Yearn Finance (YFI) – the simple yield aggregator network that automatically rebalances DeFi yield-farmer portfolios between lending protocols to earn users’ the highest yield – has been expanding its tentacles across the entire DeFi market.
What I mean by this is – Yearn has been busy acquiring and merging with many of the leading projects and protocols in DeFi:
- Nov 24, 2020 - Yearn merges with PickleFinance (source)
- Nov 26, 2020 - Yearn merges with Cream v2 (source)
- Nov 28, 2020 - Yearn merges with Cover (source)
- Nov 30, 2020 - Yearn merges with Akropolis (source)
- Dec 1, 2020 - Yearn merges with SushiSwap (source)
As such, Yearn has become one of the fastest-growing DeFi ecosystems with a total of 42 monthly active developers in their first year:
What that means for YFI Holders
Now that Yearn Finance has expanded its tentacles across many of the leading DeFi protocols and is one of the fastest-growing DeFi ecosystems, its $YFI token will now act more like an Index token that consists of $SUSHI, $CREAM, $COVER, $AKRO, $PICKLE, and any other protocol they integrate with and encompass.
That said, Yearn Finance is on a fast-track to becoming the go-to, one-stop DeFi platform that absorbs value into its $YFI token from the entire DeFi space.
When that happens, $YFI becomes a double-edged sword. If $SUSHI or any other protocol gets exploited it might have a negative rebound on $YFI price. Alternatively, in the more optimistic scenario, if $SUSHI goes rogue or flash loaned then Yearn can cut them off, and only the $SUSHI token will experience a downside in price and TVL.
As for the most beneficial outcome; if Yearn’s merged partners continue to grow in popularity, accrue value, and bring value to the DeFi ecosystem, then Yearn’s $YFI will benefit too.
The aggregative nature of Yearn Finance with all of its mergers and integrations is creating a powerful network effect – more people participating in the platform’s services, which then attracts even more people, and creates demand for $YFI.
And since $YFI has a limited supply of just 30,000, even just a subtle increase in demand can quickly send its price upwards.
In a way, what’s happening with Yearn is similar to what happened with tech giants PayPal, Google, Facebook, Twitter, and more – it’s getting entrenched in its market position as the leading DeFi Protocol by merging with smaller players and help them to get bigger than allow them to grow on their own.
That said, Yearn Finance and its $YFI token might be something to hold on to and to watch closely as cryptocurrency and DeFi go mainstream.