**[Proposal]** Developer Incentives

[ShadyFast]

That doesn’t seem to align with the above? It certainly gave me the impression it was a development time issue and not because a “binding vote” hadn’t passed. I don’t know the exact timeline given the early date of the Minting vote but the YIP process was probably not formally implemented at that time?

I don’t think the topic matters at this point, it will probably come down to semantics and will just continue division. The community needs the team to honestly communicate their demands. At that point, something can be worked out. Until then both sides are left speculating in not a particularly nice fashion about one another.

[tracheopteryx]

yes, there was an actual vote – it was a signaling vote on snapshot as I explained. The voting process was formalized at that time, you can go back and look at the progression of all the previous YIPs if you like. We could have done better to clarify the voting process. But on the other hand, that proposal was the first post on the topic and it didn’t say YIP or have a YIP number, so, pretty clear to me what it was.

[yfi_lit]

My thought process is in terms of dev ownership of org. Looking at comparable DeFi projects, 3% is still tiny.

I’m a bigger fan of @banteg’s most recent proposal. I think builders should have a minimum of 10% equity. Else, they’ll go somewhere they can get at least that. I just wanted to get the ball rolling with 3%.

[scottcoin]

Straw man - I completely agree with that statement; however, we differ on what will contribute the long-term fundamentals. I am saying that there are sustainable ways to reward devs and invest in yearn that don’t require compromising the trust of the community.

[banteg]

I read that the vote was a carrot for someone to research an on-chain governance system, where it would be the first autonomously executed proposal.

[yfi_lit]

This isn’t compromising the trust of the community in my opinion. The community will decide what’s more important: a hard cap or proper incentives for our builders

[yfi_lit]

@Ceazor

Also, this Mint of YFI came from YFI_LIT, I don’t know who this is. this might be my problem. but having someone I don’t know express that Minting is a good idea, is received a lot differently than having a core member propose it. The Buyback and Build was authored by 6 names, 5 of which I recognise in an instant.

First they came for the socialists, and I did not speak out—
Because I was not a socialist.

Then they came for the trade unionists, and I did not speak out—
Because I was not a trade unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

[urizenus]

@tracheopteryx

The other case I see mentioned around how we don’t honor votes (this is provably false) is the SNX vault proposal YIP 34: Add Synthetix (SNX) to yVaults. This was a formal YIP and it did pass. So why don’t we have a SNX vault? It’s because no strategist has found an effective way to make one.

I don’t understand the problem. Here is a strategy based on 10 seconds of reflection. Take the SNX in the vault, stake the SNX at synthetics.io. What does this accomplish? Well instead of each contributor having to pay the transaction fees once a week to claim rewards (fees that some weeks are more than the rewards claimed), everything is merged into a single transaction fee for the entire vault. Then use the staked SNX to mint SUSD and put the SUSD in a curve pool or use it to buy SBTC and put that in a curve pool or I don’t care just sit on it and let it 3X.

I am fully aware of the long history of online communities voting for things that can’t be done. This dates at least to the days of LambdaMOO and Haakon’s post-Mr. Bungle “New Direction” and the subsequent failure of the New Direction. But is building a vault for SNX really an impossibility for the big brains that are now asking for more compensation for their fine work?

[yfi_lit]

@urizenus

No it becomes a meme coin when the governance token offers no ability to govern anything. This is my point. The governance token is currently a joke. It just entitles people to sit in here and yell at each other and vote in what are de facto opinion polls. There is ZERO real benefit to holding a governance token.

What Andre and the devs should do is just disable the governance contract and do whatever they want to do and pay themselves 100% of whatever they earn with the vaults etc. The point is that this is where this is headed. There is nothing decentralized about this. the Governance token has nothing to do with governance. End the charade already.

The only way this passes is with a YFI token vote, so I have no clue what you’re talking about.

[Ceazor]

that’s a bit melodramatic.

are you suggesting that I am ignoring the issue? When in fact, I am just illustrating the issue with the proposal that came out of nowhere, and why it was received with little serious thought, that is until there were 187 comments.

I do guess the discussion needed to start somewhere, and I do salute you for bringing it to the table.

I have learned a lot about the benefits of inflation from this discussion and the discussions connected to this.

But I do still stand by my points that this proposal needs to be recompiled with a clearly set out plan.

Also, it might have helped if you had supplied some assurances that the devs were dissatisfied, which has come out of this discussion as a result of it, so again this is great.

I am fairly active in this community, not to the extend of some, but much more so then many yfi holders, and I had little idea of this level of an issue. But I get that the Devs are not going to come out and complain about their compensation (which is an issue that needs to be addressed as they are most certainly the spine of the beast). When I first read this, I was of the understanding that the V2 perf fees and then the BABY was going to make them happy. It was an assumption, I do admit, but it was my understanding.

With all this in mind, I can honestly say I was not looking away as they carted the “Jews, unionists, and socialists” off for the slaughter.

[tracheopteryx]

Sounds reasonable. But I’m not a strategist and I haven’t looked into this closely. There may be implementation details that wouldn’t make it as easy as you say. I don’t know the specifics here. When I asked a strategist about this a while back I was told there weren’t good options. I trust that. But if this is important to you, maybe they overlooked something. Discuss it in the strategy channel and make it happen.

[yfi_lit]

Sorry. Am sleep deprived. Was definitely over the top.

It will be recompiled with much more details, not sure if by me or someone else. Lots of people writing up right now.

[urizenus]

@yfi_lit

The only way this passes is with a YFI token vote, so I have no clue what you’re talking about.

