- YFV has crashed 75% following FUD spread on the back of concerns over a locked pool
- The issue was already fixed by the team, but some individuals chose to try and cheat the system
- The incident is a reminder that FUD alone should not influence your thinking over a project
YFV, the token associated with the Yfv Finance DeFi project, spectacularly crashed 75% in 24 hours after a previously addressed staking bug was exploited, causing an avalanche of FUD. The bug, which was patched by the team a week ago, was recently spotted and utilized by opportunists who thought they could farm the token at a higher yield, causing a chain of events that led to FUD over the incident dropping the token price from $44 to $11.
The episode is a reminder of how just susceptible crypto projects are to FUD, especially DeFi projects, and that temporary concerns should not impact an investor’s decision if the fundamentals have not changed.
“Human Error” Leads to Pool Issues
Yfv launched their product a week ago and quickly became a very popular farming protocol, with YFV landing itself in the top 3 trading volume coins on Uniswap within days. However, what wasn’t known to investors at the time was that the team had inadvertently revoked their ownership of a stablecoin pool, dubbed Pool 0, meaning that it was at risk of being inaccessible. They relaunched the following day with a new stablecoin pool and “considered the matter concluded.”
What the team didn’t bank on was that eagle eyed DeFi nerds would spot the error and realize that by farming YFV to the ‘faulty’ pool they could substantially increase their yield due to the fact that they would be the only ones. Soon after the team realized this was happening they also realized that a minting key error meant that these individuals were also minting vUSD and vETH tokens associated with the project, as well as YFV.
If this wasn’t enough, it was also discovered that all the funds in Pool 0 could be locked for good by the time of the next “epoch” – around 2pm GMT on Tuesday, August 25. This is when the FUD really started, with people seeming to think that multiple pools were under threat of being locked:
$170M funds in @FinanceYfv pools are now at the risk of being locked by contract owner https://t.co/QrnngU7fOB. 👇 @ASvanevik @davecraige @boxmining @tx_origin
— dryrunner (@dryruner) August 23, 2020
FUD Brings YFV Price Down
This FUD has caused the YFV token price to tank as panic swept through the community that their tokens could be lost. While people were panic selling and running around like headless chickens, developers were working out a solution – at the next epoch they would transfer the keys to a multi-sig wallet so that all those who have tokens in Pool 0 can continue to retrieve them. This was explained to investors via Medium post on Monday.
What was also revealed was that Yfv Finance will have their code audited by Arcadia Group to ensure that it is now above board and free from issues. This shows how hard developers have worked to fight the FUD and turn the fortunes of the fledgling project around.
DeFi-nitely a Gamble
The YFV episode is a reminder of a few things in the crypto space. Firstly, no matter how good a project is, humans are at the base of it, and humans are fallible. After all, this whole thing started with a mis-clicked link.
Secondly, cryptocurrency, and especially the DeFi space, is a volatile, high risk environment. It is all experimental and is, in many ways, a get rich or get poor setup – paper profits can be wiped out in an instant, as the YFV incident shows.
Finally, the episode is also a reminder that FUD can kill a project, at least in the short term, but it can also present great opportunities. In this case the FUD was unwarranted – the issue had been dealt with, and would not have reared its head had it not been for greedy individuals trying to gain an unfair advantage.
The Yfv Finance team has dealt with the issues promptly and professionally, and there is every chance that those who panic sold will come to regret their decision as the fundamentals of the project, to which they presumably bought in, have not changed.
