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Yearn and Pickle Merge After a $20M Attack

Yearn Finance and Pickle Finance today announced a merger where the teams are consolidating resources and technical stack. Just a few days earlier, Pickle was attacked and ~$20M Dai was drained (more on the attack below).

The timing of the merger at the heel of a protocol attack highlights the seized opportunity these DeFi teams took to share knowledge in an effort to increase security. Pickle is brought into Yearn’s ecosystem, gaining the project’s development and security expertise, while contributing its own development talent and TVL.

Yearn is a suite of products that provides lending aggregation, yield generation, and insurance. Pickle Finance enables users to earn compounding yields on their deposits. 

Main Changes

1. Pickle Jars & Yearn’s v2 Vaults merge

Yearn’s vaults are capital pools that automatically shift deposits into the highest-yielding opportunities in the market. Similarly, Pickle Jars are yield farming robots that earn returns on user deposits. Merging vaults and storage lessens redundancy in capital storage.

2. Pickle introduces reward Gauges

Pickle tokens are now distributed through staking Yearn Vault tokens in Pickle gauges, where depositors can earn additional rewards.

3. Pickle Governance participants get voting power by locking Pickle

Token holders locking Pickle for set maturity dates receive a new token called DILL. The longer the time that Pickle is locked in for, the more DILL they receive. 

4. Additional token rewards

Depositors can earn additional rewards by locking Pickle for DILL, up to 2.5x, the more DILL they hold the greater the rewards

Gauge deposit, withdrawal, performance, and protocol fees go to DILL holders.

5. Victim compensation

A new token, CORNICHON, tracks losses from the recent Evil Jar exploit, distributed proportionally to victims of the attack.

Pickle Bailout

Pickle stated they would not be able to replace lost funds, as any remaining balances are reinvested back into the growth of the project. Yearn stepped in to help distribute CORNICHON to pay back victims’ lost funds. CoinDesk contributor Ajit Tripathi considered this M&A as Defi’s first example of a bailout. 

Market Reaction

On the day of the attack on Pickle, the Pickle token plunged to $8.70, compared with its all-time high of over $85. After the announcement of Yearn and Pickle’s synergy, the token jumped by almost 80% to $15.55. Yearn Finance’s YFI token meanwhile shows little change.

The rebounding sentiment for Pickle should precede increasing total value locked as the merger comes after Yearn’s debt ceiling on MarkerDAO was raised to $20M Dai from $7M. The raised limit means more YFI-based Dai loans can now be issued.