YFI Holders Have Strong Hands and Bought the Dip
Yearn’s ecosystem has expanded remarkably in the last ten days. In a move first of its kind, Yearn has “merged” with six different DeFi protocols since November 24: Pickle, Cream, PowerPool, Cover, Akropolis and SushiSwap, in that order. While the conditions of these mergers vary by protocol, most of them are certainly not mergers in…
By: IntoTheBlockDeFi News
Yearn’s ecosystem has expanded remarkably in the last ten days. In a move first of its kind, Yearn has “merged” with six different DeFi protocols since November 24: Pickle, Cream, PowerPool, Cover, Akropolis and SushiSwap, in that order.
While the conditions of these mergers vary by protocol, most of them are certainly not mergers in the conventional sense. Andre Cronje has clarified these and how they operate either as mergers, acquisitions, partnerships or simply collaborations in a blog post. How each of these work will differ, but overall these mergers aim to grow Yearn into a DeFi ecosystem with an active developer community across multiple verticals.
The mergers with Pickle and Akropolis do embody something closer to traditional ones. Both Pickle and Akropolis provide yield aggregation services similar to those core to Yearn. Additionally, both protocols were hacked in the past few weeks. The teams behind these protocols will work alongside Yearn’s developers working on new strategies, while also accessing existing ones.
On the other hand, the mergers with Cream and SushiSwap add new verticals for Yearn. These work closer to partnerships rather than full mergers. They will share development resources and both of these protocols will serve as launchpads for proof of concepts in their respective areas. Cream will be used for testing StableCredit, an AMM for stablecoin lending, while SushiSwap will assist with launching DeriSwap, a consolidated derivatives protocol supporting several capital-efficient services.
Finally, the Cover and PowerPool partnerships aim to improve existing areas for Yearn. In the case of Cover, it will expand its insurance coverage across vaults to reduce the risk of using the product. PowerPool will lead participation in Yearn governance through its meta-governance inter-protocol voting.
This summary of the partnerships certainly does not cover all the angles in which these protocols will be collaborating with Yearn, and more details can be found on the Yearn’s Medium page. While it may take some time until these partnerships and proof concepts come into fruition, on-chain activity suggests that they have already impacted YFI. In short, YFI holders have been showing three bullish trends in Key indicators even before the mergers.
1. The Number of YFI Holders Reaches New High
The total number of addresses holding YFI took a sharp drop in October as DeFi tokens retraced. Since then the number of addresses rebounded and has continued to increase, accelerating in November.
Source: IntoTheBlock’s YFI Network Analytics
On December 2nd, the number of YFI holders reached a new all-time high, surpassing 15,000 for the first time. This applies only to users holding their YFI on-chain, as those with their funds on exchanges are likely to have their tokens grouped along with other users’.
2. YFI Holders Have Been Buying at Lower Prices
After dropping 80% in two months, YFI’s price has managed to rebound an exceptional 300% in one month. By analyzing addresses’ profitability on-chain, we observe that YFI holders took advantage of the lower prices.
IntoTheBlock’s Historical In/Out of the Money tracks addresses unrealized profits and losses based on the average price at which they received tokens. Comparing two points in time at the same price range reveals how holders adjust their positioning and profits.
Source: IntoTheBlock’s YFI Financial Metrics
In this case, the last time YFI was around $29,500 less than 50% of holders were in the money, or profiting from their positions. This percentage has grown significantly to approximately 73%, suggesting that new holders were able to buy at lower prices while some existing ones decreased their average cost. Ultimately, YFI holders have shown strong buying activity and conviction despite its volatility.
3. Exchange Flows Point to YFI Leaving CEXes & DEXes
Analysis of funds flowing in and out of exchanges also paint a bullish picture for YFI. Netflows measure tokens being deposited into exchanges minus those being withdrawn. Positive netflows mean more tokens are being deposited into exchanges, which tends to align with large selling, while negative netflows can be interpreted as a sign of holders going long.
Source: IntoTheBlock’s YFI Exchange Analytics
Since the Pickle partnership was announced on November 24, net $14.65 million worth of YFI has left centralized exchanges. Similarly, decentralized exchanges’ flows show that a net amount of over $2 million worth of ETH was swapped for YFI in that period.
To clarify, the total amount of YFI withdrawn is significantly larger, this simply displays that the net effect is that YFI is leaving both centralized and decentralized exchanges.
Overall, Yearn is experiencing an outstanding amount of progress in the development side as it merges with six different protocols and continues to innovate at a quick pace. This progress is reflected in YFI holders’ on-chain activity, which showcase strong growth and buying activity.