Yam plunges following bug discovery
Market capitalisation evaporates after bug results in the printing of useless YAM tokens
Although the decentralised finance (DeFi) boom of recent months has propelled many cryptocurrencies to new heights, Thursday, August 13 witnessed a prominent and significant flop in the burgeoning sector. Between 07:40 and 08:15 UTC, Yam Finance’s DeFi project YAM token collapsed, falling from $120 to $12.41. Having hit an all-time high of $167 less than 24 hours beforehand, by mid-afternoon, YAM traded below $1.
The evaporation of its market capitalisation, which had topped $475m (£363m, €402m) at one point, came following the discovery of a bug. Rather than keeping parity with the US dollar by contracting and loosening supply, the yield farming protocol was discovered to be printing “dud” YAM tokens. These useless tokens prevented holders from making any governance decisions.
Yam Finance tweeted: “We are urgently investigating a potential flaw that would prevent proposal execution.” However, it proved too little too late and co-founder Brock Elmore declared the short-lived project dead at 08:01.
In a blog explaining the incident, the company stated: “[The] YAM token will now live on as long as Ethereum continues to operate with support for the contract as written. It can no longer be modified by governance, so on a technical level, it will behave in a similar fashion to other rebasing assets such as AMPL.”
Ampleforth or AMPL, is another price-elastic DeFi token which has suffered turbulent swings in market capitalisation of late.
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The high-profile failure of YAM could now threaten to slow the pace of the wider DeFi boom. Leading DeFi tokens also fell, with Compound, Balancer and Yearn Finance down by 17, 15 and 12.6 per cent, respectively, in Thursday trading.
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