In a surprising turn of events, Yearn Finance’s native token, YFI, experienced a drastic plunge of more than 40% within a 24-hour period, prompting speculation about potential insider activities within the protocol. The sudden decline in price, from $14,519 to $8,915, led to a substantial liquidation of approximately $5 million and raised concerns about the stability of the Yearn Finance ecosystem.
Market Cap and Liquidations:
The sharp sell-off caused Yearn Finance’s market capitalization to plummet by around $200 million, dropping from $482 million to $296 million. Data from Coinglass indicates that crypto traders holding YFI positions faced significant liquidations, totaling approximately $5 million. This included $3.5 million from long positions and $1.42 million from short positions.
Derivatives Trading Volume and Open Interest:
Yearn Finance’s derivatives trading volume experienced a notable 26% increase, reaching around $2 billion, accompanied by a surge in open interest to approximately $162.54 million. Major exchanges, such as Binance, witnessed substantial declines in YFI token open interest positions alongside the liquidations.
Asset Locking and Project Insiders:
The sell-offs also resulted in a decrease in the total value of assets locked in the Yearn Finance project, dropping by approximately $6 million to $329.5 million, according to DeFiLlama data. Observers raised concerns about potential insider involvement, noting that nearly half of YFI’s supply is held in 10 wallets.
On-Chain Analysis and Whale Activity:
On-chain analyst LookOnchain reported a significant whale transfer involving a wallet labeled “0x48f9,” moving 446 YFI (worth roughly $5.8 million), with a substantial portion deposited into exchanges. Despite the subsequent crash, the analyst highlighted that a whale managed to profit from these transactions before the market downturn.
The recent price volatility follows Yearn Finance’s domain registrar issues in September, where users faced difficulties accessing the protocol through the Yearn.fi URL. While the problem was resolved, it added to concerns about the project’s stability.
Yearn Finance, a prominent player in the decentralized finance (DeFi) ecosystem, faces scrutiny and questions about the integrity of its protocol following the unexpected YFI token crash. The incident underscores the challenges and uncertainties present in the evolving landscape of decentralized finance, prompting the need for transparency and vigilance within the crypto community.
Disclaimer: This article adheres to the Trust Project guidelines, aiming for accurate and transparent reporting. Readers are advised to independently verify facts and seek professional advice before making decisions based on this information.