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Alarm Sounds As Hot & Unaudited DeFi Potato, YAM, Locks USD 387m In Hours

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Last updated:

October 23, 2023 09:40 EDT

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Sead Fadilpašić

Journalist

Sead Fadilpašić

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Sead specializes in writing factual and informative articles to help the public navigate the ever-changing world of crypto. He has extensive experience in the blockchain industry, where he has served...

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Last updated:

October 23, 2023 09:40 EDT

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Apparently, decentralized finance (DeFi) is not risky enough for some people – the riskier the better(?). These have found a new thing to make seemingly popular, namely, pouring millions in an experimental and unaudited project.

Source: Adobe/Joe Gough

First, there was yield farming in the wild world of DeFi, spiced up with governance tokens, and now some yield farmers have turned from already, objectively risky business to a freshly launched DeFi project – YAM.

Since its debut on the Uniswap decentralized exchange yesterday, its price increased by 26%, to almost USD 88 (10:54 UTC), while trading volume surpassed USD 12m in less than a day.

Also, per Yamalytics, in 15 hours since its launch, total value locked into Yam Finance has climbed to USD 387m.

In comparison, total value locked into major DeFi platform Aave (LEND) stands at USD 530m today. The platform is fourth by this measure among DeFi projects tracked by Defipulse.com.

According to its team’s post from August 11, YAM is an elastic supply crypto, expanding and contracting supply in response to market conditions. It’s “an experimental protocol” in regards to governance, elasticity, farming, etc.

As for the audits, they wrote: “None. While the initial creators of the Yam protocol have made reasonable efforts to attempt to ensure the security of the contracts, […] nothing approaching the rigor of a formal audit has been conducted at this time.”

They warned of the crypto’s experimental nature on their twitter account as well:

We were serious about this being an experiment and the code being unaudited. Please exercise some caution.
— Yam DAO (@YamFinance) August 11, 2020

US-based crypto research boutique Delphi Digital called this new entrant “the DeFi crop of the day,” stating in their post that it’s “essentially an AMPL clone.”

Ampleforth (AMPL) was until very recently a little-known altcoin, and then it blew up in the second half of July. It soon prompted a number of clone coins, including some anties.

This itself followed the explosion of yield farming, compound (COMP) and balancer (BAL) tokens.

The Cryptoverse immediately took notice of this latest development.

Stani Kulechov, founder of Aave, said that people are borrowing assets from Aave for YAM, calling it surreal. “I hope people are having sufficient collateral,” he said.

There are opinions by certain investors that YAM could flip AMPL in market capitalization in a week. Per CoinGecko.com, YAM’s current market capitalization is nearly USD 5 million, while AMPL’s is USD 227.9 million.

Eric Conner, a product researcher at blockchain startup Gnosis, noted that YAM is even pumping the above-mentioned COMP, LEND, Synthetix Network Token (SNX), and even maker (MKR), as “people FOMO [fear of missing out] buy for yield.”

Some, like crypto educator Brad Laurie, wonder if, despite the high risk, “when something is this fresh, this experimental & unaudited, it can drive people to lock up numerous DeFi startup tokens for profit (part of the appeal to related teams).”

Meanwhile, some other crypto insiders believe that this is just a bad idea:

Dear $YAMFam,

Since apparently I wasn't clear….

IF YOU #FOMO INTO THIS YOU WILL DIE A LONELY TERRIBLE DEATH AND YOUR LAST MEMORY WILL BE THE TASTE OF STALE $YAM BETWEEN YOUR TEETH AND YOU'LL MISS THE VALUABLE PART OF THE BULL RUN.

Stop ruining it. https://t.co/scrR2UoOrR
— Tay 💖 (@tayvano_) August 11, 2020

Here are a few more reactions and complementary jokes:

Prices of the 7 DeFi coins + DEFI-PERP + sDEFI since @YamFinance was announced has gone up around 18% on average.

TVL has increased to ~$250m.

Before you stake your life savings into an unaudited smart contract, you might want to consider using some to long the assets instead pic.twitter.com/W6fspj5CQT
— Darren Lau (@Darrenlautf) August 12, 2020

Now you know why traditional VCs have a hard time coming into crypto. Try explaining YAM farming to the investment committee…😄
— Kelvin Koh (@SpartanBlack_1) August 12, 2020