The Decentralized Finance (DeFi) frenzy is starting to mimic the initial coin offering (ICO) boom, including the fact that poorly built DeFi projects like YAM are having hundreds of millions of dollars invested into them.

YAM is a bunch of new DeFi projects bundled together into one token, somewhat reminiscent of the subprime mortgage bundles that took down the global economy in 2008. YAM has never had a proper code audit, and in fact displays warnings on its website that it’s risky to invest in it since it was built with haste. 

Further, the YAM twitter is constantly posting about bugs and asking for the community to help, and it seems that YAM is not even functioning correctly based on the tweets. 

Despite the red flags, massive amounts of capital are constantly pouring into YAM, and the total value locked is now $514 million

This is of course a recipe for disaster, if God forbid YAM gets hacked and suddenly this $500+ million is drained away. Unfortunately, due to the tremendous amount of bugs in the protocol’s code, this doomsday scenario is quite possible. 

Further, YAM is supposed to be a stable coin pegged to the USD, and now it is worth well over $100. It seems people are rushing in to farm YAM as fast as possible during the initial allocation, even though there will be a tidal wave of printed YAM that will force the price down to $1, which could be a disaster for people who do not understand this. 

Thus, it seems the DeFi world is making the same mistakes as the ICO boom. Notably YAM is just the tip of the iceberg, and many more new DeFi projects are popping up and having tons of money invested into them. This is likely setting the stage for massive losses, and eventually a regulatory crackdown which will ruin the DeFi party.