Yearn Finance continues acquisition spree with Cover

November 29, 2020 admin

“That’s how shit gets done here,” says one team member

This morning, Yearn founder Andre Cronje announced the latest in a spate of high-profile mergers and collaborations for the multi-faceted decentralized finance (DeFi) protocol: Yearn Finance will be “joining forces” with market coverage provide Cover.

In a blog post, Cronje notes that the merger will be a natural one, as Yearn and Cover developers have been working together since Cover’s inception. Cronje also listed a series of promising possible synergies, including enhanced utility for the Cover’s CLAIM token, which will act as collateral and become a borrowable asset for Yearn, as well as enhanced security for Yearn vaults via Cover’s market coverage.

The Cover merger is just the latest in what has been a wild week for Yearn. Yearn announced forthcoming projects with yield farming protocol Pickle Finance, a vault integration with crypto wallet Argent, and a merger with lending protocol Cream Finance.

The acquisitions are notable for how they improve both the core competencies of Yearn while also pushing the protocol into new markets — both vertical and horizontal expansion. Cream and Pickle will enable superior efficiency for Yearn’s vaults, while Cover grants the protocol a new product line (Cover representatives insist that they do not offer “insurance” like yInsure, but instead “cover”).

There is some nuance to each ‘acquisition,’ however. While Cronje’s blog posts describes the work with Cover and Cream as “mergers,” senior developer Banteg noted on Twitter that the Pickle announcement is a “developer collaboration,” and it has been described by the official Yearn Twitter account as a “symbiotic relationship.”

Protocols or developers

One possible reason for the rapid expansion might be that working with other protocols grants Yearn not just greater vault efficiencies across the DeFi ecosystem, but also allows the protocol to tap an important resource that has been prioritized in recent weeks: developers.

One observer compared the moves to those of legendary tech exec and investor Keith Rabois, who is notable for his focus on talent acquisition and management:

Andre is clearly pulling off some Galaxy brained moves. Scooping up talented developers and monopolizing talent is a move straight out of @rabois

But that doesn’t mean YFI is worth anything.

— Tyler Reynolds (@tbr90) November 27, 2020

Incentivizing, training, and bringing in new developers has also been a priority for the protocol. Two recent Yearn Improvement Proposals (YIPs), YIP-52 and YIP-53, increased the quantity of vault rewards allotted to smart contract engineers who develop the vault strategies and established the “yAcademy,” an audit training program, respectively.

The latest moves indicate that Yearn is reaching outside its ecosystem to recruit talent while simultaneously building internal pipelines.

Community involvement

Some critics have pointed out that these protocol acquisitions have not been approved by community vote via a YIP:

I think it’s a serious issue. Even shareholders of centralized corporations have to vote on approving acquisitions.

Check out this article we wrote: https://t.co/A5LSOmQWm9

What leaders are openly saying about their communities in even the public Discord channels is horrendous

— The Ether (@TheEther2077) November 27, 2020

In a Twitter thread, however, a member of the Yearn Operations team noted that “There are variations and gradients” to decentralized governance, and that if community members want to organize a merger, they would have the power to do so and would be supported if the proposal “seems cool.”

“Decentralized Governance” is not a monolithic concept. There are variations and gradients. And related concepts like self-management and networks.

DAOs != postmodern consensus mechanisms where every voice is heard and every decision up for debate.

— tracheopteryx.eth (@tracheopteryx) November 27, 2020

The team member went on to explain that Yearn is peopled with self-starting “builders, creatives, and doers,” and that Yearn’s permissionless structure means that there are few gates in the way of community members who wish to take proactive actions to improve the protocol.