The likelihood of recurring and compelling external YFI farming incentives does present an interesting game theoretic situation for us. A repeated game of deciding between A) staking yearn internally for governance, and B) staking yearn externally for profit.
Without A yearn becomes ungovernable and YFI probably goes to zero. But that means giving up massive profit opportunities.
Totally agree. Out-competing liquidity incentives from external pools could make the current system of governance tricky.
I am not a solidity dev nor the most informed in these things – but here’s a stab at how this might work. Instead of staking into a voting contract, we’d create a voting vault. When we deposit YFI into the vault we’d get yYFI LP tokens back. These could be added to external liquidity pools like YAM, but it poses some problems: since the ability to convert yYFI back to YFI would be limited by vote lock, it’s less appealing of a liquidity asset than regular YFI, so external devs would be incentivized to create farms for YFI still and that would earn more fees.
vVault: a Voting yVault
Here’s another option, and I may be totally talking out my ass here so apologies. If we create a voting vault rather than a normal staking contract then we have a giant shared pool of YFI and the ability to run modular strategies on it. We don’t need farming rights, we could use our existing governance system to vote on how to utilize this liquidity. Example: we could vote to add it all to the YAM YFI pool.
We could potentially split the vault into multiple risk tolerances too. The nice thing about this idea, if it’s possible, is it could cohere even more collective intelligence within the yearn community.