DeFi traders blame YFI price collapse on shorting by Alameda Research

Yearn Finance price has been in a serious rut during the past 2 weeks and many in the crypto community blame the sharp correction on Sam Bankman-Fried, the CEO of Alameda Research and FTX. In the past month, DeFi giant Yearn.

Finance's native token YFI dropped 62.7% from $43,970 to $16,360.

Throughout the past week, various reports emerged that Alameda Research has a short position on YFI. Alameda, which describes itself as a quant trading firm, is recognized as one of the most successful crypto trading firms.

On Oct. 11, SBF confirmed on social media that Alameda does have a short position on YFI. But, SBF emphasized that it did not crash the price of YFI. According to SBF, Alameda placed a net 200 YFI short position.

"SBF borrowed YFI which destroyed its price, he sold it on Binance and other exchanges - only once he was caught, did YFI go back up' False. 200 net YFI short over days does *not* destroy it! This is just off by an order of magnitude. The impact wasn't huge."

SBF also added that the YFI he "Borrowed" on Cream, a DeFi protocol, was not used to short the cryptocurrency.

Much of the negative sentiment around SBF's YFI short came from the speculation that he borrowed YFI to short it.

Bankman-Fried denied the speculations and explained that "Most of the YFI was borrowed for liquidity and farming, not selling or shorting."

Due to the trend of major cryptocurrencies outperforming smaller DeFi tokens, the YFI short could be a short-term hedge.

Despite the upcoming product launch, the recent controversy involving former YFI supporter Blue Kirby, and the prolonged downturn in YFI price have some traders cautious about the future of the project.