Ethereum-based yearn.finance and its governance token YFI evolved into a major DeFi player.
Yearn.finance’s native governance token, YFI, is now the second-biggest decentralized finance (DeFi) coin in the cryptocurrency market. Its market capitalization has surpassed $1.1 billion just one and a half months after its launch.
Four major components contributed to the rapid success of yearn.finance: unique supply, an active community, a respected developer, and innovative products.
Unique Supply, No Premine, Decentralized
The process of yearn.finance’s launch garnered the attention of many DeFi enthusiasts since the beginning.
Andrew Cronje, the main developer behind yearn.finance, rebranded, and relaunched iearn.finance with a suite of products. Cronje released YFI with no premine, a fixed supply of just 30,000 tokens, and no founder reward.
The transparent and decentralized launch of yearn.finance, which also gives YFI token holders all the governance rights, made the DeFi protocol unique.
“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. Despite having the power to give himself a pre-mine or founder reward, he elected instead to keep zero tokens for himself,” Daryl Lau, a contributor to Deribit Insights, explained.
A part of the intrigue behind YFI was its token. YFI has a fixed supply of 30,000, which led to the price of each individual token surpassing that of Bitcoin. But, in terms of market capitalization, even at a price point of around $38,300, its market cap is less than $1.2 billion. In contrast, the market cap of Bitcoin is at $216 billion.
The price chart of YFI, the native governance token of yearn.finance.
Respected Developer, Fast Shipping Speed
Cronje, despite receiving no major financial incentives from the YFI launch, has consistently shipped out new DeFi-related products.
Most recently, as an example, yearn.finance announced the launch of yinsure.finance.Yinsure will provide insurance coverage to DeFi users.
The developer has collaborated with various top developers and executives in the cryptocurrency industry. On August 28, Cronje hinted at a collaborative project with Sam Bankman-Fried, the CEO of FTX, one of the largest derivatives exchanges in the cryptocurrency sector. Bankman-Fried is also the chief executive of Alameda Research, a cryptocurrency trading firm and OTC desk.
“Guess the cat is out of the bag, but just so that there is some expectation management, this is a long roadmap that we are working on, so it won’t be anything anytime soon. But there will be something very sexy in the future,” Cronje said.
The confluence of a low and unique supply model, a transparent launch, and an active developer eventually led yearn.finance to evolve into one of the largest DeFi protocols across various metrics.
According to data from DefiPulse, there is more than $790 million in total value locked in the yearn.finance protocol. It trails just behind Synthetix, Aave, and Maker.