I 100% support this proposal and I love the modeling which is evidence that supports all stakeholders.
I just want to add that TVL is important and we need ways to incentivize TVL. Banks have traditionally used one time cash bonuses to attract money into checking and saving accounts.
I think we should brainstorm the crypto versions of this to attract TVL when v2 vaults are ready.
Collected the data across all vaults. The new model results in 85% the fees collected by the old model.
Total 4,025,570
Total 3,421,646
Here is the raw data to do your own modeling.
I support the proposal. We need to compensate the strategist well enough and incentivize more to come and build for Yearn. We need to act quickly in making this happen and iterate later if necessary. We can reevaluate later after seeing data with the proposed model.
Thanks everyone for feedback. The proposal has been taken over and split up into several parts.
The first one removes withdrawal fees and secures 2/20.
Makes sense to split up the proposal. Commenting, therefore, only on the fee allocation not fee structure here.
Broadly agree with the suggested split overall, but wonder if strategists should benefit from some of the managemt fee in exchange for a slightly smaller cut of the performance fee.
A strategist is currently more incentivised to develop niche, high APY strategies even if those attact low AUM (e.g. strategist will make the same from 33m AUM / 30% APY versus 100m AUM / 10% APY). Right now, this isn’t really an issue, indeed it’s a benefit as higher yielding strategies will also generally also attract higher AUM. But, as this space develops and opportunities for high yields decrease, competition is going to turn to how to attract AUM through other means, whether that’s a pretty small boost in APY versus other available offerings, or other more innovative features of vaults such as built-in contract risk coverage. The proposed strategist reward depending on performance only may, therefore, mean that we lose the ability to attract the stragegy talent we need to thrive in the long-term.
Not sure exaclty what numebrs would work best, but as an example something like:
2% annualized management fee
20% performance fee
Note that this results in the same stragist reward in the “Example Valut 10,000,000 AUM, 10% APY, after 1 year” but with 20% coming from the management fee and 80% coming from the performance fee.
Voting is live for part one of the proposal. The scope of this vote:
https://snapshot.page/#/yearn/proposal/QmSaYHR97LDMDvg9xeTfdNZw6aqL9njxBKM6JVFtCYxKvB
I do think there needs to be some clarity on the Strategist role. Is it only limited to developers or those who can code? If so, we are potentially excluding a large part of knowledge minds that can help the ecosystem.
I myself am a knowledgeable DeFi user and have a few strategies in mind already, but am I ineligble to receive Strategist fees because I cannot code them myself? I believe I also nudged us in the direction towards UNI farming, which led to the pickle vaults. This strengthens my argument that we can benefit by clearly defining the Strategist role to not be solely developers who can code. We should make sure we can get ideas from all talented individuals, not just ones that can code them up.
I also think there needs more clarity or a sliding scale of the performance fee. For instance, the Strategist for the curve vaults particulary the yUSD one was Andre. He didn’t take a Stragist fee. The other ones are essentially the same strategy just a different pool. It is not a complex strategy or vault. It merely deposits to the gauge, auto farms, auto sells and redeposits. On occassion, there are some boosting done. Are we now will be paying a Strategist fee for the curve vaults, which was originally Andre and he relinquished? This is not clear to me.
Are curve vaults so complex that it warrants over 7 figures in fees (based on above models) to the Strategists? I would argue it almost certainly does not, and we would be drastically overpaying. I am, however, support paying more complex strategies or innovative ones to Strategist. An example, is the leveraged DAI strategy proposed by a community contributor. I do believe that should be compensated for its ingenuity.
But paying 7 figures for 2-3 months for a curve pool vault to me just doesn’t make much sense.
Don’t know if it’s possible. But maybe the “strategist” address can just be a smart contract that doles out the strategist fees to people who contributed to the strategy (code and idea). If done this way, each strategy can negotiate its portions among the contributors on a case-by-case basis (not set by the YFI gov). Maybe there’ll even be multiple coders that maintain the same strategy in the future, or teams of 20-30 people all getting the strategist fee divided among themselves.
It has triggered me reading that Curve strategies are simple. The opposite is true, in fact, they are the most complex and intertwined piece of engineering in the Yearn ecosystem. Did you know that yUSD strategy has taken 10 iterations after the initial version? This system was written by a dozen people, has taken a lot of collaboration and a lot of deliberation, there is nothing simple about it.
An idea without implementation costs nothing. Implementing a strategy takes a lot effort and almost always requires a collaboration on design and testing. If you find a dev that agrees on a split in exchange for an idea, in v2 the Strategy is free to decide how to distribute the rewards, there is a hook made exactly for the purpose of collabs.
@banteg , @dudesahn I really like the showcases ideas
Maybe this need to be highlighted more in newsletters , pinned and update when it is possible, please.
