The State of Yearn ($YFI)

It is no secret that the Delphi team members have been bullish on YFI, writing numerous Dailies, and recently releasing our YFI Institutional Research Report. Delphi Ventures also holds YFI. YFI is up ~120% since we published our report, whereas the rest of the crypto market ex-BTC has gained ~15%.

Rewinding to September, we saw YFI heavily (understatement) retrace from its all-time highs. This was primarily due to the defi market overextension and surface-level, short-term narratives fueling its descent. The one most commonly echoed was the death of yield-farming. Trading these narratives proved profitable, but behind the scenes, the YFI core team and community continued to build, iterate, and question Yearn’s design choices. Narratives are quick to shift, but as a long-term focused research shop, we remained convicted in our YFI thesis.

We see Yearn as the protocol well positioned to dictate supply-side liquidity flows through the highest sustainable liquidity incentives. Yearn’s sustainable liquidity incentives derive from Yearn’s ability to capture the marginal risk-adjusted liquidity effectively, and this is a function of Yearn’s respective potential moats.

Moats

Tacit Knowledge

The coordination and the maintenance of protocols, particularly one of yearns complexity, is tacit knowledge. You can siphon off a talented Strategy dev, but pulling the aggregate knowledge moat of the community, in my opinion, is easier said than done. Yearn v2 vaults rely on active governance to maintain the system: what strategies interact wi