What I’m talking about is that it doesn’t matter what passes, whether it is a signaling vote or a YIP. The devs do what they want to do. You can vote on a YIP but it has no binding force. Voting on a YIP here is like sitting in one of those little kid car seats that have a “steering wheel”. You can pretend you are “governing” the protocol, but that is the same sense in which the little kid is “driving” the car.

[yfi_lit]

@urizenus

What I’m talking about is that it doesn’t matter what passes, whether it is a signaling vote or a YIP. The devs do what they want to do. You can vote on a YIP but it has no binding force. Voting on a YIP here is like sitting in one of those little kid car seats that have a “steering wheel”. You can pretend you are “governing” the protocol, but that is the same sense in which the little kid is “driving” the car.

Yes until you can replace DeFi developers with robots this will always be the case in every org.

[urizenus]

@yfi_lit

Yes until you can replace DeFi developers with robots this will always be the case in every org.

Or… Or instead of robots you could simply ask for a culture of accountability in which devs understood it is not their business to gift 25 YFI from the protocol to buddies like Blue Kirby and then come back and ask us to print money because they are broke. Or… instead of robots you could simply ask the devs to report these financial decisions and transfers of assets ON CHAIN (wow, there is a novel idea) so governance can monitor them.

[krugman25]

I don’t understand why this is being pushed just before major updates are rolled out. Most of us know that v1 is stagnant and not generating much in revenue because most of the focus has been on v2 + other infra/ecosystem updates. With the fee structure being revamped a few months back plus the recent buy and build proposal that has broad support, once the updates roll out and revenue significantly picks up the protocol will likely be more than well funded.

If I was being cynical I would say this is being pushed hard just before updates are rolled out because once they are rolled out and revenue picks up there is going to be zero support for a mint, so this is the last chance to lock in a quick $30,000,000 dilution plan.

To bring those of us against minting onto the “pro” minting side, why don’t we do something like wait for the protocol upgrades to roll out and if after a month or so if it looks like there is not enough revenue to support the protocol then we can supplement that with a dilution schedule that ends with a true burning of the minter. You would likely get a lot more people to agree to something like that.

[barry]

You could also issue a new token(YFI.B) with no supply cap and have the protocol fees directed to that token.

This will accomplish several things:

1. Allow the YFI 30,000 meme to stay intact
2. Allow funding via YFI.B
3. Ensure A.Conje original mantra of YFI being a worthless token and only useful for governance to be more realistic.

[dazzlingkudu_1960]

Okay. What are we looking at here!

Yearn Ecosystem
A world class product built by altruistic devs, community, researchers, etc.

Challenge
Contributors are far from getting fairly compensated for their work.

Reason for challenge
(a) Sub-optimal compensation choices at the start &
(b) Naive fans/greedy investors capping the 30k YFI supply early on to make the “number go up”

Community Consensus
Compensation for contributors need to be re-aligned for long terms health of the Yearn ecosystem.

Current Proposed Solutions

1) Increase YFI supply by 1,000 i.e. ~3.3% dilution.

My opinion: I strongly disagree.
a) Not because I do not want contributors to get paid, but because I think this approach is not well thought out.
b) It is a mis-step just like capping the supply was at the first place.

2) Buybacks

My opinion: I disagree as well as a “long term” solution because of the same two reasons cited above.
But, may be as a stop gap solution, yes, we can/should direct some revenue to contributors for a few weeks.

My Proposed Solution

What we need to do is two things
a) Understand that YFI is a productive asset. It is different from Bitcoin where scarcity narrative is crucial because of the Store of Value narrative.
b) Understand what do companies like Coinbase, JPM, Apple, etc. and startups do to incentivize their contributors?

Finally, community has come to agree on (a).

Now for (b), we need a professional HR team. I would strongly suggest the following -
a) Let’s crowdsource a great HR team
b) Incentivize this HR team to come up with a compensation structure that is scalable across time and size of Yearn ecosystem
c) Let them independently establish a golden standard for DeFi compensation

I understand it is a slower process than quickly diluting the supply or executing ad hoc buybacks.
But if our ambitions is to become a global protocol, we must act like that today, not when we reach there (we may actually never reach if we do not fix it today from a long term viewpoint)

Final words
a) As the Yearn ecosystem grows, my hope is to see it encompass hundreds of thousands of people under its payroll in decades.
b) Let us do it in a sustainable fashion - think BIG!

[Beepidibop]

Yes, I think a separation of funding mechanism vs governance will avoid a lot of conflicts of interest down the line. We can treat YFI.B as a promise of periodic returns (fees) for funding yearn operations.

I’ve gone over it a bit here before.

[jimmygatz]

Jose here from Delphi Digital and I am broadly for @banteg’s proposal

While the capped supply meme is certainly powerful, Yearn isn’t Bitcoin. Yearn isn’t trying to be money and doesn’t rely on people’s “intersubjective belief” in its scarcity to be valuable. Yearn is early stage tech and its value derives from a strong founding team building excellent products that users want and that ultimately generate cashflows for tokenholders. You cannot build early stage tech without highly incentivised founders with skin in the game.

The opportunity cost of being a DeFi dev has never been higher and Yearn has already lost developers to Hegic, Idle, Sushi and others. The fixed supply meme will continue to hamper Yearn’s ability to compete on compensation and the result will be developers leaving to competing protocols or spinning up new tokens where they can own more of the supply. Neither of these are good for the ecosystem long-term.

I would suggest that a portion of the new supply is used to create an option pool for future development / grants. As a best practice, I would also suggest tokens given to the development team are vested over time, with vesting conditions potentially enforced by a community multi-sig.