Now that we have a YFI vault, I think there are a decent number of people who would like to be able to use their yYFI tokens for governance. I have gone back and forth on this in my head, and ultimately I don’t see many good reasons for it.
The best argument is that YFI token holders should be able to optimize yield on their YFI, and allowing those to vote while doing this will help encourage voting and won’t split farmers vs voters. However, instead what I think may be best is to rethink how we use the funds earned from yearn, paid out to YFI voters. Personally, I really don’t like that a large chunk of YFI is being designated currently to a single protocol (CREAM). I don’t think the CREAM protocol would actually use them to vote, since they then wouldn’t be able to return them to their users (and honestly I doubt they can use them to vote based on the staking contract they use), but so many tokens being in one external location is still a bit worrying.
I think perhaps the clearest solution (and the one that is most likely to work) is to incentivize locking up YFI and voting with it to an extent that it is the most profitable option for farmers (or at least risk-adjusted). This would likely end to the YFI vault being deprecated, as it would no longer be the most profitable option for staking YFI.
Currently, yearn only takes 0.5% on withdrawal. Should we think about increasing this? With ROI of 25% or greater for the vaults (except YFI), this would be still inconsequential for users if we increased it to 1 or even 2%. Alternatively, we could think about adjusting this to be a percentage of profits– so that way we would be taking more from the higher-yielding vaults, but since these vaults are yield so much the users likely wouldn’t care.
I think it also may be worth adding an option to use yCRV vault earnings to buy YFI and pay this out if you are also staking YFI for governance (so instead of receiving yCRV interest for your yCRV vault, you would get YFI). That way we are earning YFI, increasing our holdings, and more importantly it is going to those most likely to hold and use YFI for the original intention– governance of the protocol. I’m guessing this would require a separate vault/strategy, but it could be interesting to work out and I think would really benefit the protocol and YFI holders alike.
Let me know your thoughts!