YFI worth good points 46% in simply 4 days after Yearn Finance’s $7.5M buyback
Yearn Finance (YFI) emerged as one of the top performers in the crypto market this week, rising over 46% in just four days to a two-week high of over $ 29,100.
YFI / USD daily price chart with its four day bull run. Source: TradingView
The gains mainly came to the fore when Yearn Finance announced that YFI has been buying back en masse since November in response to a community vote to improve the economics of the YFI token. The decentralized asset management platform bought 282.40 YFI at an average price of $ 26,651 per token – a total of over $ 7.50 million.
Additionally, Yearn Finance found it had saved more than $ 45 million in its treasury and had “stronger than ever” revenue. As a result, it could – in the future – use its earnings to buy back more YFI tokens.
Now that the Treasury Department has saved more than $ 45 million and profits are stronger than ever, expect much more aggressive buybacks. What are you going to do
– sehn.finance (@iearnfinance) December 16, 2021
Adam Cochran, partner at activist venture fund Cinneamhain Ventures, found that Yearn Finance was making about $ 100 million a year just through fees from Vaults, its flagship smart savings account service that maximizes the appreciation of digital assets on hold deserved.
The analyst also highlighted that Yearn had attracted more than $ 5 billion in Total Value Locked (TVL) on a market cap of $ 781 million. That being said, the Yearn Finance protocol earns one of the highest fees per TVL, which gives it enough liquidity to sustain its token buyback strategy going forward.
The total value locked in Yearn Finance vaults. Source: DeFi Lama
Cochran also compared Yearn Finance’s earnings-to-sales (P / S) and earnings-to-earnings (P / E) ratios to another “payout-based” protocol, Curve, noting that YFI remained undervalued compared to Curve’s staking token CRV.
In detail, the P / S ratio indicates how much investors are willing to pay for a company’s stock based on sales per share. The P / E ratio shows investors’ decision to buy a stock based on the company’s past or future earnings. In either case, a lower value indicates an undervalued stock.
“Their P / S ratio is 3.6x and their P / E is 7.9x,” wrote Cochran of Yearn Finance, adding:
“Those numbers for other payout-based protocols like Curve are 71.9x and 143x, respectively. So roughly the multiple ratings for someone who has fees.”
Aside from holding $ ETH, $ YFI is actually my top pick for all of 2022.
I’m stupidly at Yearn a long time, both in terms of my capital and my time, as I expect to spend a lot of time building here.
– Adam Cochran (@adamscochran) December 16, 2021
YFI next at $ 40,000?
While Yearn Finance’s decision to repurchase over $ 7.50 million worth of YFI helped boost its prices, the cryptocurrency also received an additional upward boost from a historic accumulation margin.
The range between $ 18,500 and $ 20,000 has been attracting buyers with every YFI price drop since November 2020. It also held up against bears in September 2020, causing prices to rebound towards $ 40,000.
YFI / USD three-day price chart with fakeout area. Source: TradingView
If YFI holds the $ 18,500 to $ 20,000 range as support and continues to climb above $ 24,580, or the 0.786 Fib line on the Fibonacci retracement chart in the above chart, its next upside target will be $ 40,000, a Level that coincides with the 0.618 Fib line.
Related: As Yearn.Finance’s revenue reserves grow, “harvest” projects define boundaries
Popular crypto trader Cuban noted that YFI’s Fully Diluted Valuation (FDV) is below $ 1 billion, which is “criminal given the potential and the team behind it.” He added:
“As for macro-crypto, I believe fundamentally we are going to have a big Q1 and a lot of people will stay on the sidelines after reducing EOY risk.”
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