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Yearn Governance Roundup #14

Week Ending January 31, 2021

Nomad
Nomad
Jan 30 · 4 min read

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

Quick reminder: The Yearn Governance Roundup is now on a bi-weekly schedule. The next one will be released on the 2/13/21.

⚖️ Governance Summary

Active Votes

Table of contents

YIP-57: Funding Yearn’s Future

Safeguard Yearn’s future development. Mint 6,666 YFI. Use ~1/3 of minted YFI to reward key contributors and put ~2/3 of minted YFI in the Treasury under the control of the community through future proposals.

This is the most important — and controversial — Yearn governance proposal to date. It’s been the topic of discussion on crypto-Twitter for what seems like forever now and it’s time to make a decision that has significant consequences for the future of Yearn.

If adopted, this proposal will:

  • Mint 6,666 YFI.
  • Allocate ~1/3 of the minted YFI to key contributors as vesting retention packages.
  • Allocate the remaining ~2/3 to the Treasury, which will be deployed through existing Governance for various uses.

It’s no secret that the launch of YFI was as fair as it gets. There was no pre-allocation, no early investors, and no secrets. However, what was once YFI’s biggest advantage has evolved into a competitive disadvantage for Yearn and its ecosystem.

Many projects have hundreds of millions of dollars at their disposal to attract talent, retain talent, pursue innovation, and expand their community and reach. Meanwhile many of Yearn’s contributors have limited exposure to Yearn’s upside and it’s becoming increasingly difficult to attract fresh talent.

***Disclaimer: I am a beneficiary of the Yearn treasury. I have received a handful of grants for my newsletters and other copywriting work. But, this proposal is not about me. My contributions are nothing compared to the long hours and stressful work endured by the developers and builders in our ecosystem. They are pioneers on the cutting edge of DeFi / Ethereum and deserve to be rewarded for it.

Minting 6,666 YFI gives the Yearn Treasury a war chest that will enable growth in ways that aren’t possible today. For context: The current operational treasury size is $500,000, with a 0% token allocation to the team. Not a budget suitable for pushing the boundaries of finance.

Here’s why 6,666 YFI was chosen:

  • 6,666 is 22% of the current total supply of 30,000 YFI.
  • After gathering feedback, modeling a number of mint scenarios and various retention package estimates, a ~20% increase was determined to be the minimum viable amount to provide competitive retention plan, using only roughly 1/3 of the total mint amount.
  • 22% is in line with Yearn’s peers. For example: Aave minted 23% when they migrated from LEND to AAVE.

To avoid dragging on, I encourage you to read the proposal in its entirety before making your decision. You can do so here.

The binding vote for this proposal will be live until Feb. 2, 2021. You can vote here. Poll results as of Jan. 30:

Proposal: Adaptive mgmt fees based on AUM

Yearn v2 comes with a 2% mgmt fees on AUM. Yearn gov should ramp up mgmt fees slowly as vault’s AUM grow up to the 2% max.

Put more clearly: This author proposes that new Yearn Vaults should go live with a 0% management fee, that increases slowly as AUM increases — with a 2% upper bound.

I won’t go into too much detail here as the specification and implementation are relatively straight forward:

  • Launch vaults with 0% fee — encouraging growth of the vault.
  • For every $1M that AUM increases, increase the fee by 0.5% until 2% ceiling is reached.

The goal of this proposal is to encourage early participation in Vaults without hindering individual performance within the vault. In their current form, the earliest users still have to eat a 2% fee even though rewards aren’t sufficient to bring profit to users.

It appears that there’s broad support for this proposal and it will likely become a YIP. The snapshot page is pending here.

💵 Treasury Update

Operations Fund — Jan. 30, 2021

Treasury Vault — Jan. 30, 2021

Governance Contract — Jan. 30, 2021

Yearn Governance Roundup

A weekly newsletter covering everything in the Yearn Governance pipeline.