Taking a step back and reflecting on the lessons learned from YAM to get as close to a fairly distributed community governed protocol as possible.
YAM has captured the Ethereum community in a flash never seen before, utilizing what Ethereum has built to bootstrap a community and its own distribution. Ultimately, there was a fatal flaw that ended up harming the initial protocol, and while the community thought it could be saved, there was not enough time. Although the community could not save YAM, everyone who believed displayed a tremendous effort and presence within the initial 36 hours period of YAM that we should all commend.
The YAM team has now been working towards a solution through migration of existing YAMs and rewarding the delegators who voted, although feedback is mixed. Some dislike the migration, as the distribution of YAMv1 is not as reliable as it was pre-vote, while others favor the migration, as they had held onto their YAMs for voting or other reasons, and had lost money in the process, hoping to make back what they had lost.
With HAM, we believe the incentives driving either decision for YAMs future are either selfish, unfair, or flawed in some form. We love the experiment that YAM began as, and it is unfortunate that it turned out the way it did. But we believe the best way for its goal to move forward is a fresh start through HAM. A truly fairly distributed and community governed protocol for managing the treasury in order to bring value into HAM itself as a stable share of voters rights.
Why HAM?
Participation in our community is a MUST for progress to be made. Every decision and modification from the base workings of YAM will be heavily discussed with strong transparency. We will be using the EIP process (renamed into HIPs) to formalize changes, power discussions, and reach consensus among every participant. We can truly get a fair launch and a correct start for HAM.
With HAM, nothing is certain unless the community is in support. Every decision will go through rigorous discussion, heavy review, and will be ensured that there is strong community alignment. YAM has been largely centrally planned and mainly created behind closed doors, and that is where most of its downfalls come from. HAM will shine through its community, as we revisit what YAM created from a fresh slate with a passionate community at its base. Through an active community that is open and insightful, who knows what the treasury could be capable of.
Where YAM could be improved
While YAM launched as an experiment, we believe there were several flaws with its inception and design.
- First off, we believe the tokenized farming was flawed in that all the pools were equally weighted. Some were very heavily diluted (WETH) and unattractive while others were too rewarding and encouraged purchasing the staked asset or gave existing holders an unfair advantage (COMP). Some of the tokens also had poor distribution (COMP) or were difficult or risky to obtain (AMPL_ETH_UNI_LP). The plans for the distribution are still very much in the air, so we welcome additional discussion!
- Second, YAM’s farming schedule and liquidity mining design nearly incentivized chaos. Many early members who had received plentiful YAMs from farming had free capital to enter into the YAM/yCRV liquidity mining pool, while new members saw the attractive returns, and bought YAM with existing capital in order to capitalize on the yields as quickly as possible. Due to the protocol’s sudden downfall, and the bug being especially harmful towards the YAM/yCRV pool, liquidity providers witnessed intense impermanent loss if they were caught in the pool during the second rebase.
- Lastly (but always more to discuss), the governance mechanism was an odd choice considering that it required exiting all existing positions and farming opportunities for several days in order to properly participate. For a token that is built up by farmers, this is a rather ill-designed governance model. Exercising the rights of voters shouldn’t have any opportunity cost, or else governance becomes inefficient and unreliable.
These outline our main troubles with the existing protocol, but they don’t end here. By all means join our community and discuss why you support or don’t support these changes and discuss with us any future potential you see.
A Call to the Community
One of the key foundational aspects for HAM is its community. YAM’s largest failure was the lack of transparency into the key decisions that formed the protocol. While a DAO is great conceptually for decentralization, they tend to struggle when every aspect is decided by a closed group of people. HAM aims to solve this by being a completely open and transparent process from the start.
YAM was built for its community. We are taking it further and are letting HAM be built BY the community FOR the community. By analyzing YAMs launch it becomes apparent that fair launches, rigid code, transparent development, and risk mitigating pool structures are imperative in DeFi projects moving forward.
If you’d like to be a part of HAM, please join the discussion on our Discord, and follow us on Twitter.
