yields are plunging: is this a risk for the Ethereum DeFi darling?

Published on by Cryptoslate | Published on

Due to a confluence of trends including but not limited to DeFi becoming crowded, venture capital firms launching "Industrial-scale farms," and Ethereum-based coins dropping, the yields offered through the top "Farms" have plunged.

Finance's yCRV/yUSD vault, one of the protocol's most popular products, now offers an annualized yield of around 15 percent - far below the 60-100 percent offered just weeks ago.

That's not to say 15 percent is bad - it's at least ten times the yield you could get at a traditional bank.

As these yields have dropped, so have those dividends.

That's an issue when many in the space were buying YFI in hopes of using it as a yielding investment.

According to Andrew Kang of Mechanism Capital dropping yields aren't a pressing concern.

Lead developer Andre Cronje is currently working on StableCredit, yInsure, yTrade, and others, which will enable YFI holders to capture yield through fees charged on decentralized trading, insurance, and lending.

Vaults have yet to expand to IL strategies, asset backed yields, basis, etc etc.

"We're still in an early era of yield generation in crypto. There tons of lending platforms & AMMs about to launch that will introduce even more areas for yield. For those that don't want to be rotating crops daily, Vaults are a perfect solution. The LM rewards are a cherry on top."

Finance is the "Future of DeFi." He added that by extension, this means it is the future of finance, referencing the oft-touted sentiment that DeFi will take over traditional financial mechanisms in the coming years and decades.