After Aave went public and hinted that it might establish a partnership with FTX, the decentralized financial giant Yearn.finance’s native token YFI once again hit a record high. The price has soared from $14017 to $18,169 in the past 12 hours, an increase of more than 30%. Now enter ” Price discovery” stage.
The above figure shows the price trend of Yearn.finance’s native token YFI in the past two weeks. Source: TradingView.com.
For Yearn.finance, this is also the first time the YFI token price has entered the price discovery stage 8 days after it reached the previous peak of $16,666. “Price Discovery” (Price Discovery) is actually a term in the futures market. It refers to the open bargaining between the supplier and the demander. Through fierce competition, the commodity price level is constantly updated and spread to the world, so that the commodity price becomes the world price In the process, the buyer and seller finally reach a transaction price on the quality and quantity of a commodity at a given time and place.
In fact, the reason why YFI price can reach a record high is mainly driven by three factors:
1. Listed on Aave;
2. Potential new corporate partners;
3. Strong product and technical strength in the ecosystem.
1. Listed on Aave
On August 25, Aave’s UK subsidiary announced that it had obtained the Electronic Money Agency (EMI) license issued by the British Financial Conduct Authority (FCA), further confirming its dominant position in the DeFi market. According to information released by the Financial Conduct Authority of the United Kingdom, Aave was approved as early as July 7, 2020, and can now issue Crypto cash alternatives and provide payment services.
Stani Kulechov, founder and CEO of Aave, revealed that the company submitted an authorization application to the UK Financial Conduct Authority for the first time in 2018 and plans to launch a pilot program in the UK first, and then cover the entire Europe and expand globally. At this stage, the work in the decentralized field of the Aave protocol is still continuing, the governance smart contract is being tested, and the security smart contract is under review. In addition, Jordan Lazaro Gustave, chief operating officer of Aave, also explained:
“Through the legal agreement reached by OpenLaw, Aave will make credit authorization possible, in which Party A can entrust its own credit line to Party B, and Party B can also borrow credit line from Party A. For example, a credit entrusting party may want to establish For the party with more credit, the borrower can be a company, NGO, government, institution, etc.”
On August 28, the money market agreement Aave (LEND) announced the listing of YFI. Aave is currently the DeFi agreement with the largest total amount of DeFi locked up. The total locked up value reached 1.53 billion US dollars, accounting for 21.09 of the total locked up value of 7.24 billion US dollars. %. Although Yearn.finance has always been one of the most important DeFi protocols in the market, the listing on Aave is undoubtedly the main reason to further promote the development of YFI token prices.
2. Potential new corporate partners
In fact, before landing on Aave, Yearn.finance founder and core developer Andre Cronje said that he is negotiating cooperation with FTX CEO Sam Bankman-Fried.
In recent weeks, the cryptocurrency derivatives exchange FTX has made frequent moves in the DeFi industry, including:
1. Launch a decentralized exchange called “Serum”;
2. List Compound governance token COMP and Balancer governance token BAL;
3. Launch Uniswap’s top 100 liquidity pool index futures;
4. The acquisition of Blockfolio, an crypto price tracking application, at a price of US$150 million is also the largest acquisition in the Crypto asset field in 2020.
The potential cooperation between FTX and Yearn.finance is in line with its development plan in the field of DeFi and DEX.
Andre Cronje said implicitly:
“I guess there is a cat who can’t wait to jump out now, but it’s better to wait for a while. This is the long route we are working on, so there should be no other problems in the short term, but there may be some very Sexy things happen.”
3. Strong product and technical strength in the ecosystem
The Yearn.finance ecosystem itself has strong product and technical strength. Its official website introduces the core products in the ecosystem, including:
1. Yearn.finance——the lender who performs profit conversion to optimize the loan yield (online);
2. ytrade.finance-trading with stablecoins (currently in the testnet stage)
3. yliquidate.finance——Aave’s 0 capital automatic liquidation (currently in the test network stage)
4. yswap.exchange-unilateral automated market maker (already online)
5. iborrow.finance——Credit entrust library from smart contract to smart contract lending (current testnet stage)
Recently, Year.finance launched the decentralized insurance service yinsure.finance. This new product contains three core parts:
1. Insurer Vaults-insurance is provided by the liquidity provider. The first vault will use USDC. The liquidity provider will provide USDC and earn the start-up fee and weekly fees paid by the insured. If the claim is approved, USDC will be deducted from the vault and paid to the claimant.
2. Insured Vaults—store insured tokenized assets. Take USDT as an example. If you want to insure USDT, provide USDT to the vault to generate yiUSDT. When making a deposit, you need to pay a 0.1% activation fee. Every week, you will be deducted 0.01% of the fee. You can withdraw USDT or deposit more USDT at any time.
3. Claim governance (Claim Governance)-allows the insured to make a claim by betting their yiUSDT, as the insurer’s liquidity provider will use its own yiUSDC to vote. If the claim is approved, yiUSDT is allocated to the yiUSDC liquidity provider, and USDC will be paid to the insured.
Based on these products, Yearn.finance has created a revenue-generating ecosystem whose sources of revenue also exceed other DeFi agreements, including:
- yearn.finance interest
- Compound governance token COMP
- Curve.fi native token CRV
- curve.fi/y liquidity pool transaction fees
- yswap.exchange transaction fee
- yborrow.finance transaction fee
- Leverage fees and liquidation fees of ytrade.finance (currently in the testnet stage)
- yliquidate.finance liquidation fee (currently in the testnet stage)
- Unallocated system interest or expenses
- Decentralized insurance service yinsure.finance income
Therefore, under the “stimulus” of these favorable factors, it is not surprising that the price of YFI can surpass Bitcoin and become the most concerned dark horse in the DeFi market. But at the same time, there are always bubbles and risks in the crypto market, so we also need to be cautious.