Yearn Governance Roundup #0

Week of September 14, 2020

Nomad

Published in

Yearn Governance Roundup

8 min readSep 18, 2020

Welcome to the Yearn Governance Roundup—a weekly roundup covering everything in the Yearn Governance pipeline.

📣 Before we get started I thought I’d give some background. A couple of weeks ago I launched Yearn Weekly (a weekly newsletter) on www.yearn.news. Turns out there was another newsletter in the works and we thought it would be best to combine the two efforts into what is now the official Yearn Finance Newsletter. If you’re looking for TLDRs and governance highlights just subscribe to the weekly newsletter here.

⚖️ Proposals and Discussions

Make sure you join the governance forum if you want to get involved with these discussions! Table of contents:

Governance Overhaul and Future Rewards
Burn YFI Minting Ability Permanently
Adopt Snapshot + Aragon for Binding Governance
Lets poach samczsun and plant the seed for an auditing academy
Governance Black Hole DAO Vault
Bonus: Whitelist Yearn Finance on BTCUSD Oracle
Bonus: YFIUSD Oracle (Collateral Onboarding Oracle Assessment)

Governance Overhaul and Future Rewards

Banteg shared this proposal on Sept. 8. Here’s the summary:

Move fully to off-chain voting hosted by Snapshot. Enable voting with your YFI from everywhere, be it wallet, staking contract or providing liquidity on Uniswap. Distribute the rewards based on voting participation without vesting. Open up the way for yUSD 38 rewards and gYFI 51 proposals.

First things first: Snapshot is an off-chain gasless multi-governance client with easy to verify and hard to contest results. It makes creating and voting on proposals free with similar benefits to on chain voting. This has been used for Yearn proposals in the past and it seems like the community would love to make it the default standard. Encouraging smaller YFI holders to vote in this high gas environment is a net positive.

The controversial portion of this proposal is enabling the ability to vote with YFI outside of the governance system. Remember: Participation in the current governance structure requires you to stake your YFI in the governance contract.

Snapshot would make voting from elsewhere much easier to implement, but the community has mixed opinions about it in practice. There are a couple of attack vectors that need to be addressed (e.g. double voting) and many think YFI outside of governance should have reduced voting power if implemented.

Either way, the responses showed an interesting tension between those who want to maximize their the YFI exposure and participate in governance vs those who are willing to embrace the opportunity cost and only participate in governance. I won’t address this proposal in full because we could probably spend an entire blog post doing so. To save some time I’ll refer you to an incredible summary by dudesahn on the governance forum — read it here.

Burn YFI Minting Ability Permanently

Andre shared this proposal on Sept. 12. Here’s the summary:

Burn the timelock on the YFI token so that no minting can ever take place again.

Andre’s proposal is pretty straightforward: After onchain governance goes live, the multi-sig will hand over the keys to the kingdom and the first official vote will be to cap the supply of YFI at 30,000. This is possible by setting the token’s governance address to 0x0. So far the community seems to be in overwhelming support of maintaining YFI’s scarcity.

This proposal is active on Snapshot and is accepting votes until Sept. 18, 2020. If you’re a YFI holder, you can vote here. Current poll results (Sept. 16):

Adopt Snapshot + Aragon for binding governance

Jorge, a co-founder of Aragon and CEO at Aragon One, proposed that the Yearn ecosystem should use Snapshot in combination with Aragon Agreements to make Snapshot votes “binding.”

Aragon Agreements leverage Aragon Court to allow DAOs to supplement their programmatic rules with subjective constraints and intentions that can be interpreted in plain English. Here’s how it works: Someone proposes an agreement (i.e. makes a proposal), configures requirements for the agreement (challenge period, collateral reqs, etc.), and then users vote on the proposal. If a proposal gets approved, anyone can sign the agreement and certify that it’s been approved. To do this the user must also put up collateral that they would get back once the proposal is executed.

But, before going live the proposal must sit in a queue for a predetermined period of time where users have the opportunity to dispute the proposal. If the proposal is disputed, it will get passed to the Aragon Court (AC) to be resolved. A small number of jurors will be randomly selected from the AC juror pool to review and make a ruling on the dispute. Read more about Aragon Court here. This is a lot to take in, so make sure to read the proposal in full when you get a chance.

