Yearn.Finance’s governance token (YFI) fell more than 43% in just five hours on November 18 after rallying nearly 170% earlier this month, sparking fears of a possible exit scam.
During the dramatic drop in value, more than $300 million in market capitalization was erased from November’s gains, according to CoinMarketCap data. At the time of writing, the YFI token is trading at $9,069, up from $14,185 the previous day. However, the token is still up 83% over the past 30 days.
The sell-off sparked another weekend of fear, uncertainty, and doubt (FUD) within the crypto community. On X (formerly Twitter), some users claim that 50% of the token supply was held in 10 developer-controlled wallets. However, data from Etherscan suggests that some of these holders could be cryptocurrency exchange wallets.
Additionally, some X users pointed out that opening short positions might have triggered the move. Data from Coinglass shows an increase in YFI’s open interest, indicating that traders are shorting the coin following November’s gains.
“I bought the dip…someone sold 1,000 coins, maybe that’s why it dropped massively. I’ll see.” commented a trader on X. According to another user, YFI’s price movement after the drop is unusual for exit scams:
“It doesn’t look like a rugpull at all. Because despite so many sales, the price is still stable at 9k, which is 80% above its bottom.”
Yearn.Finance is a decentralized finance (DeFi) protocol that provides automated trading solutions for DeFi markets. Andre Cronje, an Ethereum developer and entrepreneur, launched the protocol in July 2020. Cointelegraph reached out to Cronje and Year.Finance but did not receive an immediate response.
Review: Beyond Crypto – Zero-Knowledge Evidence Shows the Potential of Voting in Finance