Yam DAO Considering Dissolving DeFi Project Yam Finance, Returning Investors’ Assets

Token holders of DeFi project Yam Finance are considering whether to dissolve the project’s treasury and distribute the funds among token holders as part of efforts to salvage what is left of the project.

Yam Finance is a decentralized finance project that recently made flash loans, yield farming, and staking available with big potential returns to users. Launched on August 11 2022, after two days the native token (YAM V3) of the DeFi project surged its market value from zero to $57 million. But on the third day, the firm announced that it found a bug in its rebasing contract, which led to the crash of its token’s market capitalization to zero. The bug also resulted in excessive YAM reserves being minted, making the project “impossible to take any future governance actions.”

While the DeFi community members rallied to salvage the project, its token continued to slide, falling from highs of more than $6 to its current price of $0.17. The plunge and a lack of meaningful progress have caused its community to lose faith in the current trajectory of the project.

According to the latest announcement as reported on Sunday, token holders of Yam Finance have recently passed a proposal that aims to dissolve the DeFi project. The proposal considers shutting the project down, stopping funding further development and splitting treasury assets among token holders – anything unclaimed going to charity. “The correct, but unfortunate, choice is that Yam should be dissolved before there is further value destruction,” the proposal said.

A community member called 1tx wrote in the proposal: “After years of Yam contributors making various efforts in different and sometimes conflicting directions, we believe that Yam has reached a critical juncture where it can either continue on its downward trajectory (~97.69% value destruction from ATH) or allow token holders to redeem the assets that they rightfully own.”

1tx further stated in the proposal “Core contributors are taking more than $30,000 out of the treasury each month to fund development work, yet there was not much to show for this.”

However, a core contributor known as Feddas responded strongly against the proposal, arguing that it was a tactical move by those buying the token at less than the amount to try to redeem massive assets if the treasury were to be dissolved.

The opinions raised by other core contributors showed a divided community. Others agreed with the idea of sharing treasury assets among token holders, saying that it was “better than doing nothing.” However, others argued that the core developers should be given a chance to bring the project back, claiming there was “not much to lose at this point.”

Without the hiccups being witnessed, Yam Finance could have become one of the major DeFi platforms during the yield farming craze. DeFi has been one of the areas of cryptocurrency most affected during the recent market downturn. The collapse of Anchor and other DeFi protocols in the Terra network as well as the constant pressure in LIDO and stEth have been just a few of several many events that have challenged DeFi’s entire value proposition.