Yeti Finance, a prominent protocol in the Avalanche ecosystem, has just announced its decision to cease operations in the DeFi space. The statement has sent shockwaves through the decentralized finance world, impacting treasure owners, token holders, and the community at large. The choice to halt operations was not taken lightly and arises as a result of various challenges faced by the protocol over the past year.
From its inception, Yeti Finance’s primary goal was to establish itself as the leading protocol for borrowing against a diverse portfolio of assets on the Avalanche network. The team behind Yeti Finance has always maintained a strong commitment to this vision, standing out by not selling any of its founder tokens and prioritizing security above all else. However, the past year presented considerable challenges, with a marked decrease in Total Value Locked (TVL) and revenue, leading to budget adjustments and personnel reductions.
We are sad to announce Yeti Finance will be winding down.
Please read the full thread below to understand why and what this means for trove owners, token holders and the greater community 🧵
— Yeti Finance 🔺 (@YetiFinance) December 27, 2023
The industry has been navigating turbulent times marked by unforeseen events and increasingly common targeted cyber-attacks. Despite having limited resources, the Yeti Finance team focused on maximizing protocol security to safeguard user funds and establish itself as a trusted leader in the lending space. Despite achieving this goal, the protocol did not reach the necessary scale for long-term sustainability.
How Will the Closure Process of Yeti Finance Be?
As for the wind-down process, approximately 90% of the current treasury will be available for redemption by YETI token holders. The remaining funds will cover the necessary costs of the closure process. The redemption contract will be accessible until February 10th. Additionally, liquidity funds belonging to the protocol have been withdrawn, and the AVAX portion has been contributed to the community redemption pool. It’s noteworthy that tokens held or allocated to current team members will not be redeemed, ensuring that all assets are directed to the community.
Yeti Finance has outlined a plan for users to exit the protocol. Interest rates on outstanding loans will be increased over three months to encourage treasure holders to close their positions and withdraw their deposits. The peg-stability module cap has been removed to facilitate users in swapping YUSD for repaying loans and withdrawing assets. The Yeti Finance team reminds users that participation in the protocol and holding tokens has always been at their own risk, as stated in the protocol’s disclaimers and Terms of Service.