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Here's a thread on @iearnfinance created by @AndreCronjeTech, which a couple weeks ago launched its governance token: $YFI. I'll discuss the history of this launch, its fit in the market, and why it is the most important product in the crypto space since $LINK.
The @iearnfinance y pool launched on @CurveFinance in February. This pool has consistently been the most liquid pool on the biggest stablecoin dex since it launched. The y pool currently has around $230m in liquidity locked.
During the initial $YFI farming phase it was upwards of $500m. The y pool is a lending aggregator and it automatically shifts stablecoins between AAVE, Compound, and dydx. This gets you the highest yield in DeFi on your stablecoins and is built with the power of smart contracts.
Lending providers earn roughly 10.4% APY, and the pool itself accrues roughly $60k in earnings weekly to the iearn protocol. Since then @iearnfinance has been creating an entire suite of products focused #DeFi yield farming.
This led to the launch of $YFI, which is a governance token that overseas the entire iearn protocol. $YFI holders - through governance - ultimately determine how protocol earnings are allocated, and if any incentives are to be generated (YFI inflation).
Instead of allocating a large portion to himself or solicit VC funding @AndreCronjeTech chose to give away control of this protocol, which was already earning $60k weekly, and IMO is a $1b+ protocol.
It couldn't be purchased, there was no premine, the only way to obtain it initially was to "farm" it by providing liquidity to the y pool on curve. He also made an ingenious way to farm several tokens at once: $BAL, $CRV, $YFI.
This is in addition to earning interest on stablecoin deposits and yCrv trading fees. During the initial $YFI farming phase the APY was 10-16% per week when factoring in the $YFI rewards. This is 1m DeFi IQ.
@AndreCronjeTech stated in the initial blog post that it was "valueless" and had "zero financial value", but that was an IQ test and smart money knew right away that a token controlling a protocol with $400m TVL locked and earning $60k weekly was not worthless.
This is essentially the fairest, most decentralized launch since $BTC, and has quite a few similarities. Genius lone founder, no premine, no VCs, only earned through mining, technological complexity only deeply entrenched participants would understand.
There is only 30k in existence, making it incredibly scarce and nearly no large holders will sell their shares as they can just hold and earn a % of protocol fees that are almost guaranteed to grow as new products are released.
@iearnfinance is now building an entire suite of products and the next launch is delegated yVaults. Users will be able to deposit any ERC-20, which will be used to draw stablecoins and farm the most optimal strategies in all of DeFi.
This is an absolutely gamechanger and will result in tons of capital being locked in the iearn ecosystem. Why deposit USDC on Aave when you can deposit to the yVault and have it be used to farm strategies that are yielding multiples of the interest rate you would earn on Aave?
The implications of this are that @iearnfinance has now just raised $200m+ in liquidity to do as it pleases. There is going to be hundreds of millions of dollars allocated to yVaults that will be used to farm the most optimal opportunities in DeFi.
Almost any new liquidity incentive program now will be dominated by @iearnfinance as they will be the largest liquidity provider and will farm a substantial amount of any rewards. This was already seen first hand with the YFI forks: YFII, YFFI, etc.
As more capital is locked the iearn ecosystem will generate more yCrv fees, which will boost its earnings. As earnings of the ecosystem grows investors and speculators will purchase $YFI to gain a % of the protocol fees.
As $YFI starts pumping, LPs will deposit more capital to iearn products to receive the high APY (assuming $YFI inflation restarts). A positive feedback loop will boost the TVL to very high numbers. You didn't fall for the "token is valueless" fud did you?
Smart money figured this out weeks ago. A self-identified user named yfi_whale on the governance forum is a collective group of individuals that farm based on optimal farming opportunities. Some deeper research indicates that they are a professional MM and trading firm.
Here is another interesting purchase. $1m spent to buy ~300 YFI at $3k. Likely a VC fund. Why would they buy a purportedly "valueless" token for nearly $3k? Because they figured out everything outlined and above.
tx 1: https://etherscan.io/tx/0xfe418fde0250817d4e51983aa09ef6e405c73ae1cbf67fae37616f9570b2baaf
tx 2: https://etherscan.io/tx/0x8c7039e63ff2b659f8419c6a21b048b8932a152dec5ac125924c8e90d54eb463
tx 1: https://etherscan.io/tx/0xfe418fde0250817d4e51983aa09ef6e405c73ae1cbf67fae37616f9570b2baaf
tx 2: https://etherscan.io/tx/0x8c7039e63ff2b659f8419c6a21b048b8932a152dec5ac125924c8e90d54eb463
This is smart money and they have been accumulating heavily. Here’s another interesting holder: 17m LEND. They were purchasing $YFI hand-over-fist a few weeks ago, even when $YFI farming was on-going. https://etherscan.io/tx/0xaba907642b10a353a51df9e8dbe080dfd8bde53a3dc6e56c82b085318cf56325
Are all these whales – who are heavily entrenched in DeFi – wrong? Unlikely. This is a $1b+ protocol and the centerpiece of DeFi. An automatically optimizing high-yield divided mutual fund. Except without the high expense ratio and completely permissionless and no KYC required.
