I’m coming to a maximalist paradox and although I know that not everybody tries to maximize their profit to the fullest extent I feel like it is unwise at this point to vault your assets rather than purchase $YFI with them. If people started thinking this way the pool would get smaller. Is this a potential threat?
I think there’s a few reasons why we won’t suddenly see a mass migration:
- YFI supply on the open market is limited. Only around half of it is available on exchanges.
- People want exposure to other assets to diversify. I still have money in the yaLINK vault, for example.
- Honestly, I think that given comparisons to other DeFi protocols, ~$30K seems like a fair price for YFI right now, which puts ts market cap at around $1 billion.
It’s true that TVL in vaults going down is bad for the protocol, but people also have many other investment opportunities outside of YFI. While I think YFI’s recent price movements have been tempting, consider also that YFII went up even more. If people want to chase higher returns, they’re out there. My point is that I don’t think YFI’s recent price movements will motivate too many additional people to leave the vaults.
The people who are out chasing higher gains likely already have many opportunities to do so, and I would guess they’ve already adjusted their proportion in vaults accordingly.