Of course, these same strategies could produce different results depending on various time frames and assumptions.
However, it does seem that an active process with appropriate risk management comes out on top of the passive one.
Investors with more massive disposable capital can take advantage of yield farming and enjoy relatively lower risk returns. However, performance from yield farming is heavily contingent upon knowledge and timing.
Our observation suggests that DeFi activity has not stopped despite the correction.
However, smaller investors seem to be limiting their interactions with Ethereum.
Allowing more prominent players the time needed to evaluate their options before the activity starts inching higher carefully.
We need everybody on board.
I must agree that while it increases strategy success , it decreases vault value. With so many forks and copycat strategy, something original comes along every few years. Andre is a case to study. He created it and gave it to the community. So will we also allocate a fee to him? Decentralization is at a very early stage in development, and frankly framing is at a even earlier phase. If the community wants want to reward success, it should be to someone who makes great strides to forward crypto. Let the money hungry types continue to rib pension funds. Their days are numbered
As an angel investor…the idea that stakers are “free lunchers”…whatever that means…feels oblivious at best and irresponsible at worst. In traditional finance, literally the entire ecosystem revolves around the creation and care-taking of shareholder/stakeholder value…the crypto equivalent of shareholders would be, you guessed it…stakers (most of which are typically long). Dividends (profit shares) are paid to reward the risk and investment taken by shareholders. No one bears a greater risk than those directly investing in a project…with hard capital. With all due respect and admiration for yearn devs and contributors…if they are uninvested, they can easily just switch over to a new project and get paid there. This has unfortunately proven itself to be the MO for much of DeFi thus far…buy/build, pump and dump…with no long-term investment in projects. Long shareholders/stakers are left holding the bag if a project fails…not the uninvested strategists, contributors, devs. If they are instead invested, then they too are stakeholders bearing risk. Having mined my first $BTC in 2013…I can tell you first hand that the crypto-verse graveyard is littered with great builders and promising projects that imploded because they underestimated (or intentionally subverted) the importance of recognizing stakeholder risk and value creation for the community. Staked protocol ownership adds tremendous value and bears equivalent risk…
The problem with your analogy is “investment” in YFI does nothing, it doesn’t reach the people who work on it, which I’m trying to fix here. So we are basically arguing about the same thing. And the point about uninvested contributors is incorrect, most people I know are plenty invested, and they go an extra mile to produce value for their YFI with blood and sweat.
The issue with DeFi is that its on an order of magnitude more speculative and risky than traditional investment. The official stance is that YFI is a valueless goverance token and you are investing in nothing. However, there is a team of devs behind it creating value with no certainty at all. Basically any value besides current fundamental value is pure speculation of what the future hold. There is no core ethos in protecting the investors as thats not what YFI is about.
Just to clarify, traditional markets protect investors as those are securities. YFI is a valueless governance token that can’t do anything except vote on proposals and be traded on a crypto exchange.
Totally in agreement regarding getting builders paid and the value they add…that’s not the issue. It’s the dismissal of the core. Investment in YFI does everything…try eliminating the ~30% staked in Gov, plummet the price and see where yearn ends up. Stakers…long holders and believers…are the foundation. Builders need that foundation and support…without which everything crumbles. Never said contributors were uninvested…I said “if” they are uninvested. If they are invested (which I’m sure most are)…it underscores my point. Traders and yield-chasers are customers…they come and go. But stakers are your muscle…
That’s the CYA stance. The reality is that the market has decided protocol ownership has value…governance has value. The return paid to Gov staking has an IRR and calculable yield…which literally defines financial asset value. No company, project or protocol has certainty of return…DeFi risk betas just tend to be higher…but market forces and economic rules still apply, whether we like it or not.
Somewhat related to the discussion here, as it deals with Yearn’s Treasury Vault and who governs capital allocation:
While recognizing the need to pay the working group, I think the needs of the rest will have to be balanced and not ignored. Growth has to be inclusive.
Personally, I find many parrots in Discord etc who kept reiterating AC’s saying about YFI being worthless which he may be describing it as it is at that point in time. And some people are using this as an excuse to put aside those who staked.
I am hoping to remind those who had this mentality. If YFI token is really worthless, why don’t you entertain the ideal of giving it to someone else. Most of us paid for it.
Top organisation attracts top talents. YFI is no longer a rookie to the market.
Hi guys,
I am trying to wrap my head around about the new fee model and I would like to ask which number from https://stats.finance/yearn should I use for my calculations. In particular, i am modelling the treasury balances from which YFI holders will make half of the 20% performance fee and 2% management fee.
1.Vault is the only yearn’s product which should go into the performance and management fee calculation right?
2.Should i just use the “vaults” $ amount and do not include delegated vaults?
3.The 2% management fee is charged on the total amount in the treasury (not incl. profits) or total amount in treasury + profit?
