph. “Andre was publicly criticized for having too much control over ‘custodied’ tokens and launched this governance token as an immediate reaction,” the representative added.
“As such, Andre said that he mentioned in a blog post the intent for YFI to be worthless, but later clarified that he simply didn’t expect that governance rights alone would be valued accordingly,” the representative noted, pointing to a Medium post from Cronje published upon the launch of the token.
Understanding Cronje
Following his comments on YFI as worthless, Cronje told Cointelegraph that he is quitting DeFi due to a hostile community in March and then in August, Decrypt published an article in which Cronje described himself as “tired, broke and close to quitting DeFi.” This marked two instances where Cronje hinted at leaving the crypto space, blaming the same factors for his frustration, he described the social vibe in the DeFi niche as “toxic.”
One report alleged that Cronje holds access to millions of dollars associated with Yearn.finance. The article included a number of other details on the developer, his responses to critics and his frustrations with the DeFi sector. Additionally, the community reportedly controls the supply of YFI, as the project’s founder has seemingly transferred all the tokens to users through three liquidity pools.
Cronje seemingly simply wanted to give the industry a sound, community-controlled project, birthing the token to give the industry participants governance over the project while aiming for the asset to hold no price value. In return, however, he still received significant backlash.
Exchanges seeing value in YFI
When asked about YFI’s value, Binance listed a pair of use cases for the token. “Firstly, it is a governance token and can thus be used to vote on proposed changes to the YFI ecosystem,” the Binance Research representative said. “Secondly, YFI allows for a pro rata distribution of protocol earnings that are created by fees.”
Based on the mentioned roles of the token, YFI has worth because “the governance aspect tentatively enables high-value protocol users to align incentives,” the Binance representative said, noting a link to stablecoins and their importance in DeFi. Additionally, “the aspect of shared protocol earnings informs the expected earnings,” the representative added.
Related: DeFi app overview: How to navigate crypto’s new finance wave
“Yearn Finance’s secret sauce is its yVaults — which attempt to maximize the yield one can make by routing capital through different DeFi mechanisms and protocols,” Lau said. Regarding YFI’s value, he believes that “the premise is to pool user capital, thus reducing the often-expensive cost of transacting on Ethereum — which are near ATH rates.” Furthermore, he added:
“Due to the current high returns of up to 100% APY, Vaults have become Yearn.finance’s most popular product line by far, especially as traditional investments continue to offer little to no yield. yETH (its Ethereum vault) recent launch has had strong activity ahead of ETH 2.0’s PoS launch and allowing ETH holders to earn some return. Until the ETH 2.0 PoS launch, ETH is an unproductive asset in yield terms, while other yVaults are providing strong returns.”
Additionally, Lau said that Yearn.finance’s recently unveiled insurance endeavor, yInsure, has potential. Still, the DeFi niche as a whole remains in its infancy, hosting upside potential, he added, expressing Yearn.finance as an up-and-comer.
Further explanation on YFI’s price
As to why YFI’s price has risen to such heights, the representative from Binance Research pointed at a pair of mentioned use cases, while additionally noting speculation as a big cause.
Amid the ballooning DeFi sector, Yearn.finance and its surrounding elements and participants have also expanded, cementing an integral position in the overall niche, the representative posited. “As such, a bet on a growing value of YFI is in many ways also a simple bet on a growing DeFi ecosystem,” the representative said, adding:
“Instead of explaining the speculation with a bullish sentiment on DeFi, it is also possible to drill down and focus on the aspect of liquidity mining. YFI was distributed to liquidity providers who deposited in Yearn.finance smart contracts. Since high TVL (total value locked) typically attracts more liquidity miners, there is some sort of (positive) feedback loop between TVL and the price of staked YFI tokens.”
YFI is just one aspect of the growing DeFi bubble. The crypto space exudes mixed feelings on the sector as a whole, which is a normal response to new innovation. The future will tell whether the niche eventually dies or becomes the next big technological advancement.
