Why is Yearn Finance (YFI) falling?


YFI, which rose to $ 44,000 last month, saw less than $ 13,000 today. Jason Choi, research manager of cryptocurrency investment fund Spartan Capital, attributes this price drop to Curve (CRV). On the other hand, DeFi area, which was the favorite of the market last month, is also losing momentum collectively. Many DeFi tokens, including Uniswap (UNI), have experienced huge drops.

The decentralized financial movement DeFi has left behind a difficult three-week period in terms of price. YFI, the token of yearn.finance, headed by developer Andre Cronje, has experienced a serious rise in the last period, reaching the level of 44 thousand dollars for a period. Like many DeFi tokens, YFI, which decreases gradually every day, also saw under $ 14,000.

Jason Choi, research manager of cryptocurrency investment fund Spartan Capital, stated that yearn.finance is dependent on the stablecoin pool on the Curve (CRV) platform, a decentralized exchange for stablecoins:

“Yearn.finance, which provides automated trading options, offers 9 vaults (or auto-picking strategies) for users to earn money. Approximately 60 percent of the assets in Yearn are in the yCRV vault. So what does that mean? When you look at it, the capital of 220 million dollars stands in the fixed coin pool (yPool) in Curve Finance. CRVs are produced with your stablecoins and CRVs are sold for more stablecoins. This generates a return in US dollars. “

According to Choi, yearn.finance’s keeping the vast majority of the capital in the yCRV vault seriously undermines the upward trend of YFI:

“Currently the yCRV vault accounts for about 40 percent of the total locked-in value in the y pool. Pool Y also accounts for 48 percent of the total locked-in value ($ 1.22 billion) in the Curve. The more important point here is that as long as the yCRV vault is the dominant strategy, a higher CRV price benefits yearn.finance annual returns and hence the YFI price. However, the further growth of the yCRV case will create as much sales pressure for CRV ”

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In addition, Choi says the CRV has a bearish outlook due to inflation, which will affect the overall price of YFI. The crypto researcher also states that the yearn needs to get rid of its dependence on Curve in order to get back on its feet:

“Every asset has macro uncertainty… The YFI decline was really bad. Part of the reason for this is the CRV price. However, yearn has plans to go separate from yCRV. The team has grown 20 times in 3 months. New products are coming. The rise will come for YFI ”


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