Following the massive spike in the value of decentralized finance project, YAM token, the token has since lost over 90% of its market capitalization within a few minutes, as developers uncovered another flaw in the project today.
The YAM token Total Value Locked (TVL), which went above $460 million at one point in less than two-day trade plunged to $279 million, at the time of writing.
Persistent Error In The YAM Protocol
The project’s developers discovered an error yesterday that led to an unintended token supply growth instead of a rebalancing supply.
This mistake captured an increasing amount of the overall YAM token market cap, which may subsequently cause users’ token value to depreciate in the long run.
In trying to salvage the situation, a proposal was made around 06:00 UTC today, to lock 160,000 YAM in a smart contract, a move that would have been beneficial to the community members if implemented.
However, the project later discovered another flaw that could hinder the smart contract from yielding positive results, as Yam Finance announced on Twitter:
We are urgently investigating a potential flaw…We strongly advise exiting the Uniswap YAM/yCRV pool prior to rebase at 8 am UTC (35 mins).
YAM token Value Plunges
At one point, the total value of YAM token locked rose to $460 million, but data on Yam Zippo reveals that it has decreased to $279 million. Also, the price of one YAM which was being exchanged at $138 at one point is valued at $1.38
In a follow-up tweet, the project stated that the yCRV, a collateral token that was accumulated in reserve during rebase, stands the chance of being stuck if the governance cannot pass proposals.
Brock Elmore, a creator of the YAM protocol who expressed disappointment for the situation in a tweet today:
i’m sorry everyone. i’ve failed. thank you for the insane support today. i’m sick with grief
— belmore? (@brockjelmore) August 13, 2020
Despite the situation, the Yam Finance community on Twitter still took everything in good faith, as majority members acknowledged the fact that the project was a risky venture rather than a scam project.
According to data on the on-chain market analysis platform, Glassnode, the number of addresses holding the YAM token is more than 8,600, barely two days after the project launched.
Ethereum founder, Vitalk Buterin, and Litecoin founder, Charlie Lee recently warned about the bug risks with DeFi protocols. Vitalik Buterin had said that people are underestimating DeFi risks. Charlie Lee similarly admitted to not being optimistic about the future of DeFi.