Aaaaand It's Gone - The Daily Gwei #50
The mighty YAM has fallen - but we will rebuild!
So that was the craziest ~48 hours I’ve ever had in crypto. YAM went from nothing to $600mil locked to $270mil locked (at time of writing). I’m not sure about all of you but I feel like I’ve aged 10 years in the past 2 days as I haven’t been able to look away from my computer.
So, what happened? Well it started earlier in the day when there was a bug discovered in the rebasing function that mints too much YAM to the governance reserves. If this were to happen, it would make it impossible for governance to take any further action which means that YAM basically becomes useless. To mitigate this, the Yam team called on people to delegate their YAMs to an Ethereum address so that a fix could be submitted. Unfortunately, when the time came, it was discovered that this bug couldn’t be fixed and as James explains, the rebase bug led to the minting of decillions of YAM to the governance vault which means no votes can pass because the vault can never reach a quorum.
Even though the ‘SAVE YAM!’ initiative failed, it was still an amazing “experiment” to watch play out in real time. If you peel back the onion a bit, you would have realised that a global community that didn’t exist ~48 hours ago were self-organizing and coordinating to save a brand new protocol. This is one of Ethereum’s superpowers - it is a global coordination machine like no other. Ethereum achieves this through economic games (as we all saw play out with YAM) - David Hoffman does an amazing job breaking down this concept in his piece here.
There will be plenty more of these experiments spun up over the coming months and years with people trying all types of different parameters to see what sticks. I personally want to see more gamification in the form of an interface that people can interact with to earn things like achievement points and non-fungible tokens (NFTs). This could even be taken to the next level where you could “unlock” different levels of the game by participating in farming or stacking enough of the projects token to buy your way in - anything is possible really.
So, what’s next for Yam? Well, just a few hours ago, the Yam Finance team put out a short post-mortem explaining what happened and announced that they are interested in pursuing a YAM 2.0 but only once the contracts are audited (funded via a Gitcoin Grant). I welcome this and do hope that the team rolls it out more carefully this time to avoid what happened yesterday. I also wanted to note that I expect there will be an increased number of scams popping over the next few weeks/months so please stay vigilant and don’t fomo into anything!
Have a great day everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.