The price of Ethereum-based Decentralized Finance (DeFi) token YFI reached an all-time high of $11,275, on August 18.
Initially, the token was designed as a valueless supply token whose financial value was 0.
Later, YFI also experienced a drop in its price and reached around $10,800, however, currently it is still up by 55 percent.
As per the report, the consumers use YFI to shift their assets between different liquidity pools.
Notably, it is a governance token of yEarn which is a DeFi protocol developed by Andre Cronje.
Further, it has been stated that people who hold governance tokens are allowed to vote on the network’s operation.
One of the reasons for the growth of YFI is DeFi space, recently space itself has been experiencing a surge in its value. Also, the report indicates that YFI’s very own nature has helped increase its price in the market.
According to Alex Svavenik, a data scientist, the total supply of YFI tokens in the market is just 30,000 and out of them, 60 percent are already locked in different staking pools which helped the governance token in increasing its value.
It has been reported that over half of the YFI tokens neither are liquid nor are used for trading, therefore, their demand in the market increases due which its price is also going up.
As yield farming offers interest to crypto holders on their holding, therefore, most of the tokens are not used for trading.
Also, if all the governance tokens in the market are suddenly sold out then YFI would suffer a great loss in its price.
Some of the crypto experts argued that it is very hard to believe with such a small supply cap YFI has been able to make a lot of people, who invested in it, a millionaire and that too in a few months.