$YESP, Polygon, $YLDY, Esports. If you’re a fan of the Algorand DeFi space, you’ve heard these terms a LOT recently. For those that are less acquainted, I’ve written a brief summary below.
A few days ago, Algorand’s first DeFi platform Yieldly announced that they would be launching their new esports token $YESP on the polygon network. The community was already disappointed that esports would not be built on the Algorand network, but now finding out that resources and effort would be dedicated to a new token on a new chain was not exciting news, to say the least. Many community members are wondering how, if at all, this new launch will benefit $YLDY on Algorand and have been calling out Yieldly for poor communication.
This leads us to today, where Youtuber JT Invests In You is hosting Yieldly CEO Sebastian Quinn for a Q&A. Buckle up, there is a lot of information packed below.
All text labeled Q is asked by JT, and the response below is Sebastian Quinn’s paraphrased response. It is important to note that this is my interpretation of what was said. I can be (and frequently am) wrong. It is not exactly what he said, but I tried my best to summarize his response into a readable format. If you want the exact wording of the question and answer, watch JT’s interview here. This article will be continuously updated with further elaboration and a section for my thoughts.
Q: What is YeSports, it kind of feels like it came out of nowhere?
Seb starts his response by taking ownership for not being the best at communicating YeSport’s development. He then talks about how much of what they have built isn’t related to the core product. The Yesports product came out of the huge amount of interest that came out of the interest in NFT stalking. It caught the interest of esports team partners (Talon Esports, factor, Boom Esports). He notes that partnerships have helped Yieldly reach new areas and new userbases.
He then explains that NFT products have caught the attention of the market; investors saw everything that was going on and the intersection of NFTs and mainstream adoption. There have been a number of inbound requests from top-tier esports teams, and Yieldly have been in discussion with them for 4-5 months. They want NFTs that will allow them to get closer to their fans, or tools to bring fans into web3 world.
Yieldly had to decide how to fit these interests into a DeFi company that is proudly in Algorand. There are some well-documented tech limitations in related to what’s possible with NFTs on Algorand and Polygon. Key things that Esports companies want: an NFT that allows them to preprogram and do certain relevant things to their organization that you currently can’t do on Algorand.
Seb states that at a high level, they want to continue to build interoperatability. They have built a bridge, and an erc token from day 1 and have delivered and want to continue to deliver prosperous tech here.
Q: Why create the new $YESP token when there is an Ethereum compatible token?
A: Commericality doesn’t stack up. For them to be able to sponsor and attract large esports teams it didn’t make sense to sell $YLDY tokens from a treasury POV to go and tackle a business that they can build on their own and bring value back regardless. They are exploring a multitude of pathways to add value back to what Yieldly does, as Algorand technology grows. When there’s interoperability between NFTs, both Yieldly products in the future would be interopable, it’s just a matter of when.
My thoughts: I love the treasury POV here. From an economics point of view, it’s a risk free bridge for Yieldly. If it fails, $YLDY financials are not screwed. If it succeded, it does so at no cost to $YLDY and brings in publicity, partnerships, and cross-chain interoperability that can only help $YLDY on Algorand grow.
Q: If there is a new product, why not start a new brand [rather than use the Yieldly brand]? Are there any conflicts of interest between this round of funding through Polygon and Asia accelerator through Algorand foundation.
A: Yieldly believes these ventures will deliver value back to Yieldly holders. They will have $YESP pools, where people can stake $YLDY and earn $YESP. They will have a bridge for $YESP and $YLDY tokens, with the idea that you can earn the ASA token and utilize it elsewhere. There will be a roadmap coming about what $YLDY will be doing cross-chain, will gain utility as it exists in a cross-chain world. Yieldly is working with a KYC provider right now, to develop a launchpad to be able to launch things through the $YLDY ecosystem. Play-to-earn games, NFT games that will make the connection between an NFT based company on the EVM ecosystem and their DeFi company that exists to allow people to generate high rewards on Algorand stronger. The idea being that they will be able to filter users back into the Algorand ecosystem and drive the goal of interoperability.
My thoughts: If this happens, it’s super exciting. Imagine being able to Stake an ASA and earn a token on the EVM. That would be super cool, and really promote a multi-chain future. My reservations here are that I’m not sure this will actually happen or how long it will take. Would love to hear an updated timeframe.
Q: In crypto, scarcity is important. People wan’t to know their tokens are not being diluted. Can you dive deeper into iYLDY and its use/cause?
A: Yieldly took a huge amount of community feedback on how the product could be better, the key trend was around the disproportionate amount of return that large algo/yldy holders had related to winning the lottery. There currently exists a technical barrier preventing stratifying the rewards. They wanted to give the community more of a say without jeopardizing their ability to stake and earn rewards. They wondered if they can have a governance token that gives the community more say about products, launch pad, etc; based on how much they use the product? They wanted to build a product to recognize the users that care about it the most and give this base more of a say, hence iYLDY.
It was never intended to be a token people would be buying and selling like the YLDY token. Hearing the response/reaction they believe they have not explained it well enough and need to provide more information and explanations to see if they and the community want the token or not. Have a strong view NOT on $IYLDY, but that governance and community decision making is extremely important to the future of Yieldly.
Q: NFT partnerships with esport teams; Have they moved to polygon or stayed on Algorand?
A: Cross-chain, or both.
Q: In the Tokenomics, 40% of $YLDY is allocated to expansion, team, marketing, partners etc: How are these resources being used, how does it impact $YLDY’s roadmap and plans moving forward?
A: From day 1 Yieldly’s thought process was that they could use reserves to self fund and sell down for business ventures. They elected not to do this. The money they raised in may of last year is being utilized on Yieldly. They have been using resources to grow out team and make key hiring decisions. Part of this has been allowed by a capital raise from the Yesports token which has been used to hire a whole other development team, dedicated to that space.
Q: In Tokenomics, 7.2% of allocation includes marketing for esports. Could Yieldly have focused on increasing $YLDY’s price 3-4x, and then selling tokens to raise funds?
A: Yieldly is already doing as much as they can to make maximize $YLDY’s price. Always looking at how to make YLDY the most valuable/core product in Algorand. What they do to grow this is the subject of the roadmap. They are cautious of putting downward pressure on YLDY to fund external ventures that contain external risk. There is also a small time frame to take advantage of the “esports arms race”.
Q: Is moonpay available for US Investors?
A: Dependent on State
Q What can we expect in terms of roadmap growth and the integration of a Yieldly DEX and AMM?
A: The AMM has dropped off the roadmap. It hasn’t fallen off completely, they have core architecture done but new AMMs are exploding on to the scene. They have a symbiotic product that works with AMMs already. Would rather focus on products that could support these DEXs (i.e launch pad). P2E games launching in the next couple months.
My thoughts: This makes perfect sense. I see no reason for Yieldly to build their own AMM or DEX anymore. In fact, I would argue it would create conflicts of interest for the Algorand community in terms of staked liquidity pools. I would rather Yieldly continue to focus on this symbiotic relationship they are building out.
Sebastian handled himself well and spoke very well. To me it was clear that there was a focus on not devaluing the YLDY token, which is something I thought was very important. I liked that they are not using Yieldly’s treasure to fund this venture. Imagine if it was unsuccessful, and they used $YLDY to finance it? The result would be a large dilution of $YLDY tokens, reduced funding for future ventures and strong downward pressure on price.
I also appreciated that Seb acknowledged that there is significant room for improvement in terms of communication and transparency. It truly does seem like the Yieldly team is and will remain to be extremely committed to Algorand.