To direct the impacts of capital injections towards governance and devs while minimizing impact on the “free-loaders”. Since this has been brought up in a number of occasions by devs such as @banteg.
Make YFI participating in governance elastic, which captures the impact of capital injections for governance participants, protects participant voting power, and maintains investor capital.
Make the supply of governance participating YFI elastic by targeting the MC of unstaked YFI to a rolling average. This way, voters (primarily people who are responsible for decisions, and ideally devs) can directly capture market movement. This also lessens the impact of capital injection being divided across all YFI holders (specifically those who don’t contribute to governance).
Currently, direct capital injection (entities doing large YFI buys) benefit all YFI holders equally (through price=market cap/total supply). However, by making only YFI that participates in governance elastic, impacts of capital injection won’t be equally distributed among all YFI holders. Instead, it will disproportionally benefit governance YFI compared to YFI that doesn’t contribute to governance.
This way, everyone who contributed to governance will still have the same proportion of votes compared to other participants before the injection. And those who don’t contribute to governance don’t lose value denoted in USD, but loses some voting power in proportion to total supply (but their main interest is in token price and not in contributing towards governance anyway).
The target price of the elasticity should probably not be set at a constant value, but something like a rolling average over the past week or month. This way, token holders not participating in governance is still affected by the project. How fast the supply should target this moving average is up for discussion.
Of course, we still need a good way of figuring out what constitutes participation. The earliest form of this consisted of participating in the latest YIP, but we ran into a problem when there weren’t enough YIPs for people to vote on. This should be up for discussion since I don’t think elasticity should reward people who simply park YFI in governance but don’t contribute (or else everyone will just park their YFI in governance and trade some wrapped token instead).
No polls atm, this should be fleshed out more before signalling is even possible.