YAM Finally Finds Fertile Ground After Successful Rebase

Yam Finance’s first successful monetary exercise yesterday marks a new start to DeFi’s original food-based token.

YAM: The emoji that drew $400M in less than a day

No one knew Yam Finance before yesterday at 5pm UTC when the team tweeted its first and only Medium article explaining the “project” they launched two hours later. The token was born with “zero value” and without an audit, as the Medium post specified. Still, yield farmers couldn’t get enough YAMs and according to Etherscan, $90M USD was deposited in the protocol within the first 90 mins, while YAM price jumped to ~50 DAI—which sounds a lot more impressive when you take into account it was suppo...

YAM is an experiment in rebasing cryptocurrencies, plus token incentives (aka yield farming) to drive liquidity, plus full on-chain governance, plus a DAO-like treasury managed by token holders. It’s also testing the power of the emoji 🍠.

Its Aug. 11 launch immediately attracted hundreds of millions of dollars and a fierce community rallying around the project. But a bug which rendered governance impossible was found in the unaudited code two days later, prompting it to raise funds for an audit and relaunch an improved version.

Yesterday, it passed its first test.

Target Peg

It targets a peg of 1 yUSD (Yearn Finance’s stablecoin) which it tries to achieve by adjusting, or “rebasing,” its supply. Whenever the price of YAM is above 1.05 yUSD, supply expands to lower the price, and when the price is below 0.95, supply contracts to raise it.

When supply expands, Yam’s treasury mints 10% of the rebase amount and sells it to the YAM/yUSD pool in Uniswap. In other words, it buys yUSD, which gets deposited in the treasury, and is managed by token holders. The project also directs 1% of inflows into the treasury to Gitcoin grants funding Ethereum public goods.

Rebase

Monday was YAM’s first successful rebase. Since the YAM price was way above the peg at almost $20, supply expanded and $571k in yUSD was added to the treasury, while $5.71k was contributed to Gitcoin.

The price dropped to below $7, but YAM holders’ wallet balance increased by 2.49x. The rebase happens every 12 hours and is meant to gradually push the price back to 1 yUSD.

The future of Yam Finance is now in the power of YAM holders, who can vote to change anything from protocol parameters, to treasure management to contributors’ compensation.

[This story was written and edited by our friends at The Defiant, and also appeared in its daily email. The content platform focuses on decentralized finance and the open economy and is sharing stories we think will interest our readers. You can subscribe to it here.]