Bitcoin may be the original cryptocurrency, but that doesn’t mean that leading decentralized finance (DeFi) projects don’t feel confident enough to differ from Satoshi’s vision.
“Let’s not be Bitcoin. This idea of hard caps for startups is very romantic, but not necessarily the best execution path for maximum value, ”wrote a Yearns Governance Forum participant, yfi_lit, on January 13th.
Yfi_lit wrote this in defense of its now humble proposal to mint a new cache of 1,000 YFI tokens (currently priced at over $ 30,000) for delivery to Ethereum users with assets anchored in key Yearn Finance vaults were.
But the latest proposal has evolved. Now the Yearn community is gauging sentiment to increase supply by 22%, from an additional 6,666 YFI minted (worth about $ 200 million at current prices), a third of which is to the main contributors and the rest the treasury.
The proposal, which was drawn up by 11 different people, sees “the start of the trade fair as a living concept rather than a single event,” they write.
When the mood looks good, it’s written in code and matched with the governance app Snapshot in the chain.
Of course, not everyone is happy about the new developments. At least two YFI owners, who caused issues such as immutability and fixed monetary policy, familiar to many long-time crypto enthusiasts, announced in the forum that they could no longer participate in a protocol that does not comply with the social contract as understood.
“I have found that the YFI project is unable to break away from Lord and Savior Andre [Cronje] and find his own way “, wrote Captainobvious under yfi_lits Post and announced that he will go.
When another user interfered with the same decision, yfi_lit replied, “I’m sorry you left, but I’m glad people with this attitude towards our builders disappeared.”
Social contract
And it’s not entirely unfair that some would see some kind of contract. Last year Cronje herself made a suggestion never to mint YFI again and it seemed to be fading.
Over 90% of the tokens voted for it, but less than 15% of the token supply participated.
But the vote was never carried out. This is a controversial point in the community, but the current argument is that the only voting was a first stage or a feeling-gathering vote. Users never voted on the actual code, so it didn’t really count.
“What we had in September was a classic case of misalignment between stakeholders in the YFI community,” Spencer Noon, now Variant Fund, told CoinDesk. “Burning the keys would likely have resulted in the price of YFI increasing in the short term, but possibly at the expense of the long-term sustainability of the project.”
Yearn’s governance processes have been formalized since those early days, but confusion over this decision remains.
It seems that Cronje was worried.
On January 12th, he wrote again on Medium about why building in DeFi sucks. “Don’t give your tokens away,” wrote Cronje. “I still have all of the responsibility and expectation unless I have zero of reward or benefit. Don’t do that, I was an idiot. “
Cronje is famous for expressing his frustrations without completely devoting himself to the actions he stood up for in a hot moment. He also kept his eyes on the door and could ultimately see a compensation system as something that would tie him down.
That said, Yearn is not just Cronje now. As his team and ambitions grow, it increasingly resembles the protocol that DeFi will devour.
The existing support base doesn’t want to risk losing the talent the platform has achieved so far. On the whole, the token supply seems to be growing pretty soon.
“Bitcoin has the same attitude and is therefore being blown out of the water by Ethereum,” said yfi_lit.
DeFi builds its own OGs and they seem to largely circling their cars around this step. Mariano Conti, former oracle chief at MakerDAO and current member of Yearns Multisig (the closest protocol to a board of directors), told CoinDesk on Telegram:
“I’m very much in favor of it. YFI was the first ‘fair launch’ experiment, and I conclude that this model doesn’t end up properly aligning with an ecosystem of developers and strategy writers, which is the lifeblood of an ROI aggregator like Yearn. “
Oh baby
In September last year, Placeholder’s Joel Monegro wrote a blog post in which he urged the community to consider a “buyback-and-make” approach to using platform profits instead of “buyback and burn”.
For this reason, the Yearn community has come up with a Yearn improvement proposal called Buyback and Build Yearn (BABY). It was passed with 99% support but less than 10% of the YFI votes.
BABY would use Yearn’s profits to buy YFI in the open market and use it for dues and other Yearn initiatives (see Q3 2020 Financial Report). Previously, most of the revenue was distributed to YFI owners who advocate governance, but the returns on this have been relatively low.
Yearn currently makes around $ 100,000 a week in fees, and community member Ryan Watkins claimed that could be better reinvested in Yearn itself.
“Yearn has demonstrated its ability to deliver real value to YFI holders. Distributing log revenue as dividends is a sub-optimal capital allocation strategy given Yearn’s maturity,” Watkins wrote in October.
However, the point of the community seems to be that BABY itself is not enough to hold onto the core team.
The new proposal is that BABY can only buy 100-300 YFI per year. Despite the fact that Yearn is expanding rapidly and with a new version coming out soon, “the revenue will likely not be enough to amass a sufficient amount of YFI for the Treasury Department,” the proposal’s authors claim.
When the 6,666 tokens are minted, a Compensation Committee will negotiate with certain contributors about their “retention package”.
“In my opinion, this is another example of YFI having one of the most resilient and prudent communities in all of DeFi,” Noon wrote.
Before a proposal can be voted on in the chain using Snapshot, it must be kept in the forums for three days. It currently has 133 votes, around 75% for the coinage of more YFI.
Although some have already started to doubt the process. “At the end of the day, regardless of the opinion of the community, the developers will do what they think is best,” wrote Dankmonty at the beginning of the conversation. “So just let us know. All the drama is not necessary. “
