Gas fee should come from the performance of the fund. When you invest in any fund the cost of transaction is considered as cost and reduces the final pnl - so performance should be calculated after taking care of gas cost. That is one advantage of vault - shared lower cost.
2nd i believe strategist should get more but i think the current proposal is on definitely on higher side. maybe the voting can have various options like kyber protocol does. Suggested 36/51/13 ; Captainobvious 30/60/10; others could be 20/70/10 ; 15/75/10 ; 17.5/ 70/ 12.5 etc. The top 2 can be voted upon again.
If there is cost to implement the strategy that should be borne by Yearn once developer team feels that the strategy has promise.
Lastily once the strategy is implemented what is the risk Strategists bear? So that can’t be the only criteria Banteg
For those worried about 2% management remember this is annualised ie. 0.04% per week across the vaults - no-one will even notice this. Much better than competitors using 0.5% withdrawal fees.
Based upon Banteg’s tweets, misguided comments about risk of holding YFI, and the fact that he is bundling the proposed substantial reduction in YFI holders’ proportionate share of fees with the launch of v2 vaults, I am interpreting this proposal as his and the team’s implicit threat to hold Yearn hostage unless YFI holders vote in the manner preferred by Banteg.
I would love to be proven wrong. A great way to prove me (and everyone else of a like mind) wrong would be to hold one vote on the allocation of fees between the thee stakeholder groups and another vote on the change of the type fees collected from deposits.
I am quite confused with your statement that YFI stakers bear zero risk.
The truth is that YFI stakers are actually the only ones bearing risk (due to the token price).
Say something bad happens (hack, lost of users funds, …) just like with harvest finance, what would happen ? YFI price will dump thus hitting the stakeholders. In such a scenario would the devs be held accountable for something ? Well no, because we test in prod - see what happened with harvest or $EMN : funds were lost and that’s it, no further consequences.
I have a lot of respect for the job done by all the devs and I am quite exciting to see the v2 vaults but to be honest your statement on the risks + this proposal looks like you’re just pushing your personal agenda @banteg and trying to funnel as much as you can from the treasury towards a very limited number of people.
$EMN is bad example to use in your argument here tbh. Though, I do agree that it is not completely zero risk when investing and participating in $YFI governance.
this proposal looks like you’re just pushing your personal agenda @banteg and trying to funnel as much as you can from the treasury towards a very limited number of people.
Not entirely true as the team has been very transparent with their monthly budget report. By voting on every single fund distribution, the team development speed would take a huge hit imo.
My EMN example was just here to illustrate my words : whenever something bad happens devs are not responsible, neither legally nor financially. But token holders take a (huge) hit and thus are the real risk holders - as well as the end users of course
Thanks @banteg for putting this together. It’s reassuring to see that we’re open to tweaking stakeholder incentives to ensure yearn’s long-term growth.
As someone who is only a staker and not a strategist or contributor, I’ll be voting FOR this proposal.
Some thoughts:
The charts in the proposal’s description can be a little misleading. They show a drop in the total amount going to stakers, when in fact what’s actually going down is the fee percentage going to stakers. This percentage drop can be overlooked if the total amount stakers earn is significantly higher when we have more motivated strategists and contributors.
It might help the proposal if @banteg as the proposer could share his ballpark sense of how much overall fees would increase with the new incentive structure.
IMO there is some truth to this, and I’ve commented about free-riding elsewhere. But even so, saying this is needlessly polarizing. Any change to the fee structure will need to be a community decision anyway since stakers are the ones who vote on proposals.
I’m for this but I’d prefer this to be a separate poll to gauge community sentiment. Also it’s not clear how this gets implemented, will stakers now be rewarded with yYFI instead of yCRV?
For the part of Strategists, does it include only internal developers? Was wondering if there is any chance to adopt a similar approach like 3M’s system?
Was hoping to see possible contribution from external parties to improve YFI if possible.
The concept of who bears risk needs to be clearly defined because it cannot be nobody.
Users bear risk in vaults in instance of failure/losses
Stakeholders bear risk in that their capital is on the line (YFI Price) and thus their decisions must mitigate risks (which also protects users)
Strategists and contributors are expert individuals who are essentially hired by stakeholders to build value (and thus should be rewarded) but under the proposed scheme, will quickly recouperate upfront expenses and thus are risk free quickly (noting their skill and opportunity cost where they could work elsewhere is why a sum of say 30% is quite reasonable, but not more imo).
Contributors and Strategists should ideally WANT to become stakeholders to further align incentives meaning they should be attracted to hold YFI in the vault/governance contract, not just get paid for their services. Hence, we should maintain stakeholder portion at a greater share as a 'bonus for long term commitment from these experts.
In this instance, the stakeholders protect users and must also vet who they hire and their strategy code, else they suffer losses in their capital. I do not see how any conclusion other than stakeholders bearing the majority of the risk is justified.
I’d like to add more nuance to the risk discussion here.
Stakers != YFI holders.
Those who stake their YFI in the governance contract to vote, stakers, are a subset of YFI holders.
YFI holders bear asset price risk.
I believe the only risk that stakers bear in addition to the risk every holder bears, is they risk limiting their YFI to the governance contract rewards.
As I understood it, when @banteg said stakers bear no risk that did not include the significant price risk all holders bear.
But I’d love to know if I’ve missed some risk here.
It’s not clear why you think this. Are you saying that risk “needs to be clearly defined” because fee rewards should be allocated proportionally to risk?
Stakers, actually all token owners, might bear YFI price risk. But I’d argue at least a substantial portion of them bear that risk for the upside of price appreciation, not for a cut of fee rewards or to ensure protocol stability.
And anyway generalizing why all stakers bear price risk isn’t useful for the purpose of figuring out how to allocate fee payouts. The objective of the fee restructure should only be the long-term sustainability and growth of yearn. And not to compensate some group for taking risk when that is risk is unrelated to the protocol’s growth.
Risk must be proportionally rewarded, else nobody will take the risk. please refer to my original post for context on why I bring this up. Banteg is proposing a significant uplift in strategist/contributor incomes (which is in their best interest as a strategist/contributor). I am presenting the other side of the argument.
If there is some party who could massively benefit yearn, but would take on negligible risk to themselves when doing so, we should still be compensating them handsomely for it.
Our goal here is growth of the protocol, not rewarding risk per se. Any risk we’re rewarding needs to be clearly linked to the contribution to the protocol.
The contribution that strategists and contributors make to the protocol is very clear to me, regardless of what risk they are taking.
I propose 30% to strategists. How is that not well compensated? I propose that the 36% in the original proposal is too heavy and if they want the additional 6%, they should earn it by staking their YFI income in the staking contract --> align incentives.
You’re not addressing the point though about incentivizing contribution to the protocol regardless of risk involved.
The only group that can decide if strategists are well compensated are the strategists themselves, like @banteg. And if they decide they are not well compensated, they will leave and we will no longer benefit from their contributions.
