YIP 30: YFI Inflation Schedule

Proposals YIPs
1

Simple Summary
Implement an inflation schedule of 20,000 YFI over the next 8 years, with 12,802 distributed in the first 3 years, ending with a trailing tail of 1% inflation.

Abstract

  • Update the YFI mint contract to reflect the new