Yearn.finance is up nearly 45% in 24 hours, and it appears to be so thanks to the team’s new dog token offering a bi-directional peg to YFI.
Despite Dogecoin (DOGE) retracing from its all-time highs above $0.70, dog tokens continue to attract astonishing levels of popularity, with DeFi “blue-chip” Yearn.finance emerging as arguably the most prominent team seeking to cash in on the canine meme coin craze with the launch of its WOOFY token.
But the YFI fans jumping in early may not have fully understood the coin’s utility, which saw its price sail into the stratosphere.
Whisperings of the new project began to circulate on Twitter over the past 24 hours, with users associated with Yearn hinting at a new token called WUFFY. Rumors of an airdrop for users who posted a picture of themselves being licked by a dog and tag Yearn developer Banteg saw a flood of face-lick photos uploaded to Twitter.
— Max Crypto Headroom (@maxcryptohead) May 11, 2021
As is quickly becoming the norm for new releases from the Yearn team, fans in the community raced to purchase the new token before fully understanding its utility.
Despite WOOFY’s sole function being to offer a means to redenominate YFI holdings — with the Woofy Finance interface offering bi-directional YFI to WOOFY conversions at a ratio of 1:1 million — over-exuberant buyers pushed the price of WOOFY so high as to imply YFI’s to be $1.5 million per token.
As of this writing, YFI is trading for roughly $88,200 after gaining 43% in 24 hours.
$1.5 per woofy means you essentially paid $1.5million for $yfi
— Eth Lab ⟠ (@EthLaboratory) May 11, 2021
Community sentiment appears divided regarding WOOFY, with Twitter user BrotherMuozone concluding that looking like “an unsavory attempt to milk vale out of the new suckers in the market,” adding the experiment actually comprises “a brilliantly timed and themed ‘unit bias a/b test’” offering insights into whether traders prefer tokens with a larger circulating supply and lower fiat price versus a low supply and high token price.
Although whether traders choose to hodl WOOFY or YFI is arbitrary, with traders’ preference for one token over the other having no impact on Yearn’s overall market capitalization, the introduction of WOOFY may reduce the volatility of YFI’s price by creating arbitrage opportunities between the two tokens.
As of this writing, WOOFY last changed hands for $0.09, implying a roughly 3% premium over YFI.
According to DEXTools, nine of the top 10 most-viewed pairings on Uniswap v2 are dog tokens.
Two way peg means its impossible for woofy to trade at a premium to yfi for any significant amount of timeImo this is just a weird way to transfer wealth from unsophisticated users to arbitrage bots and Ethereum miners https://t.co/CUKig4fHeW
— Hayden Adams (@haydenzadams) May 11, 2021