Related: Caught in two minds: DeFi meme coins spark debate over their intentions
OKCoin to Suspend XRP Trading and Deposit from January 4, 2021
Published
1 Stunde ago
on
Dezember 29, 2020
By
According to the announcement, the XRP deposit and trading would be disabled on January 4, 2021, as the lawsuit proceedings are taking place.
OKCoin has announced its intention to suspend XRP trading and deposit following the recent lawsuit against Ripple Lab, the company behind the asset, and two executives. This is a huge blow as panic withdrawal has been triggered with investors under pressure to switch to other assets. Coinbase has also announced that they will halt XRP trading in the coming year amid the reported lawsuit. The price of XRP has been affected heavily having dropped from its yearly high to as low as $0.22 especially in a period that is supposed to be a celebration for a bull run.
OKCoin Announcement Related to XRP
According to the announcement, the XRP deposit and trading would be disabled on January 4, 2021, as the legal proceedings take place. OKCoin also pointed out two different timelines for the suspension. The first one has to do with users who have borrowed from the XRP/USD margin pair. Those who fall under this category have until 7:00 PM PST January 13, 2021, to return the borrowed value. Users who refuse to abide by this will have to face an automatic liquidation by their system to end the loan contracts as reported by the exchange.
The second suspension timeline has to do with the spot trading, margin trading, and deposit. Customers who fall within this category should be aware that the above-mentioned activities would be suspended starting from 7:00 PM PST on January 14, 2021. OKCoin noted that the ongoing legal battle will take time to resolve, and there is no known date for the legal proceeding to end. For this reason, they will inform their customers when they get access to any information that can influence the change of their position.
The Legal Battle
The US Securities and Exchange Commission has sued Ripple for the illegal sale of securities. This was revealed by the Ripple CEO Brad Garlinghouse in a recent interview. SEC, unlike Ethereum and Bitcoin has refused to recognize XRP as a currency. XRP was premined, and a lion-share of its units are within the possession of Ripple in an escrow, and periodically released into the market.
Garlinghouse argues that they do not tap the reserve funds anyhow as they please. According to him, XRP has become increasingly decentralized in recent times as it has been recognized as a bridge currency for cross-border transactions. In another part, he accused the Trump administration of being hostile to the cryptocurrency market.
He, therefore, believes that the incoming administration may certainly create a favorable environment for cryptocurrency. Also, he assured that they will not allow themselves to be bullied by the SEC, but instead, they will fight for the entire cryptocurrency ecosystem.
Garlinghouse believes that treating XRP as security controlled by Ripple is equal to treating oil as security controlled by Exxon Mobil Corporation (NYSE: XOM).
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Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
Grayscale’s AUM Hits $19B, Up from $16.4B Announced Week Ago
Published
2 Stunden ago
on
Dezember 29, 2020
By
While it may be too early to project the possible performance of Grayscale in 2021, the spate of patronage the company recorded in the last two quarters of 2020 looks quite inspiring.
In what confirms the continued embrace of Bitcoin (BTC) and altcoins by institutional investors and the big-money clients, Grayscale’s total Assets Under Management (AUM) has been reported to top $19 billion, a significant uplift from the $16.4 billion reported a week ago. According to a report by CoinDesk, Grayscale hit this AUM milestone on December 28, and Grayscale’s Bitcoin Trust holds by far the largest chunk of the total assets at $16.3 billion.
The recent rally of Bitcoin to new highs as recorded in the past days started as a chain reaction that took its precedent months ago when Wall Street firms and institutional investors began betting big on Bitcoin. The investment made by the likes of MicroStrategy Incorporated (NASDAQ: MSTR), Square Inc (NYSE: SQ), and PayPal Holdings Inc (NASDAQ: PYPL) did not just help put Bitcoin in the limelight through mainstream media, it also prompted the embrace of the digital assets by other firms.
