Governance Overhaul and Future Rewards

Proposals Vaults
81

Okay, so I’ve read through the entire thread and tried to sum up both the actual issues but also general sentiment and which ones may be worth grouping/voting on, like @banteg suggested. @waif79 has done a decent job of this, but I will attempt to add some clarity and make actionable items a bit simpler.

If you want the TL;DR, just skip to the end where I have the suggested YIPs separated out.

Gasless Voting

  1. Should we enable off-chain, gasless voting?
  • Responses seemed to be overwhelmingly yes, with only one person pushing for staying with true on-chain voting. Many mentioned gasless voting would increase participation of smaller holders/stakers. The only other issue brought up was the issue of an “abstain” option by both @DCinvestor and myself. While I think this is a good add and I don’t see any reasons not to add it, it’s not critical at this time.

Voting/Rewards Outside of Governance

  1. Should we allow YFI not staked in governance to vote?
  • Responses to this were very mixed. In general, members were against this. Many offered caveats where they would accept this, such as decreasing voting power in lending protocols by the percentage of YFI that is borrowed out, while some didn’t want to count lending protocol YFI at all. Sentiment seemed to be more welcoming to allowing yYFI to vote in some capacity, although this would perhaps only be if the yYFI strategy didn’t involve lending or if the voting power were still less than staked YFI.
  1. Should YFI not staked in governance receive rewards?
  • Response was clear, rewards should only go to those staking in governance. Many mentioned the opportunity cost of staking in governance vs seeking higher yield elsewhere.
  1. Should CEXs be allowed to vote in governance?
  • Sentiment was negative against this as well. Users did mention if CEXs were able to create a transparent voting portal, then this may be more acceptable, but many worried about CEXs voting with YFI stored on their exchange. A time-lock with gYFI was also mentioned as another mitigating solution for this. In general, many wanted all non-staked YFI barred from voting.

Vote-Locking/gYFI

  1. Should YFI implement a gYFI system with time-weighted vote locking?
  • Sentiment for this was incredibly positive. Posters seem strongly in favor of increasing voting power, perhaps also increasing rewards as well.
  1. Should gYFI be transferrable?
  • This was controversial. Several posters mentioned they felt transferring gYFI went against the reasons behind locking it up in the first place. @andy8052 mentioned that if it wasn’t transferrable, someone could easily wrap it themselves to allow it to be transferred. An interesting idea that was also brought up by @Beepidibop is to instead regularly take snapshots and calculate a weighted average that way of time YFI held in protocol. This would help avoid gaming of the gYFI that would (very possibly) occur.

Rewards

  1. Should stakers receive rewards in yUSD instead of yCRV?
  • This actually wasn’t really mentioned by many posters here. Those who did (myself and @Wassupdude) both brought up instead making the payments in YFI. To be brief, I think it makes sense to reward those who vote in governance with the governance token– plain and simple. But I also believe yUSD is an improvement over yCRV, especially for small voters, as they are earning more interest as it sits before claiming.

So, moving forward, I think we should divide up into the following votes/YIPs:

Should we move to off-chain voting with Snapshot?

  • The most important, and I would say the easiest yes.

Should we allow YFI not staked in governance to vote?

  • While I am uncertain this will pass in the first place, if we want to have specifics for the vote– I would suggest a small set of whitelisted protocols (Aave, CREAM, Balancer, Uniswap, YFI Vault), and for the lending protocols, assign votes proportionally to how much YFI is remaining in the protocol– so if 75% of the YFI is left in Aave with 25% borrowed, then those aYFI have 75% of their normal voting power. CEXs would be banned for now, which we could perhaps revisit in the future if they built voting portals with lockups.

Should we implement a gYFI system with time-weighted vote locking?

  • If this passes, then we can decide on mechanism of vote power increase, how rewards are boosted, and also whether it is transferrable or not. In general, it seems most posters are in favor of this behaving in a very similar method to Curve’s veCRV system. If we wanted to start with that as the default model and then make tweaks, I think that would likely have strong support.

Should we implement yUSD rewards in place of yCRV?

  • I will again argue here for YFI (it got 66% support here), but I do think yUSD is a great option as well, and it seems YFI rewards likely never got enough traction with the team to move forward.

That’s what I’ve got. @banteg, if you’d like help writing up any of these YIPs just let me know and I’m happy to do so.

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