True, it wouldn’t have YFI’s value - but it doesn’t represent YFI, it just represents an opportunity granted to YFI tokenholders. So it would have some kind of value. The best way to analyze this, at least in my little brain, is to think about what we witnessed with the Yam launch.
If COMP, AMPL, etc. were alternate staking choices alongside yamYFI, yamYFI would probably appreciate in value to some level that the market determined was worth the yields it could produce. There was no inherent need for actual YFI to be staked in that pool, as far as I know. It was simply a competition to produce a fairer initial distribution.
That’s another option - really interesting idea. Third-parties, in their staking contracts, could require that the wallet staking the farming token on their platform had an equivalent or greater amount in YFI tokens staked in the Yearn governance pool from the same wallet.
This is a good point. Even if there is nothing preventing other platforms for rewarding real YFI, if it were unnecessary and counter to common practice, it would raise concerns that the other platform was doing something suspicious. It suggests that using redeemable tokens rarher than the real underlying tokens would need to become widespread. If real COMP and LINK were accepted, farming rights
YFI might be excluded.
Is it true that real tokens provide no benefit in these fair distribution circumstances? What about providing liquidity? What about signaling value with known tokens? What about being rewarded for taking contract risk with real value on the line?
This is interesting. It’s a kind of built-in smart contract insurance. But it would need a mechanism for determining when remote-burn yamYFI to maintain its YFI-bound value. How do we know it is irretrievably lost and not the token owner’s fault. It gets complicated, like Nexus Mutual’s DAO. Also a token that can be remote burnt is outside the owner’s sovereign control.
I think it’s cool territory for future discussion but rather than solve both the problem of providing good farming options for the gov pool and YAM-like smart contract risk, we start with just the former. A modification of our existing vault protocol seems like the right approach. YFI will always be at risk, nature of the game.
I agree. So just creating a valueless farmable token would not work for these other platforms’ purposes. There are plenty of tokens on Ethereum that have some value, but using those is also not sufficient. What is the key – that the token be tied to a defi project and have value? Could we create a token, say yFarm, distribute to staking YFI holders, and encourage the use of yFarm instead of YFI?
Mix this with increasing proportion of fees based on time staked and invest some fees in yproducts for additional yield to be paid to YFI holders, and maybe YFI holders would prefer to use yFarm instead of unstaking and using YFI on these other platforms.
I get that, but that’s what everyone says about crypto, right?
Still, I don’t think the tokens would be valueless. And I think there might be a way to determine if there is a staked governance token to back any staked farming token up. In theory the free market, and the issuer, could decide what the rights token was worth based on what it was backed by and how many other assets are also claiming the backing. Sort of like a fractional reserve, I suppose.
I just think it’s bad, bad news to be staking YFI like we were doing on Yam, trying to come up with alternatives.
yFarm, that’s a great idea. Could be a universal token, no need for a billion platform-specific tokens then. Would then be a matter of determining how to give it basic value without cannibalizing any value from YFI.
Just a thought: Whitelist several defi platforms, drop yFarm to participants/users, encourage use of yFarm for fair distribution projects, let YFI govern additional/future yFarm distributions.
Also occurred to me, yFarm could be the inflationary unit that many people want to see on Yearn. This way, inflation can be kept separate from the YFI token.
Again, exactly how it would determine and hold its value requires some serious thought, but I like the idea of having a farming token like this.
How to get the next Yam to use yFarm instead of YFI, COMP, LINK etc? Give it out in a fair way, have governance ready, and see if the next project adopts it for their own fair distribution? Seems like the costs are low. I do not see risk to yearn except for possible PR or goodwill hits if it fails. Does this also benefit other governance tokens, or would we expect push back from Compound Finance for example?
Could distribute continuously per block or every week? Assuming distribution based on TVL, could distribute same number of tokens, which would likely mean fewer to each person over time as TVL increases. Could give 1 token / year ( 1 / number of blocks in a year) for each $ of TVL. None of this requires YFI inflation.
You make some very valid points and I thank you for that. This is exactly what I hoped to uncover. As a researcher (in part) by trade, I’m very well aware that the source of an idea is often blinded to consequence by intent.
I’m not sure we are 100% aligned on intent but I’ll add another post in a day or so that clarifies a little further, once I’ve had more time to consider this.
Maybe a radical suggestion, but along these lines, it might be most beneficial to try to create some kind of universal farming token that can somehow be shared among platforms for the purpose of removing governance tokens from the speculative farmscape.
Perhaps the tokens could be minted and inflated in proportion to market caps, but don’t quote me on that because I haven’t thought it through at all. I think the DeFi ecosystem is very interwoven, and will be even more so in the future, and the collapse of one platform could cascade into the others. It’s best that every platform adhere to safer standards, together.
Yes, I went into the discussion with a very firm idea of what was “right” and what was “wrong” and thanks to you and everyone here, I think we’re developing a much more powerful concept.
Heres another variant scenario…when a user stakes their YFI in the governance contract they have the option to mint a farmYFI token. What if the minted farmYFI token it is not project specific…you get only one farmYFI token for each YFI staked. That way you know that each farmYFI token is backed by a governing YFI token. Places on the scarcity angle…
This suggests that you might need to return the Farm token to unstake the YFI, otherwise what prevents a tranfer of the YFI to another address that mints more Farm token?
Agreed. A general token that is not project specific makes more sense. Seems like this is all consistent with @blackcoffee 's suggestion:
If other governance tokens have similar risks, a token distributed to users of those platforms to be used in place of using gov tokens for farming will benefit them as well.
How do you encourage new projects to want to use farming token instead of gov tokens? Would need some intitial interest and success before it is common and expected such that using gov token is deemed suspicious and unnecessary. Incentives for new projects to accept perhaps?
