YFI touches $15,000, future remains wildly unclear
It's one of the fastest growing coins around, but the future is murky.
Yearn.Finance has taken a subset of the cryptocurrency world by storm over the last couple of weeks, going from zero-ish to over $15,000 per coin in just a couple of weeks. There are 30,000 YFI tokens in total.
Yearn.Finance is essentially an automated yield farming system that lets users automatically earn some of the highest yields possible when they deposit funds in it. This has given its native token, YFI, a keen following from people interested in helping steer the fledgling system, or just profiting from its success.
If my math is right, yearn is currently earning about ~$42,500 a day or about ~$15.5 million annualized. That's no joke. https://t.co/ltLhdbvOqS
— Larry Cermak (@lawmaster) August 18, 2020
In true grassroots style, the project's community has grassrootedly raised awareness around the YFI coin, with most of that awareness coming in the form of comments on its extraordinary price rise, claims that it's the new digital gold and a certain degree of self-assurance.
Incidentally, that comment probably says a lot more than it meant to about gender disparity in cryptocurrency.
It's also an example of how utterly bullish the coin's community is for what is, on paper at least, very easily replicated.
The other hand
Yearn.Finance can and has been easily forked many times. Basically, there's nothing stopping anyone from taking the same nuts and bolts as Yearn.Finance and trying to make it their own. Most of those forks to date have been scams, while the rest have struggled. None have gotten anywhere close to the same degree of success as YFI.
But there's nothing in YFI's DNA that can't be cloned, and if someone's trying to look at YFI in the long run as an investment more worthwhile than just more than one of 30,000 collector's items, this has to be taken into account. It's questionable whether this high degree of uncertainty is being priced in.
However, the inimitable part of YFI which can't be cloned is its upbringing.
Yearn.Finance was launched into the world freely for liquidity miners to pick up on, harvesting newly created YFI tokens in the process. The community naturally took seed around the token, and very successfully marketed and pumped YFI up. Meanwhile, the creator and lead developer has more or less fused and become one with Yearn.Finance.
Community has always been an important factor in valuing fork-able cryptocurrencies, because the community is essentially how you tell the originals from the imitations. The value of crypto communities has been demonstrated many times over.
But whether that can carry YFI in the long run, and in the face of countless inevitable competitors, remains to be seen. The results may prove to be especially interesting given that most end users probably won't care about the community as long as they're getting the highest returns possible, and that the community is by definition composed of token holders, so it's likely to change over time.
Disclosure: The author holds cryptocurrencies including LINK at the time of writing.