Key Takeaways
- YAM Finance offered yield farmers six-digit APY returns at its peak.
- Unaudited and risky, the experimental DeFi project appears to have finally ended.
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A critical bug in YAM Finance that caused the governance token led to the publication of an emergency warning, a request by the developers to “Save YAM.”
The Yam Medium post reads:
“We believe that if the community saves YAM, tokenholders will grant lost rewards + a bonus to those who acted to save the system,” as a way to incentivize the delegation of governance tokens to the developers.
Less than seven hours were available for the community to delegate at least 160,000 YAM in order to change the governance smart contract. A stretch goal of 200,000 YAM was also introduced, which if reached will guarantee the survival of the platform, at least until the next critical bug.
The initial rebase has occurred adding approximately $500k worth of yCRV to the YAM treasury.
If governance is unable to submit a bug-fix proposal prior to the second rebase, no further governance actions will be possible.
— Yam Finance (@YamFinance) August 12, 2020
The proposed change is related to the way YAM is minted as a result of platform activity.
The problem was the fact that YAM was overproduced and ended up in the token reserves of the smart contract, which was inaccessible. The following change is proposed:
Most regular users had only earned 6-10 YAM by this point.
The introduction of whales in the ecosystem helped boost YAM production and as a result, the community managed to absolutely crush the stretch goal threshold (breaking the website’s UX in the process) ensuring the proper execution of the governance contract change.
With the goal reached, the only thing that remained was to wait out the next 4 days until Sunday, Aug 16 for the voting period to end. The initial expectations that as long as YAM delegated votes to remain at 400,000 YAM (40,000 pre-rebase YAM) by the time the voting period ends the contract governance will be saved.
The governance proposal was submitted successfully, but there was still potential for failure. @YamFinance encouraged users to withdraw their funds from Uniswap’s YAM/yCRV pair. If the governance change fails, these funds will be locked away and inaccessible.
Governance proposal submitted (0x1d64875b24732bc2e8880cd0870ea8e301ddde683ce81fea418e9ab4feea90bb)
🚨 we are urgently investigating a potential flaw that would prevent proposal execution.
We strongly advise exiting the Uniswap YAM/yCRV pool prior to rebase at 8am UTC (35 mins)
— Yam Finance (@YamFinance) August 13, 2020
The community was eager for answers and their many questions remained unanswered. People were not sure how to support the platform and were fearful of making a mistake. YamFinance was silent as troubling suspicions grew within the community.
Finally, the silence was broken when Brock Elmore, the developer behind Topo Finance and Yam Finance, announced defeat on Twitter.
i’m sorry everyone. i’ve failed. thank you for the insane support today. i’m sick with grief
— belmore🍠 (@brockjelmore) August 13, 2020
After the governance contract change failed to pass, Yam has officially imploded on itself. Any assets that were locked in Uniswap’s YAM/yCRV pair are now lost. The bug claimed the platform in an unadulterated lesson for future developers and the importance of auditing and testing smart contracts.
The experiment is over.