This begs the question about an opportunistic emission model. Could one design an emission model that has minimal inflation at certain times and then can be adjusted to pay out YFI tokens to incentivize and promote new products. Yield Farming would become the emission strategy. Different elements of the yEarn ecosystem could have different rewards curves that rely on being set by governance. Then we all go farm the rewards and drive the flywheel.
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I’m no solidity dev but I think one way to approach this, in line with a more general idea of an Issuance Max Cap, is to pre-mint the future issuance and distribute it in lots of 500 or 1000 to addresses owned by a governance contract. Then we could use votes to send them to the appropriate distribution/staking contracts at the appropriate time.
or create a metacurve that burns tokens in that contract over time. So as time goes on there will be less and less tokens to give out.
We think you make a good point about waiting for Andre’s yswap.
We have a good sense of all the upcoming upgrades that Andre has teased. Hopefully voters keep a lot of these things in mind with all the proposals popping up. There’s too many proposals happening right now to keep track of.
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Really interesting take.
I largely agree with your sentiment regarding A in the sense that we do not want to encourage trading. However, incentivizing deep liquidity for YFI is going to be key and I’m afraid without some allocation liquidity could get super scarce super fast
I feel that is ok though. If you can still gain YFI through providing work to the protocol there is no issue in scarce liquidity. As long as YFI tokens are not being locked (which I’m oppose to) some will decide to sell for a profit and those who don’t provide services to the protocol will be able to buy it.
Some organized thoughts of mine here:
I like the format of the proposal but am a little shocked at the amount of critical feedback so far. Has anyone considered that Synthetix’s inflation model works so good for them because their token is used as collateral in the system? More SNX in circulation means more utility for the Synthetix ecosystem, is the same true for YFI?
It’s very naive to assume that whatever model vaguely worked somewhere else can just be applied on top of anything.
I would suggest to focus more on revenue-generating avenues (COMP?) first to increase incentives to hold YFI and would only then think about additional inflation, which should be as inclusive as possible.
This is not meant as any discouragement to @Daryllautk - great work here, keep it up!
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Great point there @HeyChristopher originally wanted to frame thinking towards something more formalised versus the slipshot proposals we’ve been seeing posted up.
But yes it was naive to assume slapping an inflationary model could work in any scenario. Each have their own implications behind them
Glad that the community members like @Substreight has taken charge and made a thread of his own with a much lower inflation schedule of 22% and splitting the rewards to multiple streams with the potential to stream to a future Pool if it makes sense to incentivise future product offerings that would generate revenue.
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I would appreciate further explanations on why deep liquidity for YFI is essential.
Assuming deep liquidity leads to a relatively stabler trading environment of YFI, yet considering that the yearn ecosystem had been developed and engaged with healthily before the launch of YFI, I am having trouble to grasp on how a deeper liquidity of YFI is essential to the ecosystem.
The distribution of YFI should be treated more as a distribution of governing power to contributors of the ecosystem, hence decentralising the ecosystem’s governance, and less as a way to financially incentivise contributing behaviours. Financial attractiveness to engage with the ecosystem should rely more on the ecosystem’s products themselves, and less on the distribution and trading of its governance token.
Hence, a stabler trading environment of YFI carries less significance in the determination of YFI distribution model to me.
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I just want to make sure I understand Proposal A
1.5 Bil market cap on YFI tokens
30K per YFI
500,000,000 TVL
& each stakes YFI token yields $448.135 per week?