As the first official on-chain enforced governance vote, Andre Conje, the creater of Yearn.Finance (YFI), has proposed to permanently burn the YFI token minting capability, thereby capping the number of YFI tokens permanently at 30,000.
According to the online poll, the proposal has met with overwhelming support, with 96.46% voting in favour.
Over the past 2 months, YFI has seen its value increase exponentially. According to CoinGecko, YFI reached an all-time high (ATH) of USD43,678 less than 24 hours before this post, far surpassing Bitcoin's ATH of USD19,655.39 in 2017. YFI's meteoric rise has catapulted both YFI and Defi into the limelight, capturing the imagination of a whole new generation and inspiring an endless number of copycats hoping to emulate YFI's resounding success.
YFI Price Chart courtesy of CoinGecko
During the Smart Contract Summit held on 28 & 29 August 2020, Andre Conje mentioned that greed was at the core of the current Defi boom, brought on by the frenzied trade of governance tokens.
Governance tokens, like Yearn.Finance's YFI, are meant to allow holders to vote and participate in the decision making for the Defi project. By hard capping YFI tokens at 30,000 without the ability to mint more, Andre Conje may be hoping to stop people from farming YFI and possibly manipulating or sabotaging Yearn.Finance's governance systems.
More importantly, scarcity is often accompanied by price hikes. As things currently stand, there are already predictions of 1 YFI token being worth 100k in the near future. If the proposal passes, the value of YFI may appreciate considerably. As with all changes, this could be an opportunity or it could be a disaster waiting to happen.
