Analysts predict that the imminent launch of yETH by Yearn Finance could trigger a renewed surge in buying pressure on the ETH markets. The product, which is being voted on by YFI token holders, will automatically find the highest yielding decentralized finance (DeFi) protocol/strategy for Ether (ETH) deposits.
Yearn Finance’s core products are ‘vaults’ that seek the best returns for yield farmers, while also pooling funds to reduce gas fees. With Yearn’s vault purporting to guarantee the highest returns while removing the labor and research needed to maximize the profitability of yield farming, combined with hype around the brand, the yETH vault is expected to drive up demand for ETH.
Some members of the crypto community speculate that guaranteed premium yields may attract capital that might have otherwise been designated for Ether staking in phase 0 of the ETH 2.0 rollout.
The yETH vault from @iearnfinance is going to be a black hole for ETH.— Anthony Sassano | sassal.eth (@sassal0x) August 31, 2020
That is, once ETH goes in, it is going to be very hard for it to come out.
Now think about what this does to the price of ETH.
Nuggets News founder Alex Saunders also believes that yETH has major potential:
The new product that has me excited & even more bullish on ETH, is yETH. This adds to a long list of catalysts for Ethereum, but it also reduces the available supply. Anyone who owns ETH can earn the best yield automatically by HODLing yETH
However, some crypto media outlets reporting that Yearn Finance’s Ether ‘vault’ was voted into existence last night, a thread on the project’s governance forum suggests the vote is yet to have taken place — with user ‘Juanma’ describing reports of yETH’s launch as “clickbait.”
Yearn Finance’s founder Andre Cronje tweeted on August 21 that the first community built strategy for an ETH vault was “coming soon.” Then, on August 31, the Twitter account of DeFi Farmer John announced yETH had launched after a test candidate for the project had been deployed.
However, Yearn developer Banteg replied, stating: “There will almost certainly be another deployment since we’ve already identified a few things to improve.”
Meanwhile, demand for Yearn’s governance token YFI has also reached a fever pitch, with the token more than doubling in price over three days and its market cap growing to more than $1 billion for the first time. YFI currently ranks as the 27th-largest crypto asset and is trading for nearly $34,000.
Despite YFI’s massive price relative to other cryptocurrencies, Saunders believes many traders are underestimating the room that YFI still has to grow given its maximum supply of just 30,000 tokens,
Messari’s Ryan Watkins similarly asserted that people are “being too conservative with their YFI targets,” offering $1 billion as a somewhat tongue-in-cheek price target.
Yearn Finance is currently the sixth-ranked DeFi protocol with $792 million in locked funds according to DeFi Pulse.