Why has AC, the king of DeFi mergers and acquisitions, become the "public enemy" of decentralized finance?

Meituan, which entered the Internet industry from the edge, has long been in a borderless merger and acquisition expansion mode, penetrating into every track like capillaries, and has become a trillion-dollar empire. Regarding this special example in the Internet circle, some people jokingly said, "Half of the Internet world is Wang Xing's enemy."

Today, Yearn.Finance (YFI) has also copied its M&A expansion strategy to decentralized finance (DeFi). From aggregated financial management, lending, insurance, to DEX (decentralized exchange), Andre Cronje (AC) seems to be becoming the "public enemy" of the DeFi circle.

Behind the bulk mergers and acquisitions is the monopoly of talent and resources

At the end of 2011, the most brutal “Thousands of Group Wars” in the history of China’s Internet occurred. In this bloody battle, many companies closed down or transformed, but Meituan was a survivor and a winner.

"I always think that Meituan is only a few months away from bankruptcy." Although it has emerged victorious in this business melee, Wang Xing does not think that Meituan can rest easy in the future. In 2015, the stunning merger with Dianping became an important starting point for Meituan's rise. Since then, it has made greater strides in diversifying its business in its "surrounding the city from the countryside" M&A expansion strategy.

In the DeFi field where homogeneous competition is intensifying, YFI has staged a DeFi merger and acquisition drama. Although the merger and acquisition with Meituan is essentially different, YFI's expansion momentum is comparable to it. On November 24, AC announced that the developers of Pickle and YFI have designed a structure that allows the two projects to work together symbiotically, and plan further integration. Just two days later, AC announced again that Yearn and Cream developers have collaborated to launch Cream v2, which will focus on core loans and leveraged products. While everyone was still in shock, Yearn merged with Cover Protocol and Sushiswap in one breath. Under the lightning-fast merger and acquisition, AC seems to be building its own "DeFi business empire."

“Each collaboration is similar to a merger of teams, mutual utilization of protocols, and coordination and shared vision among all team members.” But AC believes that this is different from previous M&A practices. He said, “Decentralized finance allows us to cooperate and coexist while maintaining individual personality.”

YFI, which is attacking everywhere, has already stirred up the DeFi world. From the outside, AC's batch of mergers and acquisitions are the gathering and integration of talents and resources. AC also confirmed this in an article about mergers and acquisitions in the DeFi field, "Talent merger, shared development resources."

In the view of Google Payment Engineer Tyler Reynolds, incentivizing, training and introducing new developers have become YFI's priorities, and poaching talented developers and monopolizing talent are its direct measures.

The marriage is a mixed blessing

AC's every word and action has long become a "barometer" for investors' decision-making.

As soon as the news of mergers and acquisitions of various DeFi protocols were announced, the token prices all rose without exception. PICKLE rose 80%, CREAM rose 70%, and SUSHI rose 30%. The increase in the concept of "mergers and acquisitions" made many investors who were "keeping a close eye" on AC and waiting for opportunities make a lot of money.

YFI has undoubtedly boosted the morale of these projects that have been sluggish or even stuck in the quagmire before. Take Pickle as an example. On November 22, Pickle was hacked and stole $20 million due to a vulnerability in the Jar strategy. Affected by this, its token plummeted by more than 62% on the same day. When Pickle was in a mess, a group of white hat hackers including YFI core developers lent a hand, and the Pickle protocol components involved in the attack were also repaired, but its market value has been halved. When Pickle was on the verge of trust, YFI resolutely lent a helping hand. In the merger plan, in addition to the greatly improved business aspects such as Pickle's distribution mechanism, the losers of the previous attack incident were also compensated. Obviously, the merger plan is undoubtedly the best choice for Pickle at present, at least from the perspective of the sharp recovery of the currency price. There are also many negative comments on the three vertical merger projects of Cream, Cover and Sushiswap. From the current point of view, YFI's merger is positive.

It is worth mentioning that the projects acquired by AC are basically fork projects. Can this improve the industry's homogeneous competition landscape? Since the codes of most DeFi projects are open source, various protocols have begun to fork in turn since the popularity of YFI, which has made the application scenarios of DeFi very limited and the product homogeneity increasingly serious. Although these micro-innovation or pseudo-innovation projects have taken away part of the liquidity of the original protocol, as the participants who came for speculative arbitrage left, there are few fork projects that can compete with the original protocol. By aggregating and optimizing these Fork projects, AC may provide more space for more innovative projects in the stock market.

However, after YFI "bottom-fishing", can the two parties exert synergy and realize long-term value? From the history of Internet mergers and acquisitions, many projects that were once outstanding are inevitably destined to disappear after being acquired. For example, at the beginning of the merger, Baidu Takeout and Ele.me were also independently operated brands, but now Baidu Takeout has long lost its name; Tudou gradually lost its way on the road of business change after being merged into Youku.

Under AC's leadership, will the acquired DeFi projects repeat the mistakes of the above-mentioned Internet companies? Of course, AC himself also admitted that he was not sure whether the relationship between Yearn and these projects was a merger or cooperation, and the mutual empowerment between teams and protocols may not exist in traditional industries.

In the “buy, buy, buy” mode, DeFi is still a one-man show

It started with aggregate financial management, but it is not limited to aggregate financial management.

YFI is undoubtedly the most eye-catching existence this summer. With the concept of "machine gun pool" and the setting of "no private placement, no pre-mining, and no team share", YFI, which was born in the early days of liquidity mining, has been crazily sought after and imitated by investors and many projects since its launch.

Especially after AC handed over all governance to the community, the high degree of decentralization made the outside world further recognize YFI, and the outside world even called it "Bitcoin in DeFi". However, AC's recent mergers and acquisitions seem to contradict the concept of 100% pure community-driven. In the article "Terms of Mergers, Acquisitions, Partnerships and Cooperation in the Crypto Field" published by AC, it is pointed out that the role of the holders of governance tokens is similar to that of Ethereum miners - they decide whether the protocol is upgraded. But in fact, these mergers and acquisitions that affect the YFI ecosystem are decided by AC and the YFI development team, and the decision-making power of YFI holders is non-existent.

At the same time, from the current point of view, AC does not seem to stop the pace of merging other projects, but excessive mergers and acquisitions will inevitably distort the market order and weaken the fairness of market competition. In particular, at the moment when the AC behavior with its own effects is infinitely magnified, no one can guarantee whether there will be a wave of mergers and acquisitions in the market. For DeFi, which focuses on the vision of open finance and is just beginning to grow, the monopoly that YFI may bring or even cause is actually harmful to the industry.

From another perspective, in the field of DeFi where the gameplay is constantly iterating, once a project lacks innovation, it usually means that its life cycle is getting shorter and shorter. In the past few months, factors such as stagnant innovation and rigid business have caused YFI to gradually fall from the altar. DefiPulse data shows that in the past three months, the total locked amount of YFI has spiraled downward, with the highest drop exceeding 52%.

At the same time, the successive collapse of new projects such as EMN, LBI, and KPR of the AC system is undoubtedly a further depletion of YFI's credibility. Under internal and external troubles, can the strategy of diversified business really make YFI develop to a higher level like Meituan? In fact, just like Meituan, diversified business also means that it will have strong enemies in every segment. In the future competition of diversification and specialization, the success of AC's "buy, buy, buy" strategy remains to be tested by time.

However, investors do not care about these. In their view, as long as they can get the immediate profits, nothing else matters.