What began as a simple governance proposal to build a war chest for the Yearn.finance development team has now resulted in a broader conversation about incentives, sustainability and fair project starts in the area of decentralized finance (DeFi).
On Wednesday January 13th, five members of the Yearn community, including several key players, proposed a “Buyback and Build” program to divert protocol fees to strengthen the Treasury – a proposal that will change the current system that pays a dividend to governance participants. The proposal has since been called “BABY”.
In an interview with Cointelegraph, Yearn’s semi-anonymous contributor and one of the proposal’s co-authors, Tracheopteryx, he said that BABY is designed to enable superior sustainability in Yearn’s current growth phase.
“We propose to stop paying protocol fees as dividends to YFI stakeholders in corporate governance and instead use this income for an automated YFI buyback and reinvest it in growing Yearn. Our main argument is pretty simple: 1) dividends don’t make sense for our early stage in development, and 2) there are better returns for YFI elsewhere, ”he said.
Mint more YFI?
Just one day before the BABY proposal was published, another proposal from a single community member, also targeting sustainability, sparked far more debate in the Yearn governance forums.
With the title “**[Proposal]** Developer incentives “, called for the minting of an additional 1000 YFI tokens in addition to the original 30,000 tokens, which will be distributed to the core team at their own discretion in order to create incentives for further development.
Core Yearn dev banteg posted a link on Twitter on Thursday regarding the proposal, which sparked a spate of passionate debate that spanned the wider crypto community:
Suggestion: yfi_lit suggests printing 1000 YFI for the operational fund to give Yearn years of runway at a price of 3% dilution. The opposition seems to be quite strong. Should we query it? Https://t.co/nyakRuRyv8
– Banteg (@bantg) January 14, 2021
Both proponents and critics of an additional mint accused the other side of being greedy. Skeptics said developers should stick to the original set, and proponents said incentives are more important than any possible dilution. Even Yearn founder Andre Cronje got involved in the discussion:
1 / The YFI debate over the past 24 hours has been fascinating to watch.
1. Clear divergence between contributors and owners, both sides citing greed
2. The “developers” have neither started nor requested the proposal
3. The roadmap remains v2 and will be bought back and created
– Andre Cronje (@AndreCronjeTech), January 15, 2021
The thread on the Yearn forums now has 209 replies with an estimated 40 minute reading time, and the debate on Twitter continues unabated through Sunday evening.
Memes versus reality
The main argument that many of those who oppose the coining of more YFI have made is that doing so would violate the “fair start” ethos that made Yearn popular in the first place. In addition, one mint skeptics argue that there were already votes to burn the coin keys to prevent the creation of YFI past the original 30,000.
However, a thorough analysis shows that the government has never made a final decision to burn the keys that would make a mint possible:
The $ YFI debate continues. The reality is that @iearnfinance has never made a final decision about its inflation plan and the 30,000 fixed shipments meme is just that, a meme. https://t.co/24eUPOudE5
– Nick Almond (@DrNickA) January 17, 2021
Additionally, Tracheopteryx argues that while memes can act as an undeniable value driver, memes shouldn’t be the main consideration for a project.
“Stories are powerful, but they are also limiting. Just as the word “table” can never capture the rich, multi-sensory experience of a handcrafted wooden table, a meme or narrative compresses reality into easily transferable chunks of meaning. “
In this case, the easy-to-carry bits focus too much on a myth revolving around the origins of YFI, rather than how the project will continue to add value.
As a result, fidelity to portraying YFI’s fair start – a launch format the founder has since called a bug – is tarnishing its future. Due to the prevalence of YFI, developers do not have such a significant stake in the governance token compared to platforms such as Synthetix and Aave, which may cause developers to be lured away by other projects with lucrative offers or to lose interest due to a lack of incentives.
“A narrative is never synonymous with the reality on site and reduces the optionality. It is precisely for this reason that narratives have a value: they are simpler, more understandable, easier to share and can therefore become central points of coordination. And in DeFi they can also grow together and mismatch, ”added Tracheopteryx.
Build consensus
For the past two days, the debate on Twitter has largely centered on memes and attribution, but conversations on Yearn’s governance forum and social media channels have been encouraging for both their passion and sophistication, says Tracheopteryx.
“It is great. I was so excited about the community’s commitment. I’m just overwhelmed by how many people care, how many people want to help, and how many people actually step in and start working from scratch. . . This is very important to me, ”he said.
Proposals include community crowdfunding of a treasury instead of a mint, as well as a variety of debt instruments. Ultimately, however, while opposition to a mint persists, a consensus in favor of a coin slowly remains.
Key token holders seem to be rallying for support – as long as there is a record of how the funds will be used, among other things – leading to a possible successful vote in favor of increasing YFI’s maximum offering.
While the exact details remain unclear, Tracheopteryx believes that finding the solution will be more of a process than an event.
“There is a lot of momentum emerging to adequately compensate the yearning team and build our treasury. I believe the conversation will continue and there will be more suggestions for at least the next week, ”he said.
“Governance measures seem to be moving in waves, we are now in one.”
