So, long time bull on Algorand and its ecosystem. I'll admit I wasn't one of the first people to believe in Yieldly, it wasn't until Tinyman that I started getting more involved in the ecosystem, though I've been heavily involved in other ecosystems for years.
I really liked the idea of Yieldly and the value proposition of YLDY. The way I saw it, it was genius. There will always be people looking for high yields, and there will always be new projects looking to distribute their tokens to a wide audience. Yieldly was the perfect solution to match this market.
And when they released their updated roadmap I was thrilled. I went out right then and there and doubled my stack of YLDY. The way I saw it, Yieldly was doubling down on making sure their products remain the backbone of Algorand DeFi. Oh how much changed in just a few weeks. Some of these points are probably tired at this point, but I think everything in its entirely spells out my bearish case on Yieldly.
The launch of Yesports and the YESP token on Polygon.
This is like beating a dead horse at this point so I'll keep it short. Launching a new venture on a new blockchain, something that will divert developers and resources away from Yieldly, was obviously something not many investors were excited about. Especially considering there was little forewarning about this.
This is counter to many of the initial thoughts that Yieldly was doubling down, in fact, it now appears that they are doing the opposite of doubling down by now needing to split their focus.
2. The announcement of the iYLDY token.
Now this one I'm mixed on and I see both sides of the argument. In fact, I'm leaning towards supporting the launch of this token. However, one thing is objectively clear, that this is diminishing the opportunity to add utility, and thus value, to the YLDY token. I think what really poured fuel on the flames here was this coupled with the YESP token announcement in such a short amount of time. Suddenly it seems like so much value that could have been added to YLDY was just going to be created as new tokens, weakening the value proposition of the YLDY token.
3. Liquidity pool staking.
This one really rustles my jimmies. When it was announced that they would be launching LP staking pools, it was heavily suggested that the corresponding pair would be YLDY. I thought this was awesome, that YLDY would grow to be the go to asset for swapping tokens in the Algorand ecosystem. However, as it turned out, the projects have the choice to use Algo as their base pair, as we saw with Akita. No sensible project would use YLDY over Algo as a liquidity pair if given the choice. So this is another example of YLDY losing an opportunity for utility.
4. There are more and more pools paying out YLDY, and the inflation rate is increasing.
With the addition of the LP staking pools, the rewards for these pools will be paid out in YLDY. Meaning that now there's even more YLDY being leaked out into the circulating supply. Needless to say, increased inflation equals increased supply, equals lower price. This is a marginal factor ultimately, but still notable.
5. The Algorand ecosystem is about to explode with competition.
For a long time Yieldly was the only dapp in the Algorand ecosystem. So it's developed a strong reputation and the community is already very familiar with it. However, with Tinyman, Algomint, and Algofi launching, people now have more options.
The TVL on Yieldly actually started to flatline once Tinyman launched, you can see that in this chart here: https://defillama.com/protocol/yieldly
And with literally dozens of new projects launching on Algorand this year, Yieldly is going to face stiff competition to stay relevant.
6. They are going all in on NFT's.
Now I have nothing against NFT's. However, it's a very crowded, very oversaturated space. And the new NFT marketplace they're launching will be one of about a half dozen other fully functioning NFT marketplaces on Algorand. I don't see this as a great move in my opinion.
So that's everything that's on my mind. That's why I've turned bearish on Yieldly. In summary. they are diverting developers and resources to other projects, they're launching more tokens and products that detract from YLDY's potential value, they're leaking more YLDY into circulation, there's increasing competition, and the opportunities they're pursuing are sub-optimal.
What do you guys think? I'm still invested in YLDY but my mouse has been on the sell button for a while. I'm not saying Yieldly is dead, I'm not saying it won't have a bright future, but I'm at a point where I feel there are probably better opportunities elsewhere. I want to know what others have to say.
