- Several DeFi projects enjoyed a spectacular weekend, as YFI scraped $30,000
- Saturday night in particular saw numerous DeFi projects rack up multiple gains
- Liquidity issues with YFI highlight the problems with realizing gains
DeFi projects enjoyed their craziest weekend ever as YFI hit an astonishing $38,800 per token while other projects also saw huge gains. Alongside this headline-grabbing moment, several other DeFi tokens also enjoyed spectacular gains during the exact same timeframe, exclusive of their actual merits. However, issues surrounding liquidity show that for all the talk of huge valuations, actually realizing those profits is another matter entirely.
DeFi Projects Turn it Up to 11
DeFi projects have of course become famous for impromptu 10x performances, but this weekend was something of a watershed moment, with multiple projects enjoying spectacular gains:
YFI was without doubt the headline maker of the weekend, taking its already impressive price performance to new heights, hitting $38,788 on Poloniex late Saturday night. YFI had already taken the title as the most expensive cryptocurrency when it overtook Bitcoin last week, and its astonishing performance over the weekend saw it eclipse Bitcoin’s all time high of $20,000 and then go on to almost double that valuation within hours.
YFV shrugged off its recent FUD to jump from $12 to an all-time high of $57 following a successful audit, although the fact that it crashed down to $44 to $7 in little over 24 hours shows how volatile these Uniswap DeFi plays are and that paper profits can be lost in instant.
Taking Profits Proves to Be the Problem
The difference with a low supply DeFi token like YFI hitting $40,000 compared to Bitcoin hitting the same valuation however is liquidity. A look at the Binance order book for YFI illustrates the problem – there is so much locked up that the amounts for sale are almost exclusively tiny fractions of a token, meaning that all those celebrating huge gains from holding a bunch of tokens from a lesser price have a real problem selling at the current valuation.
Anyone holding more than a couple of YFI tokens will have an impossible time trying to sell them at the current price without crashing the market, illustrating the importance of taking profits on the way up rather than waiting for the big payout at the top.