What happened to YAM (Failed Community Rescue)

Boxmining

7.3K views 289 4 years ago

Description

What happened to YAM (Failed Community Rescue). Farming funds are still safe - however, the community is forever locked out of the token governance module. This means it's no longer safe to use the yc...

What happened to YAM (Failed Community Rescue). Farming funds are still safe - however, the community is forever locked out of the token governance module. This means it's no longer safe to use the ycrv YAM pools etc. https://medium.com/@yamfinance/yam-post-rescue-attempt-update-c9c90c05953f https://twitter.com/brockjelmore/status/1293820056682377216 ●▬▬▬▬▬▬▬Recommendations▬▬▬▬▬▬▬● Recommendation List: https://www.cryptoatlas.io/Boxmining 🔎Crypto Prices: https://www.coingecko.com/ 🔒Hardware Wallet: http://boxmining.co/ledger 👍🏻Brave Browser: http://boxmining.co/brave 📲Binance Exchange : http://boxmining.co/binance ●▬▬▬▬▬▬▬▬▬▬Community▬▬▬▬▬▬▬▬▬● Boxmining Official Website: https://www.boxmining.com/ Telegram Discussion Group: https://t.me/boxminingChannel Telegram Announcements: https://t.me/boxminingChannel Facebook Community: https://www.facebook.com/groups/CryptoSpartans/ ●▬▬▬▬▬▬▬▬▬▬▬Social▬▬▬▬▬▬▬▬▬▬▬● Instagram: https://www.instagram.com/boxmining/ Twitter: https://twitter.com/boxmining Facebook: https://www.facebook.com/boxmining Steemit: https://steemit.com/@boxmining ●▬▬▬▬▬▬▬▬▬▬Disclaimer▬▬▬▬▬▬▬▬● I'm not a professional financial adviser and you should always do your own research. I may hold the cryptocurrencies talked about in the video.

AI Analysis

Alright, let's break down what happened with YAM.

YAM, a DeFi project that saw an explosive rise, unfortunately experienced a critical bug that led to a failed community rescue attempt. This bug fundamentally broke its governance mechanism, meaning the entire community, including the developers, is now permanently locked out of making any further changes to the YAM token or accessing its treasury. While funds locked in YAM for farming purposes remain safe, the YAM Y-Curve pool is now considered permanently unsafe, and users are strongly advised to remove any liquidity from it. There's talk of a potential YAM 2.0, but its future is uncertain.

Here are the key takeaways from the YAM situation:

* The Fatal Bug: A significant bug was discovered in the YAM rebasing contract. This bug caused the contract to mint far more YAM tokens than intended, dumping a massive amount of excess YAM into the Uniswap YAM Y-Curve pool.
* Governance Breakdown: The core problem stemmed from how this rebase bug interacted with YAM's governance module. Because of the excessive YAM in the treasury (due to the bug), it became impossible for the community to reach a "quorum" – the minimum number of votes required to pass any governance proposal. This essentially locked out both the developers and the community from making any changes or accessing the project's treasury.
* The Failed Rescue Mission:
* The community, in a truly remarkable display of coordination, rallied quickly to delegate their votes for an emergency bug-fix proposal.
* Initially, it looked like they had succeeded. The voting progress showed overwhelming support, well beyond the required threshold, and everyone was hyped, believing the battle was won.
* However, security experts later revealed that even with sufficient votes, the underlying rebaser bug was fundamentally interacting with the governance module in such a way that it would still prevent the proposal from ever succeeding. This was the biggest, most crushing realization – even with the community's immense effort, the technical flaw ran too deep.
* Current State of YAM:
* Immutable Existence: YAM will continue to exist as long as Ethereum itself operates, but it cannot be modified by governance. It essentially lives on, but without any possibility of community control or updates, behaving similarly to other rebasing assets like Ampleforth.
Unsafe Liquidity Pool: The YAM Y-Curve pool on Uniswap is permanently unsafe. The way the contract is written means it will always be at risk of dumping tokens into this pool. If you have any residual liquidity there, you must* remove it immediately. While 75% of liquidity was removed before a second rebase, any remaining funds are at risk.
* Wider DeFi Impact: This incident caused a "micro dip" in other DeFi projects like Ampleforth, YIP, and Compound, which had previously seen boosts due to YAM's popularity and connections.
* Why People Aren't Furious (Mostly): A key reason for the relatively positive community sentiment despite the failure is that many participants acquired YAM for free through yield farming. The underlying contracts for farming YAM haven't been compromised, keeping users' initial staked funds safe.
* A Glimmer of YAM 2.0?
* The developers believe the community deserves a chance to persist and are exploring a potential YAM 2.0.
* Their plan involves setting up a funding project. If enough funds are raised, they would use them to conduct a thorough audit and launch YAM 2.0 via a new contract, essentially migrating from the old YAM.
* Interestingly, community interaction around this idea has been surprisingly positive.
* Developer Sentiment and Lessons Learned:
* The lead developer, Brock Elmore, publicly expressed immense grief and apologized, stating, "I'm sorry, everyone. I failed. Thank you for the insane support today. I'm sick with grief." This makes it clear that the failure was not intentional.
* It highlights a critical lesson for the DeFi space: the community and developers moved "too fast, too furious." The immense hype and rapid deployment led to insufficient testing and auditing, ultimately causing this devastating bug.
* Personal Experience and Takeaways:
* As someone who mined (farmed) YAM, there was no direct profit from the project itself.
A personal mistake was made: contrary to his own rules, a decision was made to buy* YAM tokens hours before the expected successful vote, hoping to speculate on its price. This proved to be a bad idea, resulting in a loss within an hour.
* This experience served as a significant lesson, instilling much more caution and emphasizing the importance of thorough audits and a slower pace in DeFi projects. While it was a loss, it's considered a valuable learning experience and hasn't negated overall positive gains from yield farming.

