Restructure fees and align incentives

Proposals Finance
83

It does baffle me to see how YFI holders lend out their YFI to other platform to earn, allowing the YFI to be borrowed to thrash the price. Can the meagre APY given out for the lent YFI compensate for the devaluation of YFI, which is like -75-80%?

But nonetheless, we really need to find ways to convert holders to stakers.

12 Likes
84

Extremely underrated comment, and IMO the core issue at play here.

This is a great point! YFI’s price suffers when governance is not the best-aligned place for parking YFI as a staker. We need to do better here.

10 Likes
85

Idk , but i still dca buying all dips ,
i lend my yfi in aave, i think is not crime and i m voting sometime,
anyway.
So far so good.
It have outstanding work well for me.
I m just filling growing my yfi bags.
But i understand the concerns in long terms.
I think if staker and via longer locktime receives generous rewards the flux will swap the other way

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86

Stalkers % is rather low. And yes, fees rewarding stalkers will surely stabilize the price in some way.

It’s not a crime to lend yfi out. But rather, what is the motivation to lend it out.

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87

Maybe I put it in another way. If the incentive is higher to stake, will you have 2nd thoughts about lending it?

Anyway, what APY would anyone offer for cheap coins?

2 Likes
88

Regarding to the treasury being composed of yYFI in the YFI Vault, I am wondering whether it makes sense for treasury YFI to participate in staking, receiving governance rewards or even voting given treasury YFI is similar to treasury shares in traditional companies.

Is it a circular act to distribute profits to Yearn treasury itself or vote for Yearn itself?

Perhaps, treasury YFI should only sit idle, instead of being put in yYFI vault which stakes YFI in governance and receives rewards?

Quote Joel Monegro in “Stop Burning Tokens – Buyback and Make Instead” below

Unlike outstanding shares, treasury shares can’t vote or participate in the economics of the organization. Both are circular acts: there’s no sense in distributing profits to yourself, and you can’t buy what you already own.

By reducing the number of outstanding shares, buybacks improve certain valuation ratios (e.g. earnings per share, etc.) for all remaining outstanding stakeholders in the market. This justifies paying a higher price per share. But actually destroying treasury stock after a buyback is not economically useful. The buyback alone does all the work because what affects the price is how many shares participate, not how many exist – and treasury shares don’t participate.

4 Likes
89

Only staked YFI can vote on governance. I think it serves as a yardstick to identify speculators.

Hence, I would propose rewards to those staking only.

3 Likes
90

remember Yams sir…dont put self replicating governance tokens in a contract where it is its biggest holder…

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91

Its the 2% management yearly fee taken from the vault holding or the strategies? If its from the vault it can be "noticed’ if only, for example, 1/5 of the vault AUM is baing allocated in a a strategy. Or 0% of the vault allocated as the GUSD vault at the moment.
I would move towards increasing the performance fees and reducing the management fees.
Otherwise looking good

92

Great summary - I agree on the points raised esp around the need to get community on board with all aspects of the change - great start though and thanks to all for the hard work

93

Thanks for the proposal and really interesting to read the thread. One thing I would like to mention here is that it’s really important for all these fees to be subtracted from all advertised APYs in a very transparent manner. Definitely in the front page but also offer explanations of how to do this for other applications that integrate with yearn such as Rotki.

2 Likes
94

I think the advertised APY has always been shown after fees. It’s based on realized returns over some period.

95

I guess that this does not include withdrawal fees at the moment. But with them gone, then it would indeed be the ROI on a given time period with fees included, right?

Anyway just wanna make sure we keep that in mind. I think that a very clear (information-wise), easy to use and also enticing frontpage is key to success here.

96

We have the staking adj reward setup,

To be honest, since the beginning, I was doing both Lending/Staking,

I m just adjusting % according to the demand.

I’m a simple long term holder staker lender and buying all dips on as much as I can,
yfi and Keep3r

and others best defi and cryptos projects , like everyone.

At my position, I don’t have the luxury, the time, the competences, the funds, the risk appetite to long or short assets by x%.

2 Likes
97

Yes, we really need a good model where changing holders into stakers is just common sense.

3 Likes
98

Banteg’s original fee proposal is most reasonable. As a trader, YFIs vaults and token are just not attractive enough currently to get my TVL. Adopting a similar concept as Harvest as proposed here by having a profit sharing pool in the native token which gets the majority of buyback rewards is something which makes YFI and the yearn ecosystem more attractive for people bringing their money into yearn. And that is the end goal. 10% strategist reward is more than enough.

99

Fully support this proposal from @banteg. He has modelled & evaluated many options prior to this proposal and has consistently demonstrated long-term thinking & commitment to Yearn.

  • The fee model is far superior, glad to see withdrawal fees gone. Better incentive alignment and better composability.
  • The proposed distribution is good. It’s important for stakers to continue to see cashflows, so glad to see that retained. Cashflow distributions create a strong price floor & valuation model for YFI that is simple to understand.
  • I like the YFI treasury buybacks, which, as the system grows AUM and net performance, will create positive price pressure for YFI, which is well aligned with any ecosystem participants that hold a long-term view. Paying contributors in protocol equity makes a ton of sense, and assuming their contributions accrue value to the protocol, multiplies earnings received by long-term contributors and builds loyalty. Some subset of stakers & contributors will sell for USD income, but I’d imagine net positive price pressure across buybacks + selling of distributions.
  • Strongly incentivising both core contributors and strategists is super important to attract and retain talented participants. These two groups will are key to driving performance and attracting AUM. Incentivising them, even at the expense of reduced cashflow distributions to YFI stakers, will create the most value for all participants (including contributors, YFI stakers, YFI holders and end-users looking for return) over the long term.
6 Likes
100

As we speak, the price is plunging. I agreed that we have to reward the working group but we simply cannot ignore attracting holders to become stalkers. It has to go hand in hand.

The number of stake yfi has fallen and there is a danger of minority taking decision for the majority. And the house is on fire, YFI had dropped out of ranks of popular coins.

4 Likes
101

Honestly, this sounds really good.
I mean on the stakers part. I’ve been lurking for a fairly long time, and been accumulating, but the only thing that kept me from participating in the governance voting, is the fact that it is not rewarding in YFI.
I guess many of us are in this shoe. I’d like to participate, but it’s too much of a fuss for a “small investor” if there exist such, to sell and buy yfi-s with the ycrv tokens.

1 Like
102

Yes, it will be advertised in Vault.pricePerShare as being the value you can withdraw for 1 whole share (in terms of the underlying). Because there is no withdrawal fee, this is 100% realizable value.