Wintermute Trading, one of the biggest market makers in crypto, has encountered some governance roadblocks as it searches for yield in decentralized finance (DeFi). The proprietary trading firm, which provides liquidity to the DeFi industry, is trying to convince Yearn Finance supporters to loan it 350 YFI tokens – worth over $2 million – in exchange for Wintermute supporting markets for Yearn’s yCRV token. However, Yearn voters are rejecting the proposal as unfair.
Evgeny Gaevnoy, the founder of Wintermute, has stated that the firm has become “creative” and “bold” in how it extracts value from crypto projects. Securing YFI tokens from Yearn can help Wintermute earn more yield in its token dealmaking. Wintermute is trying to get those tokens by leveraging its own stash of CRV tokens at minimal cost to itself and, in the view of Yearn believers, with minimal upside for Yearn.
The whole idea of the deal is antithetical to Yearn’s ethos: decentralization to its core, said the influential Yearn voter and community member who goes by the pseudonym 0x7d54. Then a potential agreement with an off-chain player to loan out its governance token? That would throw some of that out the window.
Wintermute is newly flush with CRV tokens after acquiring 25 million CRV at highly favorable rates during the industry-wide bailout of Curve Finance founder Michael Egorov. This move helped Curve – and with it, possibly much of DeFi, including Yearn – avoid the domino effects of a potentially catastrophic lending blowout.
At press time, the vote, dubbed YIP-74, was slouching toward failure, with 94% of votes against. It closes on Aug. 30. Wintermute’s shellacking appears to have emboldened DWF Labs, another market making firm. DWF has pitched Yearn more favorable terms for the same 350 YFI.
For Yearn and Wintermute, both sides are taking optics into consideration. The influential Yearn voter who goes by the pseudonym 0x7d54 pointed out in the Discord that there are benefits to be had from a big name like Wintermute participating in Yearn’s markets.