I’ve intended to get more involved on this forum, and this looks like a good place to dive in. For a little background, I found my way to Yearn a little after hearing about the immaculate conception and the initial airdrop, and have a background in startups, corporate finance, and macro. I supported the growth mint in February.
I think this discussion should be more explicitly connected to the larger vision of what Yearn aims to be, and also to the narrative of how to communicate that - including why the token has value - to the intended audience.
As best I can tell, there aren’t any normies around these boards, and few of them seem to have used the protocol directly to date. If so, perhaps they are not an intended audience to focus too much energy on. This is not a criticism of Yearn at all, but a recognition of the empirical reality and the role Yearn seems more likely to play in the future of DeFi. Active vault unique users are in the low thousands. Ethereum scaling progress and gas fees are also not likely to be ready for the normies soon. All of which is to say that addressing their unit bias, which is truly absurd to see on a daily basis (EOS volumes even pumped into a top spot this week) is probably to confuse the narrative unless we are interested in the price action pump and even higher volatility than the past. Plus, the sentiment and many great ideas shared here seem to favor incentivizing governance. Holders need to be capable of understanding how this complex protocol actually works. This is a challenge even for sophisticated investors who are just now in the process of starting to understand Ethereum. Woofy is already available and meme-worthy and can be revived. Beyond that, I’m not sure addressing unit bias is worth the effort (or the cost to the unique YFI narrative).
Should Yearn more tightly focus the narrative on being a DAO-to-DAO and DAO-to-B protocol? I see it as possibly being a pervasive middleware and liquidity sink that offers the highest yields, and can abstract away all of the hard, complex inner workings of DeFi for other protocols built on top and for more consumer-oriented applications to come. This would be a significant moat. I am also in favor of solutions with built-in insurance to abstract that away as well. If this is the intended audience, tokenomic design and narrative should be focused on it. The DAO-to-DAO story is the most immediately clear to me.
With respect to DAO-to-B, sophisticated investors will be starved for yield for the rest of this decade of financial repression. Real rates have reached historic lows, and even high yield corporate bonds now yield negative real rates. These investors also currently have all of the liquidity. Yearn can choose to position its narrative as a solution, and the story of why the token has value can be interwoven with that. If the protocol wants a non-extractive relationship with its token holders, what tokenomics would further incentivize real world funds to deposit billions in capital into the protocol? What narrative could we clearly communicate to this audience? They way corporations return cash in this era is via buybacks. Appreciation is also more of the narrative these days than boring old dividends. For the record, I am not in favor of KYC or having to worry anything about permissioned CeDeFi.
I’d also be very interested to hear opinions from LeXpunK on the regulatory risks of making various types of changes to tokenomics.
To comment briefly on the talk of additional minting above, the current treasury looks healthy, the protocol is already quite profitable, and I view the likely trajectory as follows: revenues growing exponentially with expenses growing linearly. Yearn is positioned to generate substantial cash flows. This is part of the narrative that the TradFi audience will come to understand. This is also why we don’t need VCs and don’t need to think like a conventional start up. In addition to the strong income statement and cash flows, if we can also design a better way to incentivize token appreciation, we can also grow the balance sheet strategically through treasury holdings.
To reiterate, I think we’d be best served to focus on how we weave this into the overall narrative, and the narrative probably should be capable of being communicated beyond DeFi natives. Yearn has the best origin story in all of DeFi, and it continues to do very well. Token value accrual needs to be a clear part of that story. Which also means it shouldn’t be meddled with often, and shouldn’t be too complicated.