In conclusion, the YAM project's governance is permanently locked out due to a critical bug, meaning no further changes can be made to the original YAM contract. While it still technically exists, it's immutable. The YAM Y-Curve pool is unsafe, and all liquidity should be removed. There's a hopeful, albeit uncertain, path towards a YAM 2.0. The incident serves as a stark reminder of the risks of rapid development in decentralized finance without adequate audits and highlights the importance of caution in this volatile space.

Transcript

All right, guys. So I want to make a very quick video to give you guys an update on what's happening with the YAM situation. Less than 10 minutes ago, this update was posted, the YAM post-rescue attempt update, basically describing how the devs, unfortunately, were unable to save YAM itself from being locked out. So now it turns out the case where the whole entire community is locked out of making any more changes to YAM. So all the idea of governance, basically, that doesn't apply at this curr...

All right, guys. So I want to make a very quick video to give you guys an update on what's happening with the YAM situation. Less than 10 minutes ago, this update was posted, the YAM post-rescue attempt update, basically describing how the devs, unfortunately, were unable to save YAM itself from being locked out. So now it turns out the case where the whole entire community is locked out of making any more changes to YAM. So all the idea of governance, basically, that doesn't apply at this current case anymore. And now there's two views, right? Now the community, we kind of see YAM prices dropping because the value of governance improvements is lost. And also, it's also making a kind of a negative turn on a lot of DeFi projects that were also locked up in YAM as well. So if you look at the past 24 hours and you sort that out, Ampleforth, YP, Compound, these were two coins that were really brought up by YAM in the past. So we had a micro dip that happened. And this kind of explains everything that's going on in this current space. I also did a live video, so just kind of things happen. But I'm going to take that to unlist it because this video will have more up-to-date information about what happened. Let's take a look from the developer side. So they talk about what happened. I'm just going to read it as it's written. So I'm not the actual dev. And so approximately at 6 p.m. UTC, we discovered a bug in the YAM rebasing contract that will mint far more YAM than intended to sell to the Uniswap YAM Y-curve pool, sending a large amount of excess YAM to the pool reserve. Given YAM's governance module, this bug would render impossible-to-reach quorum, meaning that no governance action would be possible and funds in the treasury would be locked. So now the whole community, both the devs and the community, were essentially locked out of creating any new proposals to YAM. And also we're locked out of making any treasury changes because the treasury is holding so much YAM that it's no longer possible for our community to reach quorum. Now, we tried, right? So prior to this, we actually did try to reach quorum to try to do an emergency fix on that. So let's take a look. So we believed achieving quorum for a bug-fix proposal would allow us to save the protocol, and we quickly rallied the community to delegate their votes towards this end. Shortly after 7 a.m. UTC, we submitted a governance proposal and cast a vote that we originally believed were sufficient votes to be able to enact it. Shortly thereafter, from the help of security experts, we concluded that the rebaser bug would interact with the governance module and prevent this proposal from succeeding. So this was the biggest problem. So if you actually take a look, just looking at the timeline. So I took the screenshot roughly 30 minutes prior to the rebase. You know, the community met its goal. I was also pledging my yams and supporting that. And in fact, there was additional counsel on that that I was trying to support this with. So, you know, it looked almost like as if we were going to win the battle, right? The votes were more. You can see the green line. It was more than what we needed. In fact, this arrow kept growing. It was like some overwhelming support from this community. Everyone was hyped up. And then, unfortunately, it was realized that it was still not enough. So just from the help of security experts, they just realized, you know what? Unfortunately, even with the community all voting and initially reaching that goal that they thought