Build a Twitter bot to give YFI valuation daily updates

General Chat Technical Discussion
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Simplifying the valuation of YFI with a Twitter Bot

Current crude YFI valuation using TVL

At the moment one of the most common ways of comparing DeFi protocols is looking at their Total Value Locked (TVL), as shown in https://defipulse.com/.

CoinGecko shows the Market Cap / TVL Ratio which is a crude way of determining whether a protocol is cheap or expensive. It is considered cheap when the Market Cap / TVL is low and expensive when it is high.

TVL is a crude measure because it does not reflect how earnings are made by the YFI protocol.

PE Ratio

A more appropriate way of valuing YFI (and most other DeFi protocols) is to use a Price to Earnings ratio.

For YFI this is equivalent to the market cap ($780m today) divided by the annual earnings (based on the 0.5% withdrawal fee and 5% performance fee on subsidized gas, which occurs only when a trade is executed). The trailing PE ratio is the market capitalisation today divided by the earnings over the previous year.

All the withdrawals information is available on-chain or available here (this dashboard is great work!) https://explore.duneanalytics.com/public/dashboards/g0bGfgloeXBd9C18jpBjdXi5KkQjR7IXYqFRUnHk

Revenue might be more difficult to calculate but could be estimated by multiplying the TVL on a given day by the growth shown on the vaults page.

Other ways of determining the annual earnings for a rapidly growing protocol are by multiplying the most recent month’s earnings by 12.

Twitter Bot Request

Please could someone clever set up a Twitter bot that states the trailing PE ratio on a daily basis, or to make it more random the alert could be set every time $100m is withdrawn from the vaults. I appreciate this is not an easy task!

The Tweet could show:

  • YFI price and market capitalisation
  • Daily, weekly, monthly, annual earnings
  • Trailing PE ratio

I see this as a more sophisticated version of the RenBTC bot (link below) which tweets every time RenBTC is minted or burned (produced by the @HAL_team)

https://twitter.com/renBTCBot

Most people do not yet understand that DeFi protocols can have PE ratios. This is understandable since bitcoin’s valuation is often carried out by saying, “look it has these properties, so it’s better than gold, and gold has a $9 trillion market cap, therefore bitcoin’s market cap should be at least as high”. This bot could help demonstrate that DeFi protocols do have PE ratios, and that they are low relative to most tech companies that are growing more slowly than DeFi.

It is the natural progression from TVL on DefiPulse or CoinGecko.

Mechanism Capital produced a report covering the fundamental valuation of YFI for anyone interested https://www.mechanism.capital/yfi-frameworks-for-fundamental-valuation/

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I’ve forwarded this one to dev Discord. Let’s see if someone implements this one.

You are also welcome for Dune dashboard! :smile:

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Thank you Milky. I saw your name on the Mechanism Capital report - good work!

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i’ll go ahead with this. price / market cap should be easy the rest we’ll probably only have in a few days available - taken from the chain not 3rd party data, defipulse seems a bit off in regards to TVL and dune i think doesnt expose the info.

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Thank you! I knew things happened quickly with YFI but this…

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I agree some indications of PE ratio might be good. I can see it provoking discussion on how yearn makes earnings and attract people from outside of DeFi circles.

Personally, I made the jump into YFI after estimating its PE with some assumptions. I also think a “fair” token price can be estimated by PV=A/i with a 2% inflation rate (maybe a bit more now given it’s 2020).

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Awesome! Should we make this its own website to like pe.yearn.finance and we could make it have an easy API for people or that quite hard to do? Cover like pe ratio, total protocol revenue, and recent surges in tvl or withdrawals maybe?

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first we need to get the data in a correct way, this we are currently working on (I mean a way that we sign off and not some 3rd party who calculates it according to their calculations…) Tokenterminal for example is waiting for pretty much this data from our side, they seem to be trustworthy in this regard since they actually contact each project to provide data instead of somehow calculating it themselves - not dissing on any other site just I’d rather it be us providing this data then them somehow calculating it without really showing how.

But yeah once we have this for tokenterminal ofc it can be used for anything. Idea is to add it to the subgraph which is publicly available and relatively easy to poll, so yeah the bot might be a nice to have but the data should be shown on a yearn site as you say (I guess not everyone has Twitter or wants to get their updates through a bot)

re bot, I’ll be having it done by tomorrow showing price and market cap for now (taken from coingecko). then we can always add on whatever people feel is important.

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twitter

this is the current wip which gets updated from my twitter account every 25min, until we have an official account for the bot (associated with yearn email and mobile), which shouldn’t take very long.

i’m happy to hear suggestions re layout / flair (emoticons for instance) and once we have more information like p/e, revenue, etc, it will be integrated

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Great start! Looking forward to the other info being added. I was thinking that it would be useful to show the withdrawal fees and performance fees separately to help with fee structure discussions.

For the emojis I think we need to ask a marketing expert…where’s Blue Kirby at?

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Yeah I would definitely say toss in some emojis to make it a bit more fun– for instance, you could do a money bag next to price, a bank next to market cap, and it would be awesome if you could code it to use either the “stock chart up” :chart_with_upwards_trend:emoji if the 24h change is positive or the down one :chart_with_downwards_trend: if the 24h change is negative.

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will do!! i hit a smallish roadbloack bc i wasn’t sure if this should be managed by me (ie my email, and well some phone number that i’ll somehow get) or by yearn but that’s definitely possible and nice

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