The latest trend in the DeFi sector is a new yield farming protocol called Yam, which promises “even odds” with no premine stakes, no founder shares, and a zero-value token at launch.
The experimental Yam protocol is the talking point on Crypto Twitter right now – many are excited about the large potential rewards while others worry about the risks. The recently launched project offers an elastic supply token, similar to Ampleforth, which can expand and contract depending on market conditions, with the goal of ultimately achieving price stability and a peg to the USD.
Yam will redistribute a 10% share of each supply increase to buy a high-yielding dollar-denominated stablecoin called yCRV, which it calls a “rebase.” The tokens will be added to the treasury controlled via the Yam community governance.
Similar to Yearn Finance when it launched its native YFI token, the official blog post claims that the tokens will have no value at launch.
“We designed Yam as a minimally viable monetary experiment, and at launch the YAM token will have a zero value.”
Reasons to be cautious
After YFI’s huge gains, which shot up thousands of percent to four-digit prices, some in the crypto community are skeptical that similar tokens would capitalize on the hype. Shapeshift CEO Erik Voorhees — who admits he doesn’t understand how Yam works — wondered if it was a pump-and-dump scam.
Messari researcher Ryan Watkins agreed with this opinion. “YAMs = Ponzinomics by AMPL + Chad launch by YFI + meme math by Tendies,” he wrote.
With no premine and no token sale, YAM tokens will be evenly distributed across eight stake pools across major DeFi protocols, including COMP, MKR, LEND, YFI, LINK, ETH/AMPL, SNX, and wBTC. Holders of these assets can stake them on Yam’s platform to earn YAM tokens in the first week.
With a total supply of 5 million tokens, the first launch occurred on August 11 at 19:00 UTC when 2 million tokens were split evenly across the eight stake pools. An additional 3 million tokens will then enter the YAM/yCRV Uniswap v2 liquidity pool, with 1.5 million being distributed in the first week and declining by 50% each week thereafter, the blog post added.
Wagering to earn is only available for seven days, and once this distribution is complete, users can deposit their YAM tokens into Uniswap as liquidity to participate in the longer-term ecosystem.
Next week could be interesting for Yam Finance if it generates the same excitement as Yearn Finance has with its YFI token. But history suggests that sooner or later, speculators on hyped new projects are likely to burn to death, as many did in the ICO bubble of 2017.
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