YFI becomes the first altcoin to exceed the price of Bitcoin
Yearn.finance’s native governance token, YFI, became the first altcoin to exceed the Bitcoin (BTC) price on August 20. It reached $13,444 at Binance, driven by growing demand for Decentralized Finance, or DeFi.
Sentiment around the YFI vertical rally since early August remains mixed. Some believe YFI is poised for a reversal. Others foresee greater long-term growth potential.
Algorand’s new update directs the project’s focus on the DeFi ecosystem
What is YFI and why did it grow so much?
Yearn.finance is a DeFi protocol that was launched in July in a decentralized environment by the developer Andre Cronje. It is the first Ethereum protocol that aims to give token holders all the power to govern the network.
Analysis company Blockchain IntoTheBlock said:
„Only a month ago, the token yearn.finance was quoted at around 1000 dollars. #YFI has gone up more than 10 times in a month, reaching $10,551.25 Yearn.finance is the first project of Ethereum, whose government is entirely in the hands of the token holders.“
Crypto coin researcher Hasu explains that yearn.finance is a platform that allows users to execute various investment strategies. He claims that:
„If you’re not familiar with yearn, you might think of it as a smart bank account that automatically allocates your assets to different low-risk investment strategies that run on the Ethereum block chain.“
The price of YFI, the governance token of the protocol, naturally increased as the total value locked in yearn.finance skyrocketed. According to Defipulse’s data, more than $670 million of capital is blocked in yearn.finance.
Neutrino USD staking reached the Ethereum network
Low supply means higher price for YFI
Compared to other tokens, the price of YFI is high due to its unique money supply. Its supply is capped at 30,000, which is significantly less than most digital assets.
Although YFI’s price is over $12,000, its market capitalization remains below $400 million. By market capitalization, it is the 45th largest crypto currency in the world market.
As such, crypto-business investor Ian Lee explained that the fact that YFI outperforms Bitcoin Future is more of a psychological event than anything else. He explained:
„The fact that YFI has outperformed BTC is arbitrary and more psychological than practical. What’s important is what yearn.finance is doing and Andre Cronje is building at YFI.“
If yearn.finance reaches a market cap similar to other top DeFi protocols, such as Aave and Maker, its price would be around $30,000 due to its small supply cap. In other words, comparing the price of YFI to that of Bitcoin doesn’t make much sense, since the latter has a market cap 568 times higher than Yearn.