Fund manager on why DeFi's Yearn.finance dropped 75% from highs

Finance has undergone a strong decline over recent weeks after a record-setting rally.

According to CryptoSlate market data, the Ethereum-based YFI coin currently trades for $15,800 - a price 65 percent off the all-time high price of $44,000.

According to Sam Bankman-Fried, CEO of crypto trading platform FTX and fund/market maker Alameda Research, there are three key reasons why YFI slipped lower.

Finance had a number of "Bad PR events," including some controversy over a side project called Eminence and a series of bugs in the protocol's core products, called vaults.

This hurts YFI especially because much of the token's intrinsic value is derived from acting as a claim of a portion of the yields generated by the protocol.

Selling $3m of YFI does not short it "To the ground".

SBF October 10, 2020.Alameda is short YFI. It's worth noting that Alameda Research, Sam's fund, has been short YFI over recent weeks.

This fact came to light last week when users on Twitter noted that a user with large amounts of Wrapped Bitcoin was borrowing dozens of millions of dollars worth of Ethereum, Chainlink, YFI, and other cryptocurrencies.

Borrowing through decentralized protocols often means someone is trying to short an asset: one could borrow ETH then deposit it on a centralized exchange, sell it, then buy it back later for lower.

Of note, Alameda Research is a market maker that purportedly facilitates billions of dollars worth of volume each day.