Yearn Finance is currently the fastest-growing decentralized finance (DeFi) protocol in the crypto space.
This growth reflects on the project’s governance token (YFI) that rallied from about $1,000 a couple of months ago to highs of nearly $40K set yesterday.
The project personifies the desire of DeFi enthusiasts to cannibalize Centralized Finance (CeFi) and make financial services accessible to everyone.
Yearn Finance was designed by its founder Andre Cronje to give investors access to the most profitable yield farming opportunities.
The project has quickly gained momentum amongst crypto traders, mainly due to its automated liquidity mining and yield farming strategies.
Since the project became a hit with investors, its native token YFI has surged massively in value; it outperformed BTC as it hit $16K on Aug 20.
Over the past week, YFI leapt even higher, eventually reaching over $30,324 on Aug 29. The very next day, YFI posted an all-time high (ATH) price of $39K before correcting lower.
At the time of this article’s writing, YFI/USDT hovers around $33,954 with the total value locked (TVL) within the Yearn Finance pools now approaching the $1 billion mark.
YFIUSDT Price Chart | Source Tradingview
What’s Behind YFI’s Explosive Growth?
Yearn Finance has primarily gained popularity due to its ability to aggregate yields from other lending protocols. YFI holders can also use their tokens to vote on proposals for the project’s improvements.
Yearn Finance creator Andre Cronje initially designed the platform to work as a yield automation tool, but the protocol has quickly evolved into a stack of various DeFi products.
It offers lucrative features, such as automated liquidity mining strategies and the trading of stablecoins, including DAI with up to 1,000x leverage.
On Aug 28, top leading DeFi platform Aave announced the listing of YFI onto its protocol. The listing provided YFI with some positive price pressure that led to the recent price surge over the weekend.
YFi holders can now earn further yields on their YFI and access simple Aave loan liquidations. What’s more, the protocol recently revealed plans to launch a new form of permissionless insurance dubbed “yinsure.finance.”
The imminent release of yInsure caused YFI to rally by approximately 40% in 24 hours, outperforming most other token assets in the market.
How Far Can Yearn Finance Go?
YFI managed to hit an ATH price of $39K this past week after posting two previous peak values of $27K and $32,843 on the same day.
The impressive momentum has gained the attention of many prominent personalities in the crypto and DeFi sectors, with some suggesting that YFI’s rally is just getting started.
For instance, the CEO of Bitmex, Arthur Hayes, tweeted on Aug 30 that YFI can climb as high as $100K.
Despite the current hype surrounding YFI, traders should deploy suitable stop losses and low leverage when trading derivatives platforms.
These precautionary steps could help mitigate heavy capital losses in case YFI corrects hard in the near term.