A Dramatic Drop: Yearn.Finance’s YFI Token Plummets Over 43% in Five Hours
On one chaotic November day, the governance token for Yearn.Finance (YFI) took a dramatic twist as it plunged 43% in just a five-hour window. This nose-dive followed an exhilarating rise of almost 170% earlier that same month, leaving the crypto community filled with fear and suspicion about a potential exit scam.
A Sudden Downturn
This sudden, steep descent in value wiped out over $300 million in market capitalization from November’s impressive gains. At the time this article was written, the YFI token is trading at a far lower figure of $9,069, down from $14,185 just a day prior. However, even after this significant fall, the token still boasts an 83% rise over the past 30 days.
The abrupt collapse triggered another whirlwind weekend of fear, uncertainty, and doubt – a phenomenon often referred to as ‘FUD’ within cryptocurrency circles.
The Community Reacts
With the dust still settling, some members of the crypto community floated theories online about possible causes of the sharp decline. Certain users voiced concerns that a large proportion of the token supply -50% to be exact- was held in merely ten wallets, all controlled by developers. However, data from Etherscan counters these claims, suggesting that some of these wallets could, in reality, belong to crypto exchanges.
Additional commentary from users highlighted the possibility that the commencement of short positions could have initiated the move. This theory is supported by data from Coinglass, which revealed a surge in YFI open interest, indicating that traders are shorting the coin after its November gains.
Contributing their own speculations, one trader stated, “I bought the dip… someone sold 1000 coins perhaps that’s why it dropped massively. Will see.”
In an attempt to dispel rumors of exit scams, another user noted, “Doesn’t look like rugpull at all. Cuz inspite [sic] of so much sell off price is still stable at 9k which is 80% above its bottom.”
Yearn.Finance is a dynamic protocol within the decentralized finance (DeFi) landscape, delivering automated trading solutions for DeFi markets. The brainchild of Andre Cronje, an Ethereum developer and entrepreneur, the protocol came into existence in July 2020. Repeated attempts to reach out to Cronje and Year.Finance for comment on the situation were left unanswered.