The latest ETH Data shows Polychain accumulated 330 yearn finance tokens as YFI faced an extreme decline in the recent weeks. The DeFi project faced a series of shortcomings and according to CEO Sam Bankman Fried, the asset’s decline can be related to three major factors that we read more about in our altcoin news.
For example, the rest of the DeFi market underwent a strong correction which resulted in steep corrections in most players. Yearn. Finance had a number of bad PR moments like the controversies over the Eminence project and also multiple bugs in the protocol’s core products. Yield farming yields dropped swell which hurt YFI because most of the token’s intrinsic value is derived from acting as a claim.
$YFI 👀 pic.twitter.com/YMvESkEbXr
— Alex Svanevik 🧭 (@ASvanevik) October 17, 2020
From the all-time high, YFI dropped by about 70% and fell from $44,000 to $14,000 in a speedy selloff according to the market data. While it is not the worst-performing Defi coin, it was certainly the one that was the most publicized on the way down. Despite this, the ETH data shows that a prominent venture investor purchased a huge sum of YFI coins. The CEO of Nansen Alex Svanevik noted that a wallet his company named a Polychain Capital, purchased YFI for the first time and the company got 329 YFI that are valued at around $4,600,000 and were sent to the wallet from Binance. Nansen used proprietary measures and heuristics to figure out funds, investors, and funds and how they interact with the different ERC20 tokens.
Polychain Capital is a notable crypto fund that is led by Olaf Carlson-wee which is the first employee at Coinbase and manages over $300 million in assets by making this position a fairly sized one. Alameda Research was short a few million dollars worth of coins as Sam Bankman Fried commented on the matter that his fund was short of $3 million on the DeFi coin:
“Much of that was staked, wasn’t all borrowed at once, net short was only $3m, though there was no way to know that without seeing the whole books.”
Crypto derivatives tracker ByBit reports show that the YFI perpetual futures markets on Huobi and FTX are negative. The funding rate is the recurring fee that long positions pay short positions to stabilize the price of the future to the underlying market. The negative funding rate suggests that the shorts are more aggressive than the longs and like this, the average YFI perpetual future holder is net short not long as Polychain could be.
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