Yearn Finance price rallies by 8% as MakerDAO prepares to deploy $100 million on the Dapp to earn yield
- Yearn Finance price recovery, unlike most of the cryptocurrencies in the market, has been very slow, rising by merely 51% in over three weeks.
- MakerDAO proposed deploying USDC worth $100 million from its reserves, where it is set to earn a 2.16% yield annually.
- MakerDAO is still the second biggest DeFi protocol in the world despite losing 63% of its total locked value in the last 13 months.
MakerDAO has been attempting to generate yield for the last couple of months now, and the collapse of FTX ended up being the perfect motivator to focus on the same. Also justifying transparency in doing so, Maker proposed the Maker Improvement Proposal (MIP) 92.
MakerDAO joins hands with Yearn Finance
Maker, earlier last November, proposed the MIP92, wherein the decentralized finance (DeFi) protocol suggested onboarding $100 million worth of its assets in USD Coin onto Yearn Finance. The $100 million would come from its Peg Stability Module (PSM) that swaps users’ collateral with Maker’s stablecoin DAI.
As per the proposal, the money would be deployed into a bespoke non-custodial Yearn vault which will provide Maker a 2.16% APY (annual percentage yield). Justifying this move, Maker stated in its proposal,
“The recent collapse of centralized entities such as Celsius, BlockFi, and FTX, among others, has made painfully clear the importance of transparency when depositing funds to generate yield—something that DeFi, and specifically Yearn, are well-equipped to provide.”
The proposal was met with slightly mixed opinions from Maker Governance, as over 71% of voters approved the plan while others did not. However, the proposal is set to go through another executive vote, where the Governance Facilitators will confirm its passage on January 26.
Yearn Finance price enjoys the greens
Yearn Finance price reacted positively to the development as the altcoin shot up by nearly 8.55% in the span of 24 hours, marking the second-highest single-day spike in over a month. This pushed the cryptocurrency’s recovery to almost 52%, bringing YFI to trade at $7712 at the time of writing.
Teetering at the resistance level at $7712, YFI is set to breach the barrier. Flipping the same into a support floor would allow Yearn Finance price to bounce off of it and rally toward $8559, marking a two-month high.
YFI/USD 8-hour chart
However, a bullish narrative supporting a 10% rise could also meet with selling for profit, which would bring the price down. If YFI loses its support level at $6892, it could continue declining to tag the support level at $6516. A daily close below the same would invalidate the bullish thesis, resulting in the price falling to further lows of $6086.