Proposal on Yearn Safe Farming
Authors: Ryan Miller, Dudesahn, Facu, Mattdw
This proposal aims to establish a standard process by which Yearn builds consensus on whether a given protocol or farm is safe to deploy user funds to. While there are no perfect ways of precisely assesssing all risks of a given farm, there are a number of heuristics available to help form a sufficient level of confidence one way or the other.
- Establish Safe Farming Committee: a list of members and Telegram group
- Provide quick and actionable feedback to strategists
- Eliminate wasted development work
- Establish risk & safety baselines from diverse set of Yearn stakeholders
Safe Farming Committee
Voluntary membership representing a reasonably diverse mix of Yearn stakeholders who will be responsible for issuing verdicts and concerns on whether a particular farm is safe for a Yearn strategy.
A strategist shall follow the following process steps prior to spending any development effort on a new strategy:
- Complete a Protocol Due Diligence Report on the target protocol
- Share the completed report with the Safe Farming Committee voters group for peer review and request a vote within a reasonable amount of time (e.g. 24 hours).
- Safe Farming Committee discusses amongst themselves and holds a vote (via Telegram poll).
- Vote occurs per voting rules outlined in the section below
- Vote outcome determined:
READY: If a vote passes, then strategist is free to continue building the strategy
NOT-READY: If vote fails, then the strategist may seek remediation opportunities with the farmed protocol to improve on any concerns before returning for another round of voting. If none are workable, then the protocol should not be considered for further development.
This process is intentionally conservative; if any voter feels unsure about farming a particular protocol they have the right to voice that concern and force further consideration.
Reference: criteria to keep in mind while voting
The rules below are merely a suggestion, and subject to change at any time per the committee membership.
- All members in the SFC group are permitted to give a READY/NOT-READY vote on whether a farm is safe to deploy user funds to.
- Votes shall be cast anonymously by default.
- Vote passes if 100% votes are READY and 4 or more votes are cast.
- Any NOT-READY voters shall cite specific reason(s) for their vote and offer remediation opportunities if possible (e.g. work with the protocol to add an additional multi-sig signer).
I’d like to participate in this committee if possible, been using vfat for a while now and can say while most projects aren’t worth farming, there are some that are good like ALCX.
I think the intention is good, as most regulations.
But it will introduce the concept of regulations into yearn, and regulations beget more regulations, which lead to bureaucracy, which leads to reduced pace of innovation. This being just the start will not be seen like a problem right now, but over time, regulations accumulate and it gets worse (corporations are a good example of that pattern and government even more).
I suggest to rather allow for any protocol to be considered for farming but instead of voting for approval, start automatically with a threshold for funds to be deployed that will be increased over time (rate to be determined yet).
Also, instead of required voting for approval for new farms, I suggest to instead voting to object to a farm (i.e. need to vote by exception, not by default).
Regulations by exception, vs regulation as the norm.
Good feedback. The motivation behind this proposal is that multiple recently completed strategies have been blocked from going live due to concerns over the security of the underlying protocol. Causing frustration for the strategist who had sunk many hours of work into something without gain. It quickly became obvious that we could do better by placing the same checks at the front of the dev process, not the back. The concerns also have a high degree of subjectivity and therefore we need some means by which we come to a resolution and develop standards for what is and is not acceptable. We think this process is designed to be as quick as possible (not a roadblock) and carried out in a way which protects interests of yearn and its users over those of solely the strategist.
I like the idea, not sure how much I can do for it though. For now, at least. The proposal really relies on direct user participation for success. Do we have a gauge on how many people might be interested in getting on the committee?
Agreed…ALCX has good tokenomics, locked up dev team and real PE $ behind it.
Agreed…there’s a HUGE amount of value (imho) in having a standardized “Due Diligence checklist” to apply to all protocols before deploying any time or $$. This is probably a good idea to review existing protocols every X months too…
Would be great value for the ecosystem if all the Protocol Due Diligence reports were kept in one place for reference purposes.
Some of the points on there are not that easy to judge for newcomers to DeFi, so they can use this as a guideline, kind of like Moody’s ratings.
What type of mechanisms will be in place to gauge the effectiveness of this initiative?
Will you provide transparency into the rejected ideas?
Can you model what could have been? Under various conditions? Think of a simulation of what the ROI would have been under various AUM’s? Is that possible?
Checks are great but if you don’t measure the effectiveness, it’s a lot of effort and likely expense that is wasted. Perhaps not wasted but can be more efficient.
Here’s my fear, which is a longer conversation… these initiatives sound great and probably have value. However, creating a bloated bureaucracy is generally costly and in the end, YFI will not get on the level of Blackrock by only enriching the insiders and developers. I’d like ideas to always keep perspective of all token holders. And to do this you need checks and balances, if something is going to suck up resources and you can’t measure success of said initiative it needs to be retooled.
How do you decide who is in the safe farming committee and prevent against sybils?
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