DeFi protocols Curve and Yearn Finance are connected as one relies heavily on the other for liquidity provision and pools. Respective token prices, however, are currently in a state of divergence.
The divergence was observed by Messari researcher Mira Christanto, who noted that the two DeFi protocols are intrinsically linked so when one goes up, so should the other.
The case has actually been the opposite, however, with the Curve DAO CRV token surging over 325% since the beginning of the year while Yearn’s YFI has made less than 30% in the same period.
@iearnfinance and @CurveFinance are intrinsically linked. If $CRV is up, then $YFI should go up pic.twitter.com/xHh5GItOQv
— Mira Christanto (@asiahodl) April 8, 2021
Curve Finance operates by collecting yields, which are generated by lending collateral across other DeFi protocols, such as Aave, Compound, and Yearn Finance. While doing so, it offers providers a mix of trading fees plus interest.
Yearn Finance users will remember that a lot of liquidity on the protocol was generated through Curve’s yCRV pool token, which was in high demand when YFI yield farming began during the 2020 DeFi boom.
It seems logical that when one protocol and token performs well, the other should follow.
CRV Beats YFI on Token Gains
The Curve DAO token got off to a shaky start with the unauthorized deployment on August 14, 2020. It dumped from that initial spike and remained flat for four months. Things picked up for CRV in mid-January when prices finally lifted off the floor of around $0.60 and started trending upwards, adding 400% to current prices of a little over $3.
Yearn’s YFI token has actually done the opposite, performing well in 2020, but staying relatively flat for the past three months. Since mid-January 2021, YFI has only managed to gain 33% to current prices, which are around $47,035, according to CoinGecko.
A Tale of TVL
Collateral locked on each platform tells a different story. Curve’s has increased by 126% over the past three months from just under $2 billion to a record high of $4.3 billion, according to DappRadar.
Comparatively, Yearn Finance has seen a much larger liquidity surge of 400%, cranking from $500 million to a record $2.5 billion over the same period, as reported by DappRadar.
Anyone notice that $YFI TVL is now at 2.5bn?$YFI is now a top 3 earner in DeFi, and the fundamental story can no longer be ignored.
No other DeFi blue chip is seeing growth like this, yet price has not moved for a while.$YFI is a resting giant and paying 3x TVL is not crazy. pic.twitter.com/eI81NMwaKX
— Daniel Cheung (@HighCoinviction) April 8, 2021
So the big question remains: why has YFI’s performance been so lackluster by comparison? Unlike its DeFi brethren, YFI has not made a new ATH this year. However, analysts are eyeing a big move for the Yearn token which has been dubbed a “sleeping giant.”
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