If we are going to pay 5% to the strategist then we should definitely pay them in YFI and have a vesting period to see that the strategy is sustainable/glitch-free. I just think 5% of 200 million is a lot and there will be multiple strategists.
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Just remember for many strategists the receipt of the strategy fee is taxable income. In many jurisdictions that could be a 40-50% tax rate. Therefore 40-50% of the fee needs to be sold immediately just to pay taxes so 100% YFI doesnāt make sense. Then of the 50-60% after tax that they keep that shouldnāt be all YFI. I was thinking about half the after tax income in YFI and the rest in something else (stable etc.). Iām fine with a vesting schedule, but if you have a single strategist thatās killing it, but the other yearn strategist suck the good strategist is going to take a hit on his vesting YFI due to no fault of his/her own . This problem is common in many hedge funds is a cause of significant resentment. Therefore, you donāt want it to have a heavy vesting schedule. Thatās why I proposed just pay them in the currency and if they want to opt-out of YFI they can do so. If someone wants to leave they can leave. We shouldnāt have an anchor around anyone. I think thatās also in line with the manifesto ethos. I just feel we should have some delay on when the payout starts to make sure no critical bugs appear at first and they arenāt dumping buggy code, taking a payout and running.
Pickleās performance fee is only 4,5%
They are also looking into other models
The rewards are paid as vault shares in the current design. This keeps strategists aligned with their creations. The other part which goes to YFI stakers market buys YFI.
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How will this work if v2 Vaults have 20 different strategies? Will they all get more of the same vault?
@banteg thatās totally fine and makes sense. Economically the same.
One thing to note is that harvest and pickle vaults are also funded through inflation.
Yes, shares in the Vault will be a claim on funds across all Strategies
Iād absolutely vote in favor of this if proposed. Eliminating withdrawal fee and adding more incentive for strategists is key to sustainability.
So, Iām in favour of a change, but not necessarily the above.
I would modify the above as follows:
- I propose that we eliminate the withdrawal fee.
- A simple performance fee be implemented on all activity. *
*This is to say, on each harvest, the performance fee is applied to those profits.
- In relation to Proposal: Rethinking Capital Allocation I would suggest we consider a performance fee of 10%. I will outline why in the linked thread.