Editor's Note: This article comes fromCointelegraph Chinese (ID: CointelegraphChina), Author: ANDREW SINGER, reprinted with authorization by Odaily.

Editor's Note: This article comes from

Cointelegraph Chinese (ID: CointelegraphChina)

Cointelegraph Chinese (ID: CointelegraphChina)

, Author: ANDREW SINGER, reprinted with authorization by Odaily.

Originally described as a “minimum viable currency experiment,” YAM launched to high-profile on Aug. 11, rocketing its market capitalization from zero to $57 million in less than two days. But later on Wednesday, the company announced it had discovered a bug in the rebasing contract, and by Thursday, its market value had dropped to zero. To no avail, the DeFi community banded together to save the project, whose rebase feature turned it into a global competition where investors speculated on token prices.

YAM’s short life has also highlighted divisions in the crypto community, with some concerned that DeFi appears to be heading in a reckless direction. Whether this divide is a generation gap, a “regression” of Bitcoinists and DeFi, or something else is entirely unclear, but an informal Cointelegraph survey found two very different views on the YAM rebasing experiment.

ShapeShift CEO Erik Voorhees said on Aug. 11: “YAM looks like a scam. Projects like this are bad for DeFi.” Meanwhile, Messari CEO Ryan Selkis slammed YAM Finance as a “perfect pump and dump.” "Plan", there is a 20% chance to become the DeFi version of The DAO, but The DAO incident nearly killed Ethereum in 2016.

Meanwhile, software engineer and Bitcoin Core developer Jameson Lopp has called on the crypto community to "shut off and be ashamed of people who promote ludicrously irresponsible financial products like YAM."

secondary title

Theoretical experiment or classic pump and dump?

Taylor Monahan, founder and CEO of blockchain interface provider MyCrypto, told Cointelegraph: "YAM marked a turning point, everything changed from crazy to downright horrible." She mentioned, "Everyone knows that all DeFi projects The collateral value of DeFi is huge", and the total locked value of DeFi exceeded 6 billion US dollars this week," but no one would have thought that a public, unaudited project with ridiculous branding would get 500 million in less than a day Dollar."

Ong explained to Cointelegraph that YAM proved that, “By leveraging various DeFi communities such as ChainLink, Synthetix, Aave, Maker, etc., it is possible to build a successful community of projects on top of other communities.”

"This is a very interesting experiment, because it also enables Ampleforth to add a rebase function to its protocol rules. A token with a rebase function actually turns the project into a massively multiplayer crypto game, with players all over the world playing Betting on the price of tokens. It creates an asset class that is not correlated to the price of Bitcoin, Ethereum, or any other token because its price is determined entirely by its own protocol rules.”

Others, while endorsing Yam, are reluctant to call it an experiment, at least not of scientific interest. Ruaridh O'Donnell, co-founder and director of information systems at Kava, a DeFi lending platform, told Cointelegraph: "Calling Yam an experiment means it's an elaborate system designed to prove a new concept. It's not. There’s a quick patchwork of DeFi ideas.” Then, he added: “Sometimes, though, we need things like this to inspire the real version that comes later.”

O'Donnell recommends taking the long view. “New markets always have periods of over-hype. They often follow an S-curve model of slow growth, then over-hype as people speculate about the potential of the new technology, and then fade away as people understand it .”

secondary title

Is DeFi overheating?

When the market is growing as fast as the DeFi market, it can be difficult for the market to maintain balance. When asked if DeFi was inflating a bubble, attorney John Wagster of Frost Brown Todd LLC told Cointelegraph: “The total value locked in DeFi has rapidly increased from about $1 billion in May to $6 billion today, which of course can seen as a sign of an overheated market.” However, he also stated: “The truly innovative concept of yield farming (yield farming) comes from clever engineering that seems to attract market players looking for new opportunities.”

Lex Sokolin, chief marketing officer and co-head of global fintech at ConsenSys, told Cointelegraph: “Software can scale ideas like never before, allowing a single developer to architect and deploy a brilliant DeFi application to $500 million in assets overnight. on. Compared to the existing financial system in banking and fintech, this space is developing faster and with more momentum.” He further shared:

"My takeaway from YAM is that there is a huge need for innovation in financial infrastructure that may outstrip the capabilities of the existing operating environment"

Monahan, on the other hand, worries that “the dangers of what happened yesterday — naive, reckless, well-motivated teams will soon be replaced by scams, robberies, and crime. We’ve already seen phishing sites and extensions specifically targeting DeFi products such as Uniswap.” .We see Google ads and malicious DMs and tweets from fake sites." She further shared:

When asked if DeFi had exploded, Bitcoin analyst Tone Vays, organizer of the Financial Summit, told Cointelegraph: “Unfortunately, DeFi doesn’t look like it’s overheated yet due to the recent rise in Bitcoin, which is why everyone Rush to get rich from these scams." Vays continued, adding:

“Developers don’t even need a functioning product at all. The YAM founders probably want it to last more than two days, but considering there’s a market cap of $60 million on day one, the YAM founders probably sell it on day one Out of $5 million worth of YAM, can now relax and enjoy the rest of my life."

When asked if he thought YAM was a scam, Vays replied: “To me, anyone who prints money is running a scam. Satoshi did it differently because he was the first People who solve real problems.” In contrast, CoinGecko’s Ong said: “I don’t think it’s a scam because the rules are clearly laid out at the beginning and everyone can see it. However, I do think YAM is A very risky, careless experiment."

The point about risk is related to the rebase function, which can mint a large number of YAM tokens, thereby diluting existing token holders, but this is not known to all participants. The project was called careless because its code was not properly audited and tested before launching.

The existing system is like a complex cathedral

There really isn't a lot of precedent for this type of weekly explosion. As Sokolin told Cointelegraph: “The existing system was created more like a cathedral of complexity. The crypto space is not going to match 50 years of core banking and portfolio management software overnight.”

Ong added that he believes the current mining boom mimics that of 2014-2016. However, back then people had to understand how mining works, but now, “people just need to have capital to stake and farm early tokens, which is a much more democratic process.”

Sokolin added that when it comes to people's financial assets, there is a danger of moving too fast and disrupting too much, "If we're going to have mass retail adoption, standards will become stricter and assets will be more regulated ’” Ong also added: “Ultimately, this ‘production testing’ behavior will result in huge losses, and I wouldn’t be surprised if a Mt. gox-like disaster happens at some point.”

secondary title

Have investors learned their lesson?

Any takeaways from last week's events? Wagster told Cointelegraph: "The fact that YAM apparently comes with unaudited software code is a huge red flag for anyone paying attention, but don't let One mouse poop ruins a pot of porridge.” Ong added that those investing a lot of money in DeFi in the future should consider buying insurance. “In this case, “insurance for the YAM contract was available on Nexus Mutual, but no one bought it,” he said.

O'Donnell emphasized the enormous impact of coding errors in this high-stakes environment: "I think it highlights how difficult building these systems is, and it's quite different from other software development. Errors can lead to catastrophic failure, which is standard Web Everything an app can't do."

Vays is skeptical of everything gleaned from recent events: "The only useful thing about YAM is to show that these projects can cost you all your money in two days, but I've seen people waiting for YAM 2.0, so People haven’t learned their lesson.” Indeed, as Cointelegraph reported, the total value locked in YAM since the network’s crash has surpassed $400 million, according to a report from crypto analytics firm Messari.