- The Serum protocol token SRM has attracted the attention of Ethereum DeFi investors by registering a 1,700% pump after its introduction.
- YAM of the Yam.Finance protocol is approaching 50% gain in less than 24 hours after launching.
Although the crypto market has suffered a setback after Bitcoin was rejected at the $12,000 mark, the DeFi sector of Ethereum seems to be unimpressed. Almost daily, new DeFi tokens are currently generating large returns that are almost astronomical. Just yesterday, the SRM token of the Serum protocol and the YAM token of the Yam.Finance protocol have written extreme returns.
Both tokens were released yesterday, August 11. The first, SRM, belongs to Serum, a decentralized exchange for derivatives. Following the latest trend in the DeFi sector, started by more established protocols such as Compound (COMP) and Aave (LEND), SRM is a token that will be part of Serum’s new more decentralized governance model.
As in the cases mentioned for other protocols, Serum seeks to incentivize its users and give them more control by decentralizing the governance model. SRM has been listed by exchanges like FTX, Binance, BitMax, HBTC, Uniswap, Balancer, among others. Within an hour of its launch, the token registered gains of more than 1,000%. Thus, the value of the token went from $0.11 to about $1.50 within hours. At the time of publication, SRM price stood at $1.84.
Data of Etherscan shows that SRM has a supply of about 160 million tokens and a market capitalization of $280 million. Thus, SRM has even outpaced tokens such as YFI (year.finance) and AMPL (Ampleforth) in terms of growth and in terms of speed of growth within the first hours of the launch.
The token has apparently managed to attract investors through its incentives. In addition to the 4% annual returns on delegating SRM, the platform behind SRM offers its investors 60% discounts on trading fees. These fees are burned to maintain the stability of the SRM offering. Finally, the team behind Serum, FTX, announced the distribution of a “MegaSerum” (MSRM) which equals 1 million SRM to one randomly selected user on August 14.
Stake your SRM on https://t.co/oIxId4RZyh for a chance to win the biggest giveaway in crypto history: 1 MSRM (1,000,000SRM) valued around $1.8m.
— Serum (@ProjectSerum) August 12, 2020
Following the launch of the token, FTX and Sam Bankman-Fried, CEO of Alameda Research, revealed that the exchange has achieved a historically high load:
Today was all-time high FTX load and it wasn’t close. We took a lot of preemptive steps to mitigate this, and it mostly kept things online, though there were pain points (e.g. we broke through the number of rows in our KYC table). Time to double FTX’s servers again.
YAM tests sustainability of Ethereum’s DeFi sector
The second of the tokens launched on August 11th, YAM, has taken the Ethereum DeFi sector by storm. Also conceived as a governance token, YAM offers its holders attractive incentives and the promise of “returning decentralization and democracy” to the DeFi sector.
Unlike SRM, YAM doesn’t have a specific supply. Instead, it will have a flexible supply that will be changed in relation to “market conditions”. The ultimate goal of the token is to act as a kind of stablecoin whose value is anchored to the USD.
Investors who have COMP, MKR, YFI, LINK, LEND, SNX, wBTC can use their assets as collateral to obtain YAM. Initially, YAM has a supply of 5 million tokens, 2 million of which are distributed in 8 staking pools. As reported by Larry Cermak there is already $343 million of assets staked in YAM, as shown in the chart below.
There is now $343 million of assets staked in YAM… pic.twitter.com/rylilAOcG7
— Larry Cermak (@lawmaster) August 12, 2020
Cermak has been one of the critics of the emergence of governance tokens such as YAM, SRM and YFI. The researcher believes that these tokens create a “vicious cycle” that encourages the creation of untested and unaudited protocols with a high risk of collapse. In that sense, ShapeShift CEO Erik Voorhees stated the following:
YAM looks like a scam… or to be more charitable, fairly transparent pump and dump nonsense. Projects like this are not going to be good for defi… What am I missing? Are the buyers willing participants in a silly game, or are people alleging actual value?
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