Yesterday I was watching the latest crypto news on the internet and suddenly saw a bizarre message.
Bizarre $ 15 million Eminence Hack, a new project from Andre Cronje
FOMO lead to a hack!
The FOMO (Fear Of Missing Out) for his latest project was so big that hackers, while asleep, found a leak in its code and pulled money out of the protocol while it was still in the development phase.
Throwback to the Yam craze
The story reminded a bit of the Yam craze in the second week of August, which was the first sign on the wall that something was wrong in the world of DeFi. Yam was essentially the first of the meme food coins to take hold of DeFi's world in the second half of August (remember the hype surrounding Sushi, Kimchi, and HotDog).
The Fairytale ended when a bug was found
At the time, Brockhelmore, the developer of Yam, launched its DeFi project on the crypto scene and was immediately confronted with immense investments of several hundred million dollars. Two days later, the fairytale ended when a bug was found in the code that "made it impossible to implement future governance actions".
First time Vitalik Buterin warned for the dangers of developing DeFi
The discovery immediately made the project obsolete and the community threw in the towel. The developer apologized and started working on Yam2. It was the first time that Ethereum CEO Vitalik Buterin warned of the dangers of developing DeFi.
Meanwhile, Andre Cronje also watched the Yam story, the Sushi hype, the rise and fall of Chainlink and continued to develop his own Yearn Finance protocol, which was launched in the background to great success at the end of July.
Andre, the developer of the Eminence project, called it an unfinished "economy for a gaming multiverse".
Investors invested money in the UNFINISHED protocol
While the investors couldn't wait and most of all didn't want to miss anything, they invested money in the unfinished protocol, with a total value of about $ 15 million. When Andre went to sleep on September 28, someone hacked into the project and drained the entire protocol. Bizarrely, some 8 million was also returned to his account.
Cronje explained the situation in a bunch of tweets a few hours ago and stated that he would try to fix it as soon as possible.
Of course we often hear that hackers are working, just think of the recent hack that Kucoin had to endure… and many exchanges have already been victims of such a hack. This hack was extra bizar. Not in the least because $ 8 million has been returned.
But what makes this project so special that hackers could get such a ridiculously large amount of money from an INCOMPLETE product?
Let's take a look at this project today. Yearns.Finance & YFI.
What is Yearn.Finance?
Yearn.Finance is a decentralized platform that helps you make the most of the different interest rates on the many DeFi projects such as Aave and Compound. You can deposit your cryptocurrency on the platform after which it will be converted to yTokens. With every transaction, the DeFi project with the best interest rates is looked at and your coins are automatically converted to this coin.
This optimizes the interest you can earn in the world of DeFi without having to constantly move your tokens yourself. Different coins, such as stablecoins, can be used on the different networks to provide liquidity. You will receive a reward for offering this liquidity and this can be seen as the interest.
Move his coins manually in the beginning of 2020
Andre Cronje, the creator of the yearn.finance protocol, had to move his coins every morning in the beginning of 2020 in order to optimally earn from the different coins. He has automated this process and has gradually made it available to the general public and it has taken hold and grown rapidly in popularity (and value!).
Different "pools" you can see as a wallet on the protocol
The yearn protocol works with different "pools" for different cryptocurrency. You can see this as a wallet on the protocol in which every user can add the relevant coin. For example, you have a DAI pool, an Aave pool and a Compound pool. The moment you add liquidity to the pool you will receive the yToken back which entitles you to the interest from the pool. Deposit your DAI? Then you will get yDAI back.
The protocol automatically moves your coins to get the best interest for
The yearn protocol keeps an eye on which network you get the best interest for, for example DAI. Is Aave currently paying the highest interest for DAI tokens? Then the protocol automatically moves all DAI from the pool to the Aave protocol. As soon as more wins can be achieved elsewhere, it will also be automatically moved again.
In short, the Yearn protocol lets you get the most out of your cryptocurrency and optimize your interest. Every time someone puts in or withdraws money from the pool, it is re-examined on which network the highest interest can be obtained.
Hmmmm that of course already sounds very good. But there is more to this project that is very attractive. Also comes with a token! The YFI.
The YFI token is used to determine the direction of the platform. With the token you can vote for the new pools and strategies that will be created on the platform. It is interesting to note that the token was released without an ICO and without compensation to the team, but was distributed to the users who provided the liquidity. This has benefited the users when looking at the YFI price.
Historical Yearn.Finance price
The YFI has not been around that long but has experienced very impressive growth. In fact, it is worth more than Bitcoin and this is uncommon, especially in such a short period of time.
If we now look at what the YFI token has done in the short term, the question automatically arises as to what this will do in the LONG term. In other words …
Yearn Finance Outlook for the future
With the rise of the various DeFi projects and the interest, Yearn Finance is very interesting. You can use it to optimize the interest you get on your credits and therefore it can be very profitable.
However, the YFI coin value is partly dependent on the DeFi market. Just like the ICO market grew in the hype but nowadays does not represent much anymore, this is an important point to keep in mind, although this is not the case now. Expecting the Yearn Finance course is very positive, because who wouldn't want to automatically optimize their profit. So it looks very rosy…
And let's be honest, who doesn't want a token which is worth US $ 24,047.14 at the time of writing. What should be mentioned here is that YFI is already in the GREEN figures just 1 day after that bizarre hack.
No matter how strange the hack was, how much the hack made clear that there are leaks in the protocol, YFI does not suffer from this. This shows to me personally that there is a lot of confidence in this project… and that's a very big part of what it takes to become successful as a crypto.
See ya'll in my next little research!
Posted Using LeoFinance Beta