The team at Messari, an online database for the digital asset sector that offers key data insights, pricing, and research on cryptocurrencies, has argued that Yearn.Finance’s YFI token is one of the least costly or reasonably priced assets in the emerging decentralized finance (DeFi) sector.
As explained by Ivan on Tech’s Academy:
“yearn.finance (yEarn) is a yield aggregating platform on Ethereum. yEarn has grown into an ecosystem of protocols that aims to maximize annual percentage yields (APY) for its users.”
Yearn.finance aims to play a part in the yield farming craze that really took off with Compound’s COMP token distribution. yEarn uses major DeFi protocols including Curve, Compound, Aave, and dYdX to enhance the token lending process.
Messari notes that its analysis is based on YFI’s price-to-sales multiple, which is calculated by dividing a cryptocurrency token’s market cap by its annualized yield. YFI’s capitalization was recently estimated at $390 million.
Messari reveals that YFI’s annualized sales were valued at $21 million. When we divide YFI’s capitalization by its annualized sales, we get about 20x. The same ratio for popular DeFi token CRV is approximately 1568x, which makes it 78x most costly to acquire (based on this particular ratio), Messari explains.
The crypto data firm argues that unlike many other competing DeFi tokens, Yield.Finance doesn’t have major expenses at the moment, meaning that its price-to-sales ratio may be turned directly into its price-to-earnings, or PE. Notably, YFI is trading at around $13,300, which makes it worth about 15% more than Bitcoin (BTC), the flagship cryptocurrency.
Pankaj Balani, the CEO at Delta Exchange, a cryptocurrency derivatives trading platform, had provided a detailed explanation of what he believes Compound’s native token COMP’s fair value should be. Balani’s analysis came after the COMP price had surged dramatically back in June 2020.
DeFi is an experimental sector of emerging finance. It’s a very high risk space due to the large number of scams and technical issues experienced by these so-called decentralized platforms.