would make it, it just didn't happen. So what the community managed to achieve in the past 30 hours was nothing short and incredible. When we deployed the contract about 40 hours ago, we couldn't ever imagine the massive coordination game that this would unfold. So let's see what the state of YAM is. Let's hear from the developers. YAM will live as long as Ethereum continues to operate with the support for contracts as written. It will no longer be modified by governance. So on a technical level, it will behave on a similar fashion to other rebasing assets such as Ample or Ample4. The YAM Y-Curve pool will remain unsafe in perpetuity. Though the YAM community managed to get 75% of their liquidity out of the pool before the second rebase, any residual liquidity should be removed. So this is very important. So unlike with Ample4, where there is a Uniswap Ample pair, which is very active right now, with YAM, this is no longer possible. It's mostly because of the way the contract is written. It interferes with how this pool works. So it's always under risk of the contract just dumping into this pool. So definitely not advised to stay in that pool at this current point of time. Now there's talk about YAM 2.0. So developers, they're saying, okay, look, they believe that the community deserves to persist. They're setting up a funding project to coordinate. And if the funding goal is reached, and they plan to use the funds to complete an audit and launch YAM 2.0 via a contract, migration contract from YAM. So that's interesting. So that means maybe the project will continue in some form or the other if the community decides. And once they set it up, the community interaction was kind of interesting. I would say it's actually a lot more positive. I mean, so I mean, if you read the developer tweet, I think it's very apparent that they never wanted this to happen in the first place. Belmore says, I'm sorry, everyone. I failed. Thank you for the insane support today. Support today. I'm sick with grief. And yeah, it's unfortunate. And, you know, obviously they kind of learn from the mistakes. I think it's very clear that it was a situation that a community moved too fast, too furious, both the developers and the community itself. There was so much attention brought onto YAMs because people thought this was going to be something very cool, very awesome. And in many senses, there wasn't too much risk in actually farming YAM itself. The contracts to farm YAM itself, they haven't been compromised so far anyways. Fingers crossed. There's still risks there. But those contracts are still safe. So I think a lot of reasons why people aren't so angry is because people got a lot of the YAM for free. That being said, did I make money from this? No. So I'm not part of the project. I'm not part of the team. But I did mine it. I told you guys about that. And prior to this, I actually broke one of my own rules. So instead of just farming YAM, hours before that success of the major vote, I actually bought some YAM. I thought, oh, maybe it'll be interesting to speculate on YAMs. What a bad idea that was. So I actually broke one of my own rules and I got punished within an hour for that. I do want to say, everyone, a lot of people gave me really positive messages afterwards. I think I chose to come up with it because I felt that was the most honest way to just talk to you guys. And I'm kind of over it now. It was still a big loss. But I think, you know, we'll move on. It's not the end of the world. So, you know, net gain, I'm still very much big positive gain from yield farming overall. But overall, this made me a lot more cautious, a lot more careful audits and kind of slowing the speed down. So that's the story so far. So conclusion, devs were unable to save the smart contract, to save the governance, to save the entire community from being locked out. Unfortunately, for now, there's no more modifications that can be done with the YAM contract. And it'll just continue on. It's not completely dead, but it just means that we, as a community, can't make any changes to it. Ethereum has it. Now it's into the ether, as we all say it. Maybe there'll be a YAM 2.0. That's uncertain so far as to what's going to happen next. But I feel like it was good to update you guys with the latest news on what's happening with the whole YAM situation. And with that, guys, thank you guys so much for watching. If you like this video, like these updates, leave a comment down below what you think about this whole YAM situation. Click like and subscribe down below. See you next video.