When I went to sleep we were trading decentralized currency, but when I woke up everyone was farming Yams with their computer. What’s going on?
Yam Protocol is, without a doubt, the latest and greatest DeFi craze. It’s the hot topic on crypto Twitter this week, so we’re going to take a quick look at what it is and why everyone is so excited about farming Yams.
What is Yam Protocol?
Important: the key thing you need to know about Yam Finance is that it’s an experimental protocol. Keep that in mind as you read on. The developers have built this protocol to see how it goes and what impact it will have. The code has also not been audited, and the Yam github even says ‘It is a probability – not just a possibility – that there are bugs’.
Yam Finance is a DeFi protocol that has taken inspiration from numerous successful existing DeFi applications. The Yam team say they are aiming to achieve four main things:
- Create an elastic supply of YAM tokens with the end goal of price stability
- Build a governable treasury to support price stability
- Facilitate complete on-chain governance with decentralized control and progression from launch
- Create a fairly designed reward distribution system that will incentivize community members to contribute to governance
The Yam team forked the Compound governance module which means that all Yam protocol updates happen on-chain, led purely by community voting.
As you’ve seen, YAM is also a cryptocurrency token. It’s designed with what’s referred to as elastic supply, which means the supply changes based on market conditions. The aim of the elastic supply is to target a stable price, which according to the Yam Protocol github is 1 USD per Yam. Currently YAM is valued over $100 USD on Coingecko, so stability isn’t going well right now. The YAM token was released by the team with zero value, and value is entirely derived by the market.
Unlike other elastic supply coins, when the YAM supply changes 10% of the supply expansion is used to buy another asset, called yCurve – a high-yield USD-denominated stablecoin. The yCurve is then added to the Yam treasury, under the control of the decentralized governance of the Yam community.
The YAM token had no pre-distribution. The team didn’t receive any YAM. Instead, it can only be earned through equal-opportunity staking distribution.
Despite all this, people are loving it.
How to earn YAMs
You can earn YAM tokens by staking other DeFi coins on YAM.finance. The initial distribution of YAM is being evenly distributed across eight staking pools: WETH, YFI, MKR, LEND, LINK, SNX, COMP, and ETH/APML Uniswap v2 LP tokens.
YAM is an extremely hyped experimental DeFi protocol, which has self-proclaimed that the code is not audited and could very well contain bugs. It will be interesting to see where the YAM journey takes us all, but approach these uncertain markets with extreme care.
Regardless, Crypto Twitter seems to be embracing the experiment with open arms.