Yearn.finance’s YFI token achieved a new record high at $38,883, as its market capitalization surpassed $1 billion.
Yearn.finance’s native token YFI has surged by more than 75% in the last 24-hours, achieving a new all-time high at $38,883 its (USDT) pair. The strong upside move also brought the DeFi-token’s market capitalization above $1 billion.
YFI/USDT 1-hour chart. Source: TradingView.com
Traders are excited but is YFI overvalued?
The general sentiment around YFI from Decentralized Finance (DeFi) enthusiasts remains seemingly positive. IDEOVC’s Ian Lee pinpointed yearn.finance’s developer Andre Cronje’s fast-paced product releases as a positive long-term catalyst for YFI.
In the past month, Cronje has introduced various products, including yinsure.finance. Many investors, including Paradigm’s Fred Ehrsam, have emphasized the potential of DeFi insurance to evolve into the next big market.
The fast-paced development of products, as well as the active community around yearn.finance, are fueling the uptrend of YFI.
Like all DeFi tokens, there is also a risk of declining yield. If the overall yield in the DeFi market declines, the demand for YFI and yearn.finance could also drop. The largest threat to the yield in the DeFi space is the price of Ether (ETH). If Ether continuously declines and causes governance tokens to slip as a result, the yield might drop substantially.
Important near term variables
In the near term, two variables that could slow the momentum of YFI are its valuation and liquidity. In terms of total value locked, YFI has reached its fair valuation above $700 million, closer to its competitors.