We consider this issue as a choice between users governing the protocol or owners governing the protocol. BPT (98% yCRV / 2% YFI) voting would be giving most say to those who take the biggest balance sheet risk on the protocol contracts and who use the protocol. YFI voting would be giving the most say to those with the most economic alignment to the protocol. In our opinion, both cases should be fine in the short-term but eventually YFI should have all of the voting power in the long run. We are suggesting this even though it would reduce our voting power from by almost a half.
Here are our reasons For and Against, some of which has already been posted.
For: YFI holders have the most economic alignment with the protocol. Stablecoin whales could do a hostile takeover and pass proposals which favor them at the expense of others. Users care less about owners than owners care about users. In other words, stablecoin whales don’t care too much if YFI goes to 0. YFI holders do care if TVL in the project drops to 0 because usage is necessary for future cashflows.
Against: BPT (98% yCRV / 2% YFI) holders governing would be the “talk to your users and ask them what they want” approach to product development which is generally considered good because owners may be one step removed from the reality of what users actually want. (Counterargument: users have no idea what they want (e.g. Apple).) BPT holders take balance sheet risk with the protocol smart contracts while YFI holders only take YFI price risk thus BPT holders deserve a greater say on the direction of the project. YFI holders could be short-term aligned with the project rather than long-term aligned. They could push for short term price appreciation through pump mechanisms at the sacrifice of long term viability of the project. Also, a hostile takeover with YFI might take less balance sheet. Lastly, YFI staked to pools can not vote, thus this causes a negative incentive where people would prefer not to vote as they would rather get yield.
Decision: For wins but we strongly suggest implementation of voting delegation or reducing the quorum threshold before passing this Prop 10. If Prop 10 passes right now, we do not think quorum will ever be reachable.