Yam, Sushi, and now Kimchi and Pasta? With Curry, and Sumo Ramen coming soon? Oh, and don’t forget about Shrimp.

What’s next for the DeFi yield farming food craze, and when will Gas costs drop (now up to around 500 gwei. In “my time”, 4 gwei was normal)? With promised yields of up to 50,000% APY, what could go wrong?

• Yam had a bug in its unaudited code after a massive week of rallying to around 1B MC, and is a month later set to launch Yam2 as a fix. 
• Sushi, a clone of Uniswap, has been live for 3 days, and is already granted the highly coveted Binance listing, with around 300M MC and several free audits in pocket (and a 10% fund for the founder for his hard work copy-pasting).
• Kimchi, launched around 12 hours ago and already the third largest user of Gas on Ethereum with 137M in assets locked up, openly admits to copying Sushi and Yuno, with just a couple minor changes (Yuno is a DeFi farming platform which missed the food theme memo).
• Pasta is similar, from a team called Spaghetti Money, with some form of charity built into its token fees and essentially zero governance because governance is “too complex”.
• Curry? Exit scammed in 20 minutes with only a discord channel.
• Sumo Ramen? Running on testnet and with essentially no information available.
• And Shrimp? Well, it’s a food crypto, and it’s a bit odd, related to governance and pools, but I honestly have no clue why it needs a token. At least they have a declaration of independence though:

You can't make this shit up...or can you?

It seems that every hour, there’s more food to come for the DeFi Yield Farming hungry. It as if it’s as easy as choosing a favorite food, adding a .finance domain, and copying code with some amount of twitter work and discord admin.

One thing is clear, however:

Everyone loves comfort foods.

See, Uniswap crossed a major barrier recently, trading huge volume of 457M USD despite high Gas costs, a volume greater than even Coinbase, one of the leading centralized exchanges. It costs anywhere from 25-50 USD for a single transaction at current Gas fees, and yet volume continues to soar.

The fact is that permissionless, private, and open exchanges are the future, and it’s provably so just by the Gas costs and projects launching on Uniswap instead of performing formal ICOs.

In this yield farming craze, people are making money hand over fist, and they are doing it despite ridiculous fees.

The price appreciation to yield farming looks from the outside like yet another pyramid scheme. It’s the sign of a bubble where the last one out suffers most. It’s magic money, and the only ones to profit are the earliest adopters.

Right?

...Or wrong?

Where is this money coming from, if wrong, then? On Uniswap, every transaction has fees, of which part of it goes to Liquidity Providers who offer their tokens in equal ratio for liquidity. These fees become their profit. Moving money is making money, as goes the saying.  

These new platforms, essentially clones of Uniswap and each other, are merely tweaking the rules, offering more fees to token holders or lock up incentives. It’s as simply as copy pasting, which is why they are often overnight sensations, and as horrible as it is to see the craze and the excessive risk taking from investors, the truth is that one of these platforms, or many of them, are going to create the perfect model that does indeed make them survive the daily rise and fall of new competition, and the fickle (greedy) moods of investors.

I would argue that these platforms are not in fact pyramid schemes, but rather just highly, highly risky gambles.

Here’s how works:

• An investor buys X token.
• X token needs to be staked in a liquidity pool so that trading can happen with minimal slippage.
• The investor gets Y token that represents their share of the liquidity pool.
• They stake that Y liquidity pool token on the new (often unaudited) platform.
• They get rewarded X token for providing liquidity and taking on that risk in excessive % returns.
  
  

In theory, the value of the actual token comes from investors getting a share of every transaction or trade (or other innovative model) on the used platform. Thus, the money comes from volume, and the real reward is fast adoption.

Every single one of these investors becomes a “shiller” to these platforms. They become an ambassador that recommends the use of their platform above others (because they get part of the fees), and as people migrate to these platforms, the end game is that some of these platforms will get used long-term as a trusted decentralized platform in the decentralized world, benefiting the early investors as well as the traders as the model to best efficiency gets ironed out. Of course the copy-pasters get a shitton of money, too, as abhorrently easy as it is.

This is a case where low effort does not necessarily equate low value, as much as we all hate to say it.

The risk to investing in these schemes is massive. These assets rise and fall like the wind. But, that said, each of these models is built on the work of years by other DeFi infrastructures, from Oracles like Chainlink and Tellor, to order book DEXs like Switcheo and Loopring, to staking and interest platforms like Yearn and Curve, to hardly known DeFi platforms pushing the envelope of innovation like Bounce, a DeFi auction platform from the creator of Ankr, or Chi Gas Token which lets you invest in the price of Gas itself and/or reduce your Gas fees.

Non-Gas guzzling, virtually free trading platforms are coming soon, as seen in NEO/ONT/Switcheo’s Flamingo project and Tradehub, Polkadot-friendly Mantra Dao, as well as other layer 2 solutions on Ethereum such as OMG. 

The DeFi Food Pyramid showcasing comfort foods from all around the world are not being built in isolation. They are the (current) top of pyramids built on the years of work setting blocks underneath them, and they are only the most obvious now because they are easy to see as they rise higher and higher.

But a pyramid “scheme”? 

No, I wouldn’t say so. It’s more survival of the fittest and the fastest.

Note: none of this is investment advice, and I emphasize once again that any food in crypto could easily give you food poisoning and leave you sick for weeks.