Key Points
- FARM token, the native currency of Harvest Finance, experiences a dramatic rise in value and trading volume.
- Harvest Finance operates on the Ethereum blockchain and offers weekly token issuance to liquidity providers and contributors.
FARM, the primary token of the yield farming protocol Harvest Finance, recently gained significant attention. Its value increased by 80% in a single day, reaching a price of $88.
At the time this was reported, FARM’s 24-hour trading volume had soared to $218 million, marking an impressive 19000% increase. This surge in activity pushed the token’s market cap to $60 million.
About Harvest Finance
Harvest Finance is a yield farming protocol that strategically moves user funds across various defi platforms to generate returns. It operates on the Ethereum blockchain and can be traded as a BEP-20 token on the BNB Smart Chain.
On its first day of trading, September 2, 2020, FARM reached an all-time high, likely due to its initial circulating quantity of zero. As a few tokens entered circulation, their value skyrocketed. CoinMarketCap records FARM’s all-time high as $2,236.
Price Fluctuations and Supply
However, FARM’s price dropped to around $78 a few weeks after its debut, coinciding with the end of the “defi summer” of 2020. During the second wave of the 2021 crypto bubble, FARM reached highs of approximately $303. Yet, as the wave subsided, FARM’s value plummeted, worsened by an October 2020 hack that stole $24 million from Harvest Finance, causing FARM to drop by 65% in just one hour. This downward trend continued through 2022, with FARM reaching a low of $33.35 by May.
Harvest Finance has a hard-coded maximum supply of 5 million coins. In the fifth week after its launch, investors voted to limit the supply to 690,420 by reducing the number of tokens generated by 4.45% each week until the end of August 2024. Despite this, the supply of FARM is growing rapidly, increasing from about 250,000 in October 2020 to approximately 456,000 in January 2021. As a result, the project’s market capitalization reached its peak much later than the cost of any one FARM token, peaking at $194 million in February 2021.
This capped maximum supply aligns with scarcity principles, potentially increasing FARM’s value as demand grows. Harvest Finance issues new tokens weekly, with 70% allocated to liquidity providers and individuals contributing capital to the platform’s asset management strategies. An additional 10% goes towards ongoing protocol development, and the remaining 20% is placed into a development fund. This fund is periodically used, with tokens being sold via the cryptocurrency mixer Tornado Cash, to compensate the developers responsible for building the protocol.
