The YAM platform, having raised enormous enthusiasm in the DeFi community and gained enormous liquidity in just two days after its launch, it filed a code bug that made it ungovernable and locked around $ 750,000 worth of tokens.
Everything seems to indicate that the practice of agricultural yield or Yield Farming has taken on another nuance and the more dangerous it is, the more attractive it becomes. At least that was made clear by the users who decided to ignore the warnings left by the team that created YAM (yam in Spanish).
Hundreds of people bet on the experimental platform that mixed several proposals of decentralized finance in a single platform. This led her to experience a increase in its price up to $ 159, to plummet to zero, after the error in the contract made the failure of the project irremediable.
The error in Yam’s contract was reported in a Medium publication. According to the members of the project, they found a bug that minted excessive tokens in the YAM reservation contract. This excess in reserves makes it impossible to make governance decisions in the network as no proposal would reach a sufficient quorum.
To save Yam, community members had to delegate 1,600,000 YAM tokens via yam.finance in less than seven hours from the moment the vulnerability was revealed. This was the time frame available to change the governance decision before the minting of new tokens made it impossible.
As much as a collective effort was made among the members of the DeFi community, time has passed: $ 750,000 in Curve tokens. And they were blocked in the governance contract and every 12 hours, new tokens will be blocked.
Community members showed their support for Yam developers, who they expressed their sorrow despite the fact that the platform had been presented from the beginning as a risky experiment launched without prior audits.
Although the developers established that the pools of staking are safe for the time being, users are advised to withdraw their Yam-linked tokens from decentralized exchanges such as Uniswap.
Later, this Thursday, the project developers they announced a plan to migrate to YAM 2.0. “We will establish a Gitcoin grant to coordinate a community funded audit of the YAM contracts. If the funding target is reached, after the audit is complete, we plan to support the launch of YAM 2.0 through the YAM migration contract, ”as a blog update reads.
What was YAM Finance?
The idea behind Yam was for users to get rewarded for depositing popular assets like COMP, LEND, LINK, MKR, SNX, WETH, YFI, ETH / AMPL, and other LP tokens from Uniswap v2. So, whoever owns any of these cryptocurrencies, could use it to bet through YAM Finance and receive the platform’s native token in exchange.
The YAM developers made their warnings. In a publication from Medium presented to the public a experimental protocol that took just 10 days to develop and was released without any professional audit of your code; “It has only been reviewed by friends.”
The document also clarified that YAM was a “minimally viable monetary experiment” and gives several indications that it is a development that arose just for fun. Furthermore, it is defined as an experimental protocol with an “elastic supply and a token that will seek price stability with a peg to the US dollar.”
With 5 million tokens available, a 10% allocation was taken and will be put into a stablecoin called YCRV, whose funds would remain in the system to exercise governance of the protocol.
Although the token was worthless at launch, its price jumped from 0 to $ 138 in about 20 hours.
DeFi ¿the field of illusion?
EthHub founder Anthony Sassano posted an article on his blog asking if the Yam Finance proposal was sustainable. Then he answers himself when he points out: of course not.
The rewards will become much less lucrative over time and the 1,000 percent return you see today will disappear as quickly as it came. The performance is also based on the price of YAM, which has a built-in overshoot mechanism that will cause great volatility (the first occurs within a few hours). But the point here is not the sustainability of these crazy returns, but to experiment with wildly new distribution mechanisms for these governance tokens.
Anthony Sassano, founder of EthHub.
A few weeks ago Ethereum co-founder Vitalik Buterin warned about the dangers and great risks of investing in the most popular segment of decentralized finance (DeFi) today, which is yield farming.
As detailed a CriptoNoticias article Buterin said that the interest rates given by these platforms are exponentially higher than those given by traditional bank accounts, which means that DeFi products are a lot riskier and more likely to collapse.