In the last 24 hours, YFI gained nearly 40% to trade at its recent price of $26,388, flipping Bitcoin’s all-time highs of $20k by setting new highs of 27,241 today.
A crypto startup investor Ian Lee sees YFI exceeding Bitcoin as arbitrary and psychological. He notes that comparing the price of YFI to Bitcoin makes little sense as BTC’s market cap is 568x larger than YFI.
Also, a growth in YFI market cap to extent of that of Aave (LEND), the largest DeFi protocol with more than $1.52 billion in total value locked and Maker (MKR) will leave its price around $30k due to its capped supply.
YFI Setting New All-Time Highs Have Been Traced to These: a potentially new partnership, Aave announcing YFI listing on Aug 28th, and strong technicals.
Arthur Hayes, the CEO of BitMEX who has been recently exploring different DeFi protocols spoke on the current DeFi mania in a blogpost “Dreams of a Peasant”.
Speaking on the positive aspect of DeFi as being a huge driver of funds into Bitcoin and other cryptos, he reinforced that the DeFi space has enormous room for growth. He also stated that there are clear risks in using these DeFi protocols which he refers to as ‘proto-banks’.
Hayes noted four main risks to DeFi “yield farming,” in his words he stated:
If you buy a DeFi token that is supposed to yield dividends from fees captured by the protocol and the token declines, you may be at a loss despite the dividends.
The loan book “takes impairment,” meaning loans are not liquidated correctly due to liquidity, thus leaving depositors at a loss.
There could be defaults if undercollateralized loans are introduced and borrowers can’t pay back loans, undercollateralized loans are something that Aave is testing out right now.
A crypto hack takes place. “That is the result of an intentional or unintentional bug in the smart contract code that siphons assets out of the project, or they become inaccessible.”