Ethereum: YFi breaks through $38,000

  • The YFI price has reached an all-time high of almost $38,000, while analysts believe a rally above $500,000 is possible.
  • Ethereum (ETH) could suffer supply-side liquidity shock due to increased demand after the launch of the new Ethereum Vault on yearn.finance. 

The token of the yearn.finance protocol, YFI, continues its incredible rally. Almost two months after its launch, YFI yesterday reached a new all-time high of $38,883. Although the token has experienced a setback at the time of release, YFI is still posting a 13.16% gain over the last 24 hours and is trading at $33,527. On the weekly chart, YFI shows a whopping 169.2% gain, and on the monthly chart, a staggering 712.15% increase.

Despite the extreme rally, few experts currently expect the hype to end soon, with the most conservative analysts seeing the token at $100,000 in the long run. Much higher is the prediction of the co-founder of Trinity Mobile Networks, Tyler Reynolds. Reynolds stated that he has “never seen a phenomenon like YFI” and believes the token could reach $500,000 and a market capitalization of $15 billion in less than 12 months.

500k $YFI = $15B mcap If it traded at 50x FCF, then it would need to generate $300M for holders It’s already generating $20M and that will go up as yUSD/yCRV grows Add in other new arb opportunities & products (eg insurance) and we’re not far from $300M in FCF.

The extremely bullish prediction is also supported by positive news for YFI. The leading crypto exchange Binance has announced the introduction of futures contracts for the YFI token. The perpetual futures contract for the YFI/USDT pair was launched at 7:00 a.m. today, August 31, according to an announcement. Users will be able to use a 50x leverage.

Additionally, the YFI token was listed on the decentralized lending protocol Aave some days ago, what was probably a major catalyst for the rally of the last days. Furthermore, the creator of the protocol yearn.finance, Andre Cronje, gave hints about a new product in the future possibly launched on the FTX platform. Cronje stated the following:

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.

The impact on Ethereum’s price and risks of investing in YFI

Ethereum’s price could benefit directly from the boom in YFI and yearn.finance. The protocol has launched a new product known as Ethereum Vaults. The vault, which went live on Monday following a community vote, allows users to stake ETH for rewards. In that sense, the founder of the Ethereumprice.org, OxNick, revealed that ETH leveraged in DeFi has passed 5,000,000 or approximately 4.50% of total circulating supply.

He further commented that the vault will be attracting a huge amount of ETH tokens, with many observers noting that this trend will leave the Ethereum market with a supply-side liquidity shock. The yearn.finance product and phase 0 of the Ethereum 2.0, OxNick stated, will be a catalyst for this crisis. Therefore, the ETH price could be at the beginning of a rally.

On the other hand, some YFI’s detractors have raised the possibility of the token being forked and therefore becoming an unsustainable project. However, the analyst Spreek argued in a series of tweets that this possibility is very remote. This is due to the community that exists to support the project. In addition, the analyst believes that YFI has passed the initial stage of launching and distributing the token. The analyst stressed that there are many components that the token’s competitors would have to replicate.

The YFI community is one of the most vibrant in crypto and is likely to accelerate its growth over time. A ton of dev talent (like the one of a kind Andre) is going into these products!