Summary:
This is a proposal to overhaul the current MultiSig scheme and replace it with a new Yearn Treasury Vault contract that periodically allocates a portion of protocol revenues to Department Treasury Vaults, controlled by Department stakers.
Abstract:
Replace Yearn Treasury Vault contract with a contract that periodically distributes a portion (currently a $500,000 reserve) to Department Treasury Vaults. The percentage allocation of YFI staked to each Department, through the Yearn Governance Interface, dictates the proportions of protocol revenues distributed to each Department’s individual Department Treasury Vault as operating capital. How each Department elects to utilize or distribute its own operating capital is left up to Department Governance, which is controlled by those YFI stakers who staked all or a portion of their YFI tokens to that given Department (or their Department Delegates).
Motivation:
Currently, the Yearn Treasury Vault sends protocol revenues to the Governance contract as profit for YFI stakers, after the Treasury Vault has accrued a $500,000 reserve. This proposal does not propose to change this function; what it does propose to change is how this $500,000 reserve is controlled. Currently, the $500,000 reserve is controlled by a MultiSig wallet with 9 signers (ychad) that are empowered to pay for various operational expenses, including contributor compensation and community grants. While the operational efficiencies of a MultiSig are difficult to understate, the obvious centralization of power and the lack of strong incentives for MultiSig signers to remain fully engaged in the protocol’s success remain problematic long-term. While the MultiSig scheme has worked out fine to date, over the long term, it is clear that some other more decentralized form of Governance needs to be created that still enables intelligent, efficient, and decisive capital deployment to promote long-term growth of the Yearn ecosystem.
By introducing a system that allows Yearn Governance participants to allocate their YFI stake to Departments, we would, in essence, be creating a discipline-specific governance system with stakers (signers) that are incentivized to remain aligned with the Department’s success.
Specification:
If implemented, this YIP would lead to the following:
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Create multiple new Treasury Vaults assigned to Departments, called Department Treasury Vaults
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Replace Yearn Treasury Vault contract with a contract that periodically distributes a portion (currently a $500,000 reserve) to Department Treasury Vaults.
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Modify Yearn Governance v2 to include an interface that allows for:
- Input of % YFI allocation to each Department as “Department Stake” (0% to 100% of YFI Stake)
- Input of % Department Stake to be self-delegated and/or assigned to a Department Delegate address (0% to 100% of Department Stake)
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Allocate existing $500,000 reserve to Department Treasury Vaults controlled by Department Stakers
Preliminary Ideas for Departments
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Smart Contracts & Back End
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User Interface & Front End
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Product Strategy Development
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Strategy Risk Assessment
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Branding & Design
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Identity Verification
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Code Audit
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Legal & Compliance
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Content Curation & Community
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Governance & Conflict Resolution
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Standards Development
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Tax Strategy
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Onboarding & Talent Acquisition
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Privacy & Security
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Insurance
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Human Resources & Benefits
Note: This list of Departments is non-exhaustive and is certainly subject to plenty of future community discussion. The general idea is that the Departments should be fairly granular in scope and should cover a wide array of current and desired Yearn contributor disciplines.
Department Staking Options
YFI Governance participants will have the following options to participate in governance of the Department Treasury Vaults:
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Staking Option 1: Indicate % of YFI stake to be allocated to each Department. It is anticipated that YFI holders who have some level of interest in Department focus areas will elect to define a unique % allocation to each Department (from 0% to 100% of their staked YFI, and any percentage in between, such that their total allocation sums to 100%). Depending upon the level of interest in a given Department and/or skill in that Department’s focus area, a YFI Governance participant who elects to allocate their YFI stake to each Department would also be prompted to select one of the following options:
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Option 1A: Self-Delegate Department Stake: This option would likely be preferred by YFI holders who are heavy contributors to a given Department, or who are opinionated about exactly how the Department should operate; selection of this option acts to amplify a YFI holder’s voice by enabling direct voting on how funds get deployed by the Department Treasury Vault.
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Option 1B: Delegate Department Stake to a Department Delegate: This option would likely be preferred by YFI holders who have strong opinions that certain Departments are more important to Yearn’s success than others, but who may not care to remain well-informed enough to vote intelligently on how that Department should deploy funds from its Treasury Vault
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Staking Option 2: Automatically allocate YFI stake to match the current Department stake allocation and Department Delegate allocation. This option would likely be preferred by YFI holders who are more passive and don’t necessarily feel strongly that specific Departments or Contributors are more crucial to Yearn’s success.
Rationale:
In theory, YFI stakers who self-delegate their Department stake would be incentivized to align with one or multiple Departments in which they are skilled or in which they have a strong (and hopefully well-informed) opinion as to how it should operate. YFI stakers should also be discouraged from simply delegating themselves in Departments in which they add little to no value, since their lack of contribution should be more easily identified and publicly called out by other Department Stakers who are actively contributing in the Department, not only through obvious engagement and participation in Department-specific open forums, but also through the use of systems such as SourceCred (and hopefully other systems) which may serve as a proxy for quantification of Department contributions.
YFI stakers who do not contribute to any Departments and who do not actively participate in the Yearn ecosystem beyond Yearn Governance should be incentivized to stake their YFI tokens to Departments that they feel can improve the value of the YFI token. Moreover, they should be incentivized to delegate their voting power within the Department to an identified wallet address of a contributor that is known to be heavily active and well-respected within the Department.
In theory, such a structure of incentives should promote gathering around one single platform to which contributors can post links to other platforms that showcase a their involvement in a given Department, with the intention of promoting that contributor’s worthiness as a Department Delegate. Thus, this should improve information asymmetry and should gradually lead to less “walled garden” interaction amongst Yearn contributors.
Note: This proposal does not propose that Department Treasury Vault funds should be distributed according to Department stake held. Rather, it proposes to give Department stakeholders ability to vote on Department Treasury Vault allocation and to vote on whether to implement systems that can deciding such allocation in an automated fashion.
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For: Set up Departments (to be determined). Add functionality to Yearn Governance Portal that prompts YFI stakers to allocate their YFI stake to Departments and to self-delegate that Department stake or assign it to a Department Delegate.
Against: Keep MultiSig (ychad) empowered, and wait for another idea to come along.
- For Department Treasury Vaults & Department Staking
- Against Department Treasury Vaults & Department Staking
0 voters