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Traders have flocked to Yearn Finance’s YFI stocks as upside prospects in other top tokens have dwindled.
Yearn Finance’s bullish bias was aided by a sluggish cryptocurrency environment, as the price of its governance token YFI hit new peaks in USD terms on May 11 — just short of $70,000.
YFI price hits new highs in USD
Before the London opening bell, the YFI/USD exchange rate increased by $6,258, or 10.02 percent, to $68,748. As traders opted to take profits, the pair rapidly retraced lower, reaching about $67,067 as of 0736 UTC. Nonetheless, the decline appeared minor in comparison to the prevailing uptrend, implying that YFI could resume its upward momentum after a brief consolidation phase.
The token outperformed Bitcoin (BTC), the flagship cryptocurrency, whose own uptrend has eased since reaching a record peak of about $65,000 last month. The YFI/BTC exchange rate was near a five-month peak of 1.192 BTC on Tuesday morning. Meanwhile, the pair’s intraday high was 1.247 BTC, a 58 percent increase.
Yearn Finance’s token market saw huge upswings as its top competitors underperformed significantly. Bitcoin initially remained weak after struggling to break through a technical resistance barrier of $60,000. Its strong positive association with other common digital assets drove their prices down as well.
For example, Ether (ETH), the second-largest cryptocurrency by market capitalisation, fell below $4,000 due to profit-taking sentiment.
On a 24-hour changed timeframe, the top losers were Dogecoin (DOGE), XRP, Polkadot (DOT), and Litecoin (LTC). Everyone dropped between 9% and 12%, owing to traders’ proclivity to take profits following the tokens’ supersonic market rallies in the previous sessions.
Yearn Finance’s YFI has become relatively lower in 2021. When opposed to its altcoin peers’ thousands of percentage point increases, the token would increase by almost 160 percent. Dogecoin, for example, remained a scene-stealer for the majority of the first and second halves, expanding by more than 19,000 percent to ultimately outperform most large-cap altcoins.
Technically, YFI served as a hedge as the rest of the cryptocurrency market returned from their overbought levels. But looking closely, what worked in the favor for the Yearn Finance token — at least in the current quarter — is its ability to cast aside a flurry of its major issues.
Banking infrastructure for DeFi
Yearn had a tumultuous start in 2021, in retrospect. The biggest issue going into the year was budget shortfalls. The Yearn Finance group did not have any reserves set aside for its key contributors, limiting its ability to achieve any upside exposure. Andre Cronje, the founder of the Yearn Finance protocol, also expressed his displeasure in a blog post titled “Building in DeFi Sucks.”
However, in the weeks that followed, there was a tremendous amount of community interest in resolving the reserves dispute. The YFI holders proposed two resolutions, which were approved by a popular vote. The first “Buyback and Build” update aided in the implementation of a buyback scheme that attached YFI to their treasury for redistribution.
Meanwhile, the second “Funding Yearn’s Future” proposal created the protocol treasury by issuing 6,666 new YFI tokens, with a primary emphasis on funding key contributors.
Yearn V2 was the next significant update. Its previous mid-January introduction received mixed feedback due to user interface problems. However, the team acted quickly to resolve those questions and bring them to a satisfactory end. The overall amount trapped within the Yearn Finance pool has risen to $4.243 billion in the months after the patch.
Yearn V2’s most significant improvements to the Yearn Finance protocol were a revised fee structure, multi-strategy vaults, and widely differentiated solutions made possible by a new ecosystem alliance with Cream. The events triggered a bullish reaction in YFI markets.
Frax Finance, a fractional-algorithmic stablecoin protocol, has introduced Yearn vaults to its fixed yield asset FXB. Meanwhile, Alchemix is developing a credit scheme based on Yearn’s protocol, reinforcing Yearn’s role as a banking solution to the decentralised finance ecosystem.