What started as a simple board proposal to build a war chest for the Yearn.finance development team has now spilled over into a broader conversation about incentives, sustainability and fair project launches in the decentralized financial space (DeFi).
On Wednesday, January 13, five members of the Yearn community, including several core contributors proposed a “Buyback and Build” program that would divert protocol fees into strengthening the treasury – a proposal that would change the current system of paying dividends to board members. The proposal has since been nicknamed ‘BABY’.
In an interview with Cointelegraph, the semi-anonymous Yearn core contributor and one of the proposal’s co-authors, Tracheopteryx, said BABY aims to enable superior durability in Yearn’s current growth phase.
“We propose to stop paying protocol fees as dividends to YFI governance strikers, and instead use those revenues for an automated YFI buyback, and reinvest them in the growing Yearn. Our core argument is quite simple: 1) dividends don’t make sense for our early development phase, and 2) better returns are available elsewhere for YFI, ”he said.
Mint more YFI?
But a day before the BABY proposal was published, another proposal, written by a lone member of the community, which also focused on sustainability, drew much more discussion on Yearn’s board forums.
Titled “**[Proposal]** Developer incentives, ”it says called for striking an additional 1,000 YFI tokens on top of the original 30,000 tokens that would be distributed to the core team at its sole discretion to drive continued development.
Core Yearn dev banteg posted a link to the proposal on Twitter on Thursday, sparking a wave of passionate debate that erupted to the wider crypto community:
Proposal: yfi_lit proposes to print 1000 YFI for the operation fund to give Yearn years of runway at a 3% dilution. The opposition appears to be quite strong. Should we gauge it?https://t.co/nyakRuRyv8
– banteg (@bantg) January 14, 2021
Both proponents and opponents of an extra coin accused the other side of being greedy, with skeptics saying developers should hack the original amount and supporters saying stimulus is more important than any possible dilution. Even Yearn founder Andre Cronje weighed in on the discussion:
1 / The YFI debate of the past 24 hours has been fascinating to watch.
1. Clear divergence between contributor and holder, with both parties citing greed
2. The “developers” did not initiate or ask for the proposal
3. The roadmap remains v2 and buy back and build
– Andre Cronje (@AndreCronjeTech) January 15, 2021
The thread on the Yearn forums now has 209 responses, with an estimated reading time of 40 minutes, and the debate on Twitter continues unabated until Sunday evening.
Memes versus reality
The core argument many of those who are against hitting more YFI have put forward is that it would happen conflict with the ethos of “fair launch” which, in part, made Yearn popular in the first place. Additionally, a coin’s skeptics claim that there were previous votes on burning the coin keys to prevent the creation of YFI after the original 30,000.
However, an in-depth analysis shows that the board never made a final decision to burn the keys that would make a coin possible:
– Nick Almond (@DrNickA) January 17, 2021
Additionally, Tracheopteryx argues that while they can act as an indisputable value driver, memes should not be the primary consideration for a project.
“Stories are powerful, but also limiting. Just as the word ‘table’ can never convey the rich multi-sensory experience of a real handmade wooden table, so does a meme or story compress reality into easily transferable chunks of meaning. ‘
In this case, the easy-to-convey chunks are too focused on a mythos built around the origins of YFI, and not on how the project will continue to create value.
As a result, faithfulness to the story of YFI’s fair launch – a launch format that its founder has since said was a mistake – now clouds its future. Due to the distribution of YFI, developers have less of the governance token compared to platforms such as Synthetix and Aave, potentially causing the developers to be poached by other projects with lucrative offers or lose interest due to their lack of incentive.
“A story never equals reality on the ground and reduces optionality. Stories have value for exactly this reason: they are simpler, easier to understand, easier to share, and thus they can become central points for coordination. And in DeFi they can also merge and mismatch, ”added Tracheopteryx.
For the past two days, the debate on Twitter has largely turned into memes and naming, but conversations on Yearn’s board forum and social media outlets have fueled their passion as well as their sophistication, Tracheopteryx says.
It’s awesome. I’ve gotten so much energy from community involvement. I’m just blown away by how many people care, how many people want to help, and how many people actually jump in and start working from scratch. . . it’s of great significance to me, ”he said.
Proposals include community crowdfunding a treasure chest instead of a coin, and a variety of debt instruments. But in the end, although there is still opposition to a currency, a consensus is slowly forming in favor of a currency.
Large symbolic holders appear to be collect in support – as long as there is a justification of how the funds will be used, among other provisions – to ultimately provide a successful vote for inflating YFI’s maximum offering.
While the exact details remain murky, Tracheopteryx believes finding the solution will be more of a process than an event.
“A lot of momentum is emerging to properly compensate the eager team and to expand our treasury. I think the discussion will continue and at least there will be more proposals in the next week, ”he said.
“Governance action seems to be moving in waves, we are now in one.”