If “for” wins, proposal #2 will be submitted to set the weekly distribution quota With the launch of $YFI, there also came with it a couple of key proposals, each to be voted by those that have participated in Pool 3. Governance and Voting and the power of community This should be kept in mind when looking at metrics like “Total Value Locked in DeFi”. A dollar in Yearn could also be represented as a dollar in Aave and Curve. However, it is worth noting that Yearn’s TVL actually overlaps with the other base protocols like AAVE or Curve.
But if applying the TVL = MC theory, YFI was severely undervalued, and coupled with the fact that everyone was drawn in to the very lucrative yields, there was a pseudo-ponzi scenario where people were rushing into to provide liquidity and thus increasing the TVL which itself lead to a positive feedback loop in increasing the prices with it. In the $YFI token announcement blog post, Andre declared that the Fair Value of the $YFI token is 0, as there was no sale and there will never be one, all tokens will have to be earned. Additionally, governance tokens could always vote to receive future cash flows/revenues generated from the company if it makes sense, which would arguably then generate a premium for the token. Some have pitched the idea that the project should be worth more or equal to its total value locked (TVL), as you might imagine if it’s cheaper than that it would pose a large security risk to the protocol as someone could make a malicious governance attack to it. The question on everyone’s mind with the recent frenzy of governance tokens launching such as Compound, Balancer, BZRX and now YFI, is how do you value governance? Importantly, for this yield to be real, YFI the token itself must have enduring value. However the question still remains on how sticky any of that capital is as they could just be chasing yields at the moment. Yearn exploded in usage and AUM shot up to well over $400m in less than a week, a strong indication that it’s achieved Product Market Fit as it would sit around #5 in TVLs across the entire DeFi Ecosystem according to. Voting is also a prerequisite for participating in the fee rewards pool, which pays out protocol fees to qualifying stakers of YFI in the rewards contract. By providing liquidity on Balancer in portions of 98% 圜RV and 2% YFI, and then staking the balancer pool tokens (BPTs) would earn not only a portion of 10k depending on their share of the pool over a week, but also allocate voting shares in proportion to the number of BPTs staked. By providing liquidity on Balancer in portions of 98% DAI and 2% YFI, Liquidity providers would earn a portion of 10k depending on their share of the pool over a week. All Liquidity Providers on the Curve.fi yearn pool who staked their tokens (圜RV) would earn a portion of 10k depending on their share of the pool over a week. The initial supply of 30k YFI was distributed equally into 3 different pools with differing mechanisms, each targeting a different goal. In short, you have to provide liquidity to the ecosystem. Much like early bitcoin miners, early YFI yield farmers have self-selected as those most in tune with DeFi, ensuring a passionate and involved community. This fair launch is reminiscent of early Bitcoin mining, as nobody had a head start–not even Andre, and the only way to acquire it was to earn (mine) it. With this, $YFI has had the most favorable supply distribution for a DeFi Community that’s ever been seen with everyone that earned tokens having undertaken the same risks with all the information freely available to them. Despite having the power to give himself a pre-mine or founder reward, he elected instead to keep zero tokens for himself. The lead developer behind it, Andre Cronje, decided that he would create a $YFI token, and with that pass over control/governance of the entire yearn.finance suite of tools. Yearn.finance is a relaunch that brought with it a whole new suite of yield tools such as ytrade, yliquidate, yleverage, ypool and smart contract credit delegation lending. It works primarily by automatically depositing stablecoins and farming yields from multiple protocols like AAVE, Compound and dYdX. Yearn.finance is what used to be iearn.finance an automated DeFi yield aggregator that had around $8m AUM with ~10.5% aggregate yields before shipping $YFI last Saturday.
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