The model for how full-timers at Yearn are compensated was set at the height of the bull market and no longer corresponds with reality. In light of this, we are changing how full-timers are compensated.
We were preparing for the bear with the intention of having 2 years of runway saved up. The treasury has successfully repaid $11m debt and managed to accumulate another $28m of cash over the course of 2021. The treasury currently has $18.1m of cash assets remaining.
This update to contributor comp will further help us towards our goal of improving Yearn’s financial health.
Since YIP-66, full-timers at Yearn received a portion of the protocol’s net income based on self-assigned percentages, which are reevaluated every quarter. If the protocol fails to hit the target, a floor compensation is enforced.
The previous parameters of 45% sharing and 2,000,000 DAI/month floor made sense at the time they were chosen, but now need to be changed to match the current market conditions.
When we don’t earn enough, the comp model falls back to a much simpler flat rate model, to free up the brainpower we need to turn the ship around.
Previously we were spending 1,419,342.9 DAI/month and 0 YFI/month on comp, not counting the 200,000 DAI/month sent to the strategists multisig to pay interns.
We are now moving to a flat compensation of 10,000 DAI + $10,000 worth of YFI per month per person. The YFI rate is adjusted once a month based on a 30-day VWAP.
This reduces the compensation spending to 230,000 DAI/month + $230,000 in YFI/month, which results in a 2.92x reduction in overall spending and 6.17x reduction in compensation spending.
Yearn has moved to streaming for most expenses since June 2022. You can check out the existing streams on LlamaPay.
Moreover, all budget requests are public since June, providing unprecedented transparency and accountability around the DAO’s monetary flows.
YFI Buybacks have been fully automated with Yearn being able to quickly fill any amounts by offering another trade leg to arbitrage bots and dollar-cost-average into YFI.