The future of the Yam Finance yield farming protocol hangs in the balance as it awaits token deposits for a governance vote that could save the project.
With less than five hours to go, Yam is only a third of the way towards the 160,000 tokens required.
A code bug discovered earlier today in one of Yam Finance’s smart contracts sent the hottest thing in DeFi into a tailspin as it scrambles to find a fix through its decentralized governance system.
The project posted an update outlining the issues and making a plea to stakeholders for them to pledge their tokens to save the platform.
We need YAM farmers to act now.
If we are successful, YAM holders will very likely vote to reward those voters who help save the protocol.
Read on for more details. https://t.co/N56vSYgeVF
— Yam Finance (@YamFinance) August 13, 2020
The code flaw causes more tokens than were intended to be minted through a system called ‘rebasing’ which was supposed to allocate ten percent of them into a treasury via a dollar-pegged stablecoin. This causes too much collateral to enter the treasury, impeding future governance actions.
Awaiting collateral for governance
In order to fix the flaw, two proposals were made to reset rebase levels and essentially ‘restart’ the system. It was initially thought that 35,000 YAM tokens would be enough to achieve a governance vote. However, Compound Finance CEO Robert Leshner, who warned about the risks on launch day, advised the team that 160,000 tokens would be required.
The ‘Save Yam’ blog post summarizing recent events added that if governance is unable to submit a bug-fix proposal prior to the second rebase, no further governance actions will be possible due to the amount of YAM in the reserve. It added a stark warning that;
“If this happens, the YAM treasury will become ungovernable and these funds will be lost.”
At the time of writing, there had been over 56,000 votes delegated but with less than five hours to go, chances of reaching the target are looking slim.
Delegated tokens need to remain in Yam wallets until 9am UTC Sunday, August 16, for them to count, which presents another risk for yield farmers if the platform collapses.
DeFi expert Cooper Turley commented on the possibility of not reaching the required amount for the governance vote due to high gas fees.
Fascinating experiment in $YAM coordination 🍠
Will community members eat ~$100 in gas to save the yCRV treasury?
Feel like this is a pretty crucial turning point for the project. https://t.co/b7hYeIDPkm
— Coopahtroopa 🔥_🔥 (@Cooopahtroopa) August 13, 2020
Hero to zero
The YAM token was launched with zero value, but rapidly surged to a high in excess of $165 according to Coingecko.
News of the code flaw and governance quandary resulted in a plunge of over 90% to current levels around $12. The amount of collateral deposited over the past 30 hours since launch has topped $570 million according to YAMalytics.