The Defi hype is still in full effect today. Yearn.Finance, or YFI, is a token that is surging in value. More importantly, it has surpassed Bitcoin’s current market volume. Replacing the world’s leading cryptocurrency will not happen, however.
YFI Surpasses Bitcoin’s Value
On the surface, it seems exciting to see a cryptocurrency with a higher market value than Bitcoin. Keep in mind this is a straight up value per token, and not the total market cap. Yearn.Finance currently has a market cap of $406 million, compared to Bitcoin’s $271 billion. For YFI to overtake Bitcoin in that regard, it would need an individual value of $7,233,333. Impossible, even under the best of market circumstances.
Several factors allow for YFI to achieve this current value. First of all, it is part of the ongoing DeFi hype. As explained before, the Total Value Locked in decentralized finance is incorrect by quite a margin, yet very few people seem to bother with it. The Yearn’finance has been pumping hard for a while now, and shows no signs of slowing down.
Secondly, YFI has a very limited supply cap. No more than 30,000 tokens will ever exist at the same time. Scarcity is a powerful trait in the financial world, but that alone is insufficient to warrant such a high YFI price. With no real use for the token itself – outside of speculation – it seems unlikely that this value can be sustained for much longer.
Last but not least, YFI is not the first token to achieve this goal. Older cryptocurrency enthusiasts will remember the other project that surpassed Bitcoin’s price briefly, and dropped off most people’s radar since. Whether Yearn.Finance will go down a similar path, is difficult to predict. Most of its supply is circulating already, and the uses for this token remain very limited at best. Dethroning Bitcoin will require a lot more work.
Looking Back Throughout History
The first coin surpassing the Bitcoin price is 42-Coin, or 42. It too tried to leverage the scarcity angle to generate value. With a maximum of 42 coins ever to be created, it was doomed to fail from day one. There would be no other use cases other than speculation, and even that aspect lost traction very quickly.
At its peak, 42-coin hit a market value of $992,883, or over 1,100 BTC per coin. This peak took place on January 14, 2014. Fast forward to today, and one 42-coin is worth $36,602.77. That is still more than Bitcoin, yet with $855 in daily trading volume, no one will ever be able to buy or sell a full one. It can only be traded on Livecoin, which has never been the most liquid exchange.
Keeping all of the above in mind, one has to wonder what will happen to YFI. With a limited supply, scarcity is created. However. if that is its core use case, the value seems unsustainable. It can still become a bigger part of the DeFi ecosystem, assuming projects are willing to integrate it. For now, that doesn’t appear to be on the agenda.