With this chain reaction, the price of Bitcoin continued to soar in response to boosted demand for the coin, and institutions like Grayscale that serves institutional investors benefited from this new demand, and hence, the continued increase in the firm’s AUM. Besides BTC, Grayscale’s Ethereum (ETH) AUM is now worth $2.1 billion, while the bulk of smaller holdings in Litecoin (LTC), XRP, and ZCash amongst others helped Grayscale’s total AUM to reach the new milestone.
Grayscale’s AUM May See More Boost in 2021
While it may be too early to project the possible performance of Grayscale in the coming year 2021, the spate of patronage the company recorded in the last two quarters of 2020 makes the case for improved performance provided the tempo is sustained.
Just as has been noted earlier, the continued embrace of cryptocurrency assets by highly liquid companies will continue to have a positive reaction on the price of Bitcoin, and by extension, this will even make more people pick interest in BTC. As a relatively young asset class, Bitcoin and altcoins have tremendous room to grow as the adoption rate is still not optimized owing to certain regulatory provisions in most countries, Grayscale and other hedge funds have enough room to compete for new clients entering the space.
With Grayscale been among the institutions at the forefront of helping to drive the acceptance of BTC, ETH, and other digital currencies, enjoying the dividends of its works through impressed AUM figures does not come as much of a surprise.
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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Following the Bitcoin all-time high on Sunday, December 27, Riot Blockchain stock registered 20% gains on Monday’s trading session. The stock has already appreciated by 13x this year. Apart from BTC, investors of Bitcoin mining companies are making a bomb in the market.
Bitcoin mining giant Riot Blockchain is making all the news in the market at the moment. On Monday, December 28, Riot Blockchain Inc (NASDAQ: RIOT) stock price surged a massive 20% surging past $15.5 levels. One of the biggest milestones with the Monday rally is that the Riot Blockchain has clocked a $1 billion market cap.
The latest price rally comes as Riot Blockchain hints at going aggressively on its Bitcoin mining business. Last week, the Riot Blockchain added new S19 Pro Antimers to its bitcoin mining arsenal. The company announced the purchase of an additional 15,000 Bitcoin (BTC) mining machines from Bitmain. The recent purchase also pushes Riot’s total fleet to 37,640 Next-Generation Bitmain Antminers.
Riot said that the fresh purchase of Antminers will help the mining company to attain a 65% jump in its mining hash-rate. RIOT stock has registered an unprecedented rally this year in 2020. RIOT stock has multiplied by 13x this year registering a 1200% surge so far.
Riot Blockchain has issued nearly 17 million shares since November 2020 with its total outstanding shares going to 67.5 million. It has been a phenomenal journey for Riot ever since it ventured into the Bitcoin mining business in October 2017. With valuations less than $50 million back then, Riot has grown more than 20x in size as of its latest stock price.
RIOT Stock and Shares of Other Bitcoin Mining Companies Profit from BTC Bull Run
The recent Bitcoin (BTC) price rally during Q4 2020 has also pushed the stocks of Bitcoin mining companies to new highs. Earlier on Sunday, December 28, the BTC price hit its all-time high of $28,000 in a massive bull run followed by huge institutional inflows.
Moreover, along with the BTC price rally, the Bitcoin hash-rate has jumped significantly since November 2020. Over the last two months, the BTC hash-rate has surged nearly 30% and is currently at 132 TH/s. The surge in the hash-rate suggests higher mining activity for Bitcoin.
As a result, Bitcoin mining companies have been making massive purchases of the BTC mining machines. In addition to Riot Blockchain, other giants like the Marathon Patent Group have made aggressive purchases over the last few months. Just like RIOT, the Marathon Patent Group (NASDAQ: MARA) has registered a phenomenal rally of 18% on Monday, December 28. MARA stock has multiplied investors’ wealth by 12x in 2020. It means the MARA stock has also given phenomenal 1100% returns year-to-date.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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