Based on the comments and signaling vote there seems to be fairly strong directional support for the proposal, with a few areas of pushback:
- Too big of a mint
- Lack of clarity on comp distribution
- Mint keys should be burned
- We don’t need mint + BABY
Many great points have been brought up. While I can’t speak for anyone else, here are my personal thoughts on each:
1. Too big of a mint
As has been pointed out by many, with YFI at $30K this is a $200M mint. I get why this headline is triggering, but the current price doesn’t adjust for the volatility of YFI or the potential for a major drawdown caused by macro factors which are out of Yearn’s control. Today’s price action, for instance, shows the danger of thinking exclusively in terms of the current spot price. The reality is that YFI is in a period of price discovery, so we should discount its value appropriately to protect against the downside.
Instead of using current price, the way I think about the value of the mint is through the lens of a time-weighted average price (TWAP), which factors in the price movements over defined periods of time:
The TWAP lends a bit of perspective – instead of $200M, you might think of it as a range between $137 - $186M. There’s a bit of art to this, to be sure.
Another angle here is that the mint will be unlocked over years, so the minted YFI join the circulating supply slowly over time to ensure long-term alignment. In other words, the dilutive impact is spread out over years.
In terms of both absolute amounts and percentage of supply, both the team bucket and the treasury are on the smaller end when compared to peers. It doesn’t matter if Uniswap has a different use case and is a different type of org – everyone is competing for the same relatively small talent pool. It is amazing that Yearn has attracted the caliber of contributor that it has on a shoestring budget, but it is very likely not sustainable long-term due to the high and increasing opportunity cost for talent.
Finally, while we could leave the warchest to a future vote and just isolated the comp piece to get the total amount down, that would almost certainly put the community in the awkward position of needing to vote on a second mint for the treasury later. It lowers the cognitive load to have one decisive mint now that covers both, and both are important.
2. Lack of clarity on comp distribution
This is a very sensitive issue and it could be detrimental for core contributors to have this discussion in public. However, there should be sufficient checks in place such that the community can be sure that the process is done in good faith and is in line with market standards. This is a good point of pushback, and I think the proposal should provide sufficient assurances before it moves to an on-chain vote. We should not be having a forum discussion on specific allocations, but we should thoroughly talk through appropriate checks on a process level before ratifying a change this big.
3. Mint keys should be burned
The best argument for burning the keys is that it mitigates governance attacks and makes it harder for bad actors to misuse the mint in the future. This is a good argument.
My sense here is that burning the keys introduces fork risk and generally constrains what Yearn can do. Case in point: a few months ago, most voters signaled that they agreed with burning the keys, which would have precluded what most now believe to be a worthwhile mint.
I saw some discussions about timelocking the keys. That feels like a sensible middle ground to me, as it provides optionality while protecting against downside. Another additional protection could be an elevated threshold for decisions that require the mint keys.
At the end of the day, I don’t think anyone is going to die on this hill. If the community will only be happy with the keys burnt… then burn the keys. Unity is more important. But let’s at least thoroughly discuss the pros/cons of each approach.
4. We don’t need mint + BABY
The mint is more important in the near term and does things that BABY can’t for years, and that’s if Yearn is successful long-term. I think BABY’s helpful in addition to the needed mint and is philosophically sound: successful start-ups have a much higher return on investment than their cost of capital. That’s why dividends are generally only paid from mature stocks – re-investment is accretive if you have attractive growth opportunities. Amazon still doesn’t pay a dividend because it finds higher-return ways to invest that capital than handing it back to shareholders, and that has been a good strategy for AMZN shareholders.
On the other hand, maybe crypto is a different kind of thing. Maybe stakers demand cash flows today and paying dividends is actually a great staker acquisition strategy. It would probably make sense to have a payout ratio in BABY where we can vote on how much to put in treasury vs pay out in staking rewards. I would love to figure out the answer to that question so that we can collectively make the right call / optimize over time.
Anyway, these are just my 2 cents. I hope we can continue the great discussions and debates. The community response and level of engagement has been really encouraging to see and I think it’ll meaningfully improve the proposal.
