As per YIP-56, we periodically buy back YFI with a portion of protocol earnings.
We’ve been experimenting with different options such as market orders on DEXes, OTC deals and, most lately, auctions. Gnosis has recently unveiled their system for batch auctions which seems like a perfect fit because it allows to determine a fair price and it’s not susceptible to frontrunning and is not dependent on the time of the bid.
There are currently two live auctions to buy back YFI:
The batch auction mechanism is presented below:
In case of inverted price (i.e. DAI per YFI) it works like this:
- The auctioneer sets the maximum price they want to pay (e.g. 1 YFI = 404,789 DAI)
- Bidders bid any amount of YFI at the minimum price they’d accept (e.g. 1 YFI = 60,000 DAI)
- Orders are sorted by increasing price and tallied until they fill the requested amount at the price of the current order, e.g. if there are orders for 1 YFI each at 60k, 80k, 100k, 125k, they will all be filled at 125k, with the last one being only partially filled, and the remaining orders untouched.
Update: another explainer