Yearn Governance Roundup #5

Week of October 19, 2020

Nomad

Published in

Yearn Governance Roundup

4 min readOct 23, 2020

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

📋 Quick Hits

⚖️ Proposals and Discussions

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

How does Yearn attract talent other than sweet talking?
September Grants Announcement
Proposal: Revamping Fees
Proposal: Create a new product, yPools

How does Yearn attract talent other than sweet talking?

This isn’t a governance proposal, but is absolutely necessary for Yearn governance to consider going into the future. Community member Temp raised an important point on Oct. 20:

The major takeaway here is that — at the moment — the incentives for building on Yearn are lopsided. To be fair, it holds true that in most open-source systems users / investors significantly outnumber developers.

It’s important that we (the community) figure out ways to reliably bring talent in through performance and management fees, good salaries, etc. You can find more people’s thoughts here. There’s no urgent action to take, but I encourage governance to begin thinking about this sooner rather than later.

September Grants Announcement

It’s that time of the month! September’s recurring and community grants were shared by tracheopteryx on Oct. 17:

At the moment there are 11 recurring grantees spread across Ops, Protocol / Dev, Academic “Public Good,” and Communications. For community grants: There were 14 individual recipients (myself included) and 1 “team” recipient — the documentation team. There is also a call for feedback regarding the grants system, if you have thoughts please jump in the thread!

Proposal: Revamping Fees

ParaFi Capital shared this proposal on Oct. 17. Here’s the summary:

A few weeks ago, we (ParaFi Capital, SRS) opened up a discussion in the forum to optimize fees. We continue to believe that there is confusion on how fees work among most. Moreover, we believe that the current fee structure of vaults is sub-optimal.
Specification:
Modify withdrawal fees to apply to all withdrawals (not just idle funds). Alternatively, remove withdrawal fee and move to time-weighted management fee
Rename “harvest fee” to “performance fee” and set a minimum of 5% on all vault profits, with the option to increase/decrease based on the complexity of the strategy. If possible, overhaul existing vaults. If not, modify future vaults and v2 specs.

Increasing Yearn’s potential fee revenue sounds fantastic — but it’s not so simple. There’s quite a bit of nuance when it comes to Yearn’s fee structure. Here’s an example brought up by fubuloubu:

The withdrawal fee seems to be a much larger part of Yearn’s revenue model. However, on further inspection there may be a time component to it. As people have gotten used to the Vaults and how they work, they’ve withdrawn less and less over time. Several teams hoping to integrate have also mentioned permanently keeping funds in the Vault, which would affect withdrawal earnings significantly.

So, it appears there’s still quite a lot of conversation to be had on this topic and it’s no secret that all Yearn users would love to maximize fee / revenue potential. You can find other people’s thoughts here and join in on the conversation if you have your own ideas.

Proposal: Create a new product, yPools

mattdw shared this proposal on Oct. 22. Here’s the summary:

If this proposal were to be enacted, yearn.finance would create a new product, yPools, similar to yVaults but with increased risk.

This proposal aims to create a new category to complement yVaults, which would be called yPools. Vaults require that a user is guaranteed to withdraw at least what they put in; yPools would be risk-on investments where things such as impermanent loss would not be omitted.

The easiest way to interpret this proposal is that demand for more risk in the Yearn ecosystem is present — but should we tap into that demand? Personally, I’m not opposed to the idea if the risks are clearly defined and separated from the core Yearn products. That said, there’s quite a lot of discussion to be had around this idea. Please share your thoughts.