That’s a perfect breakdown of our options. I feel like we need a post quickly explaining the pros and cons of each with a poll to gauge sentiment. So far we kind of only have “yes/no” polls on each idea.
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Will be several hours before I could get started. If you have time and want to give it a shot, that would be great.
I started to piece something together but I realized I was mostly trying to rephrase your comments and feel like you’ll do a much better job explaining pros and cons succinctly than I can and it’s important so I might just wait lol
Posted a continuing discussion thread with a poll. Feel free to contribute there.
Just a note. (My own novice understanding)
We currently have two gov’ pools.
- Stakes YFI and receives rewards in yCRV
- Stakes YFI and receives rewards in YFI
Both intend to become vote approved to my understanding.
Maker can be addressed with auto NFT insurance purchases for LP and liquidation risk is being addressed through other means, which I’m not yet 100% clear on. But I’ve read several approaches being investigated.
I think that the ideal solution is about layering and we should be addressing each layer separately. Trying to address everything at once is where I feel we may be missing real opportunity. Jmo.
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The first is a governance pool. The YFI is not farmed or invested, and the staked YFI is entitled to a share of system rewards. YFI in that pool gets a governamce vote.
The second is not a governance pool but a vault. Currently the valult simply puts the YFI in the governance pool, which seems unnecessary unless it is going to move that YFI elsewhere in the future. If it puts YFI elsewhere it would presumably increase the yield but would not share in system rewards and would not vote.
Your idea that started this thread was to create a pool that would act as a yield generating vault and also share in the vote. Perhaps you are saying that the current YFI vault can be used. Perhaps a new pool would need to be created. Either way, you are proposing a method for YFI to earn yield outside of rewards, vote, and possibly also share in the system rewards. Putting aside exactly how this could be implemented, there is still a question of whether we should.
What layer do you suggest we address first? Let’s identify the layer, understand what we are trying to change and why, determine if it is something we want changed, and then figure out how best to make that change.
It seems that some may see the promise of higher yield and voting rights and automatically believe it is an improvement for the long-term health of the protocol. But it may not be.
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Thank you for comments.
I’m aware of the differences and will expand upon my comment at my earliest convenience.
Noting that we do effectively have two governance pools, irrespective of one being the original and the other being a vault. The next layer to consider would, in my opinion would be Makers CDP and their liquidation process.
Goal here would be to identify a strategy that trends liquidations towards zero. This I believe will come out of a DAI strategy. I’ve read some very interesting ones and will attempt to source and share when I’ve more time.
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Assuming the vault strategy is staking YFI in the governamce pool, that may be correct. Under the current governamce rules, any other strategy would remove that YFI from governance staking and the YFI vault would not have anything to do with governamce.
Fantastic. This would be great for those interested in the YFI vault and would be safer for they yearn system than YFI placed on a lending platform. This can all be done, however, without changing the governamce rules.
If/when we start contemplating changes to the governance rules – such as by potentially allowing YFI staked in this Maker strategy to vote or share in system rewards – we should carefully consider why we are considering a change and the potential affects of such a change.
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Here’s an idea:
Allow governance to change the reward function that determines how the rewards emit so that governance can replace the process in reaction to LP behaviors. Function replacement might be too complicated for most governance structures, a fact reflected in the low threshold quorum for most DeFi protocols, even ones making relatively constrained decisions; it is also poor design from the contract security perspective. Each function changed would have to be re-audited. Moreover, realistically speaking, it’s probably not necessary to have the ability to replace the rewards function completely.
The alternate idea is to set the appropriate reward function beforehand but parameterize it to allow for governance control.
This would enable governance to change the parameters to nudge LP behaviors and perhaps even the price action.
Governance needs to decide which aspects of protocol to control and which factors to leave to the free market; no doubt a non-trivial task.
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Aggregate governance proposals with maker aave and processes are reaching maturity.
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