I’m not a huge fan of some of what I see in this thread - that being a complete lack of consequential consideration. I am, however, a fan of those who are thinking about long term growth and viability.
It’s never a poor idea to have a full back pocket for the pursuit of new endeavors or operational costs, but, in a perpendicular stance to last time, I’d like to make the argument that we’d benefit far more from a more dynamic and less jarring approach to this - avoiding the 100% stop in cash flow to governance rewards. Hell, even 50% - at least not all at once. For perspective ~1500 USD/yfi annually, we’re looking at around 45,000,000.
The rate fluctuates greatly - assuming vault v2 and then outward expansion allow us to take on more TVL before diluting the yield to these levels, I’d say it could wind up (reasonably) doubling TVL as more non-stable assets are incentivized and being deposited.
It’s not difficult to imagine building upon the current TVL x APY% x FEE% amount when new vaults with multiallocational strategies are a play, vault framework and efficiency increases, and better frameworks being done allow contributors to turn towards expanding into other assets. But even then - let’s for a moment stick with 45,000,000-
How many people work on the project? Can we get an actual, circa grounded in reality, estimate for operational costs? For reference, 45,000,000 annually is enough to hire nearly half a thousand full time employees, at 100k a year, if yfi were to go the true decentralized route.
(where do I sign, says the dev who builds capital efficiency strategies for fun and is writing a blog post ~few~ will read)
What the hell are we going to spend 45,000,000 dollars on, some new houses for those who hold quorum? Before even beginning to aggressively pack away funds into a “growth vault” I’d love to know where we’re moving as an entity.
To begin, active participation in polling - some months ago - was so driven by hype, that cutting the fee emissions to governance stakers didn’t deter people from keeping their YFI locked simply to vote on the early foundation.
We’ve grown beyond that - if the growth rate with respect to time is significantly impacted negatively (Δδ < 0 :: {$YFI | APY} –> 0) and becomes predictably unfavorable for extended periods of time, we also now have the ability to utilize the asset to provide collateral in Aave, and take out a loan on it for capital efficiency and increased growth. One might argue that the number of participants that would move HK this would be inconsequential, but adding temporary sell pressure to the asset, coupled with those who seek to be more capital efficient as they have a smaller share by weight anyways, would mean that diversity and number of participants in voting would reach all time lows, and with it, a mix of good takes and opinions.
This above worse-case scenario would also create temporary sell pressure and throw a discount on the asset, which I’m sure those who control a larger share of the network and have disposable capital would really consider “…unfortunate.“
Without data on operational costs, grants, etc… I’ve got no idea what is appropriate in terms of what the project needs outright. Without knowing that I’ve got no idea what is a generous tack on, and what is a decent reserve target. What is the business attempting to push into for growth? How will the money be allocated there?
But to dump all of the revenue into a bucket, with very little information on expansion, set it on for several years, and watch a large portion of participating voters unstake or sell, begin sweating about reaching a quorum, and finish it off with the deepest pockets / multi sig access hugging us for discount representation to that cool 45,000,000$ aum network share.
Instead, let’s consider n sum of fees waiting for a distribution event, and some function f(n) represents the amount in a given time frame the chest should be given vs normal emissions to stakers and voters.
In my opinion, it would be much healthier to calculate the amount taken to the chest with respect to the TVL, time since last claim event, a specific target in mind, and a specific time frame we’d like to have it filled by. Set a target to fill, make a function of how we get there, and once attained, close the faucet. Use that as a performance data set and reevaluate from there.
That way we’d retain vote participation, potential v2 fee attraction, vote diversity, and not create a market event where half of the universe shorts this asset since everyone is an insider when it comes to public crypto governance
But what’s the worst that could happen, because we all know it isn’t the institutions that could possibly want to buy a discounted quorum… right guys?
Tldr - Need more data need more plan.