YIP-56: Buyback and Build

It seems we have 3 different proposals + a pact from @Banteg that are essentially trying to accomplish the same thing reward, and further incentivize our excellent developers.

  1. Rethinking Capital Allocation @RyanWatkins
    (Passed, but is now closed, I don’t know what the state of development on this one is)
    TLDR- If the community were to enact this proposed YIP, we would use system income to buy back YFI to then use to reward different stakeholders for providing value to the Yearn ecosystem, instead of just distributing income to YFI stakers

  2. Developer Incentives@yfi_lit
    TLDR- A one-time issuance of 1k YFI for our core developers to distribute amongst themselves.

  3. Bantegs YFI Pact
    TLDR- When signed, Yearn Pact mints 666 YFI per year over 5 years, making the terminal YFI supply 33333 YFI. The contract is meant to be set as YFI token governance.

  4. Buyback and Build
    TLDR - (I hope you read because you’re here)

  • 1. Replace YFI staking rewards with YFI buybacks, until further notice.
  • 2. Enable YFI that’s actively being used in ways that bring benefit to Yearn to participate in Governance.
  • 3. Retire the YFI governance vault (yGov).

There’s clearly a divide in preferences between our developers and the HODL’ers (Disclaimer I’m a very small HODL’er who can’t code)

I haven’t read anything from any credible posters in these proposals from people who don’t want to increase the dev teams compensation, the disagreement seems to be on the best way to do that.

@DCinvestor raises good points regarding incentive alignment (Use 25% of the Buyback YFI to replace the rewards that are currently being issued to prevent burning the token holders, while still giving the Devs a larger piece of the pie they’re creating), and a periodic re-up to ensure the buybacks are working to everyone’s satisfaction.

I think some of us forget that the team is currently being paid monthly with yUSD (not enough for the value that’s being provided, hence all the proposals to give them YFI)

I think their yUSD salary would limit the amount of YFI devs would sell. This would mitigate the negative price impact.

I don’t think we run the risk of our developers picking up and running off the second they receive their chunk of the YFI, because they’d be abandoning a ton of their hard work (on YFI, and all of it’s integrations)

I say all of that to say this:
I think that an ongoing repurchase of YFI that’s used to compensate with some kind of vesting period for devs and reward holders (The split between which can be adjusted dynamically) is more favorable to me than minting more YFI, and seems to be more sustainable vs a minting scenario, and aligns both groups with long term incentives, we all want Yearn to be thriving in 10 years.

4 Likes