Over all: The community seems undecided. On the one hand, it adds a level of robustness to Yearn’s governance that doesn’t exist at the moment and makes it easier to transition away from multisig in the future. On the other hand, it adds a layer of unknowns / complexity to Yearn’s governance that some may not be comfortable with. Another complaint was that it could potentially bloat the governance process — making it less agile. Regardless of the outcome Jorge is impressed with the Yearn community’s diligence:

Lets poach samczsun and plant the seed for an auditing academy

Next is a wild proposal from Aliatiia, shared on Sept. 13. Here’s the summary:

We provide samczsun with an offer he can’t refuse to become the first hire of a yEarn auditing academy that attracts and mentors top talent. Mission: audit yEarn contracts in a collaborative and semi-structured process. Auditors that shine are rewarded, and if they shine even more, are offered permanent position in the academy. Eventually the academy could grow to become a profitable auditing wing of yEarn offering its services to the outside world for hefty premiums.

Well samczun, it looks like you have to become one of us! If you don’t know samczun, he might just hold a record or something for finding the most critical smart contract bugs. Check out his blog.

While this proposal is a tad bit provocative, the idea itself seems sound. Creating a self-sustaining auditing arm in the Yearn ecosystem not only benefits Yearn products, but the products in the larger Ethereum ecosystem. The mentor structure makes it especially appealing since auditors are becoming increasingly difficult find and get in touch with. Based on the signaling poll, the community is in support of this idea (Sept. 16):

Can’t wait to see where this one goes!

Governance Black Hole DAO Vault

JonathanErlich shared this proposal on Sept. 13. Here’s the summary:

Up until now most of the vaults have been generating yield by farming governance tokens and selling them on the market.
What if, instead of directly generating yield, we created a DAO vault whose objective was to retain governance power over the most interesting farmable projects out there? Instead of immediately selling the governance tokens of such projects, the DAO would hold them long-term and also actively participate in the governance of such projects to increase their long-term value.

Note: This proposal is still in the idea phase, but seems like an important consideration for Yearn’s future role in the Ethereum landscape. Yearn products have mutually beneficial relationships with the protocols they use and this would give the Yearn community some power within those protocols. While still early stages, I’d love to see people put their brains together for this proposal!

Bonus: MIP10c9-SP10: Subproposal to Whitelist Yearn Finance on BTCUSD Oracle

While this proposal isn’t for YFI voters, it’s still relevant. Banteg shared this Maker Subproposal with the Maker governance forum on Sept. 16. Here’s the summary:

We are currently building our second Maker-based vault that will leverage WBTC-A ilk in a similar manner to our yWETH vault that uses ETH-A ilk. It will maintain a Maker Vault and delegate the drawn DAI to the yearn DAI Vault. To make the strategy able to rebalance and unwind, we require access to the next OSM price.

A little background: The OSM is Maker’s Oracle Security Module. The OSM ensures that new price values propagated from Maker’s oracles are not taken up by the system until a 1 hour delay has passed. This means that in the event of a rapid collateral price cash, the yVaults will have an hour to fix their collateralization ratio to avoid liquidation. Yearn currently has access to the ETH-USD oracle, this will add one more oracle to the tool belt.

The ability to read data from Maker’s OSM requires services to go through a whitelisting process—hence Banteg’s proposal. So far the comments on the thread make it seem as if the proposal will get pushed through.

Bonus: MIP10c3-SP10 Proposal: YFIUSD Oracle (Collateral Onboarding Oracle Assessment)

Here’s another relevant Maker proposal shared on Sept. 17 by NikKunkel of Maker’s oracle team! Here’s the summary:

This Oracle would provide the YFI/USD price as part of the collateral onboarding process for YFI.

This proposal paves the way for YFI to become a collateral type in the Maker / Dai system. Since YFI has been listed on many reputable exchanges, building a reliable oracle for USD and ETH pairs should be a non-issue.