A Brief History of YAM
While it seems like an eternity has passed, Yam was launched just one month ago. Since its release, we’ve seen a proliferation of forking experiments, fair and not so fair launches, and DeFi communities testing long-held assumptions. On Friday Sept 18th, Yam will be re-launching into a landscape it helped create, and it will continue to push the bounds of decentralized governance and innovative protocol design. As we prepare for this relaunch, it’s worth taking a moment to recap the brief but dramatic history of YAM.
The launch of YAM took place on August 11, 2020, but its inception was 10 days earlier on August 1. The launch team was brainstorming how one might theoretically solve the “death spiral” problem of AMPL’s negative rebases, and the treasury was born initially as a simple “price floor” mechanism. This was an interesting economic experiment on its own, but we saw the opportunity to go further with a fair launch and Day 1 fully decentralized, on-chain governance. Thus the multidirectional YAM experiment had its heading, and execution and optimization began.
While we were excited by our concept and the true novelty of the project began to dawn on us over those 10 days, we did not predict the FOMO and hype that YAM would generate at launch. It may seem naive given the events of the past month, but prior to YAM it would have been unthinkable for an unaudited protocol to amass over $500M in TVL in less than 24 hours. There was no ramp up, no hesitation, only YOLO. This was both thrilling and terrifying. Speaking personally, there were 24 hours when it seemed like two years of grinding through a bear market were culminating in a rocket-like ascendance to the moon.
Moon mission dreams were short lived, however, and any excitement turned to dread when we discovered that the rebaser mint function was missing a key divisor, leading the system to mint a massive amount of YAM to the treasury. Because the treasury is only controlled by the governance module, and that governance module has quorum requirements, this extra minting meant that quorum would be impossible and governance fully broken.
At first it seemed that there was a window of opportunity to save Yam: if YAM holders delegated their tokens in a 12 hour time frame, a governance vote to modify the protocol could occur before too many YAMs were minted. We scrambled to rally the community, and rally they did. Such a global effort of coordination in such a short span of time was astonishing and inspiring. It was very nearly the most epic thing I have ever been a part of — what seemed like the entire DeFi community pulling out of a nose dive and course correcting to the moon once again.
Of course, it was tragically all for naught, as the implications of the extra minting persisted despite delegation. We learned just how difficult it can be to evaluate the emergent properties of complex systems, especially when under immense pressure and time constraints. In the end, the original Yam protocol was indeed broken, though it continues to function as programmed on the network.
That day and those following were an extremely difficult time for many in the community, the launch team obviously included.
Almost nothing had gone according to plan, from the unprecedented growth to the ultimate failure of the protocol’s intended functionality. We had succeeded in one key measure, however: building a strong and committed community.
Despite the trials, many maintained faith in the project. A grant for a YAM audit raised over $120k in under 72 hours, and a migration to a vanilla ERC20 YAMv2 was announced and performed. Though criticism abounded, the YAM community came together for an efficient governance process and addressed all key issues for a V3 launch in the span of one week.
This successful governance process was an impressive accomplishment on many levels and further revealed the character of the community. The over 6,000 tokenholders contained groups with explicitly opposing economic interests: delegators who had sold YAM, holders who had bought the dip, those who farmed after the incident, those who had missed the initial migration, and combinations of all of the above. Despite these points of opposition, the community recognized it had to collaborate to move YAM forward, and not only were delegators rewarded at least 1:1 for their delegation, but the community voted to set up a multisig to assist those who missed V1 to V2 migration.
This has been a hallmark of the YAM community. Adhering to social contracts, acting for the good of the protocol and community, and generally holding itself to a high standard of character and integrity.
While all of this was happening in the world of YAM, the broader DeFi ecosystem was exploding with food coins featuring the Yam user interface and general launch strategy — we had opened Pandora’s Box. Even Tron and Binance hopped on the hype train.
It’s worth noting that there were often core differences in these fast followers, however. Many included a developer share, which at least in the case of Sushi led to disaster, while Yam was truly a fair launch with equal opportunity farming and no founder or VC shares. To this day, the launch team has a combined less than 1% of the total YAM supply. Additionally, many of these projects were exact forks of existing projects.
While we certainly utilized existing code and were inspired by many of our favorite projects, the Yam protocol introduced a novel rebasing module. This was YAMv1’s downfall, but it is also what will enable YAM to grow into a successful and innovative protocol. At the core of YAM is a new idea: using rebasing to programmatically measure demand to continuously fund a community treasury according to that demand.
Yam’s efforts built on those of Compound and YFI and helped push fair launches and community ownership to their logical conclusions. While the result has been, well, at times a bit chaotic, this experimentation is teaching the DeFi community important lessons and laying a foundation for a future of decentralized and community-owned financial networks.
And the saga is not yet over. Questions remain unanswered, and approaches untested. Governance maximalism has proved all the rage over the past month, but governance minimalism likely has a role to play as well.
After the past month of community mobilization and engagement, it should be clear, but I’ll spell it out: the Yam experiment is only just beginning. The replanting of Yam concludes this brief history, but it is only a stop along the journey. With hard-won lessons learned, Yam will continue to push the bounds of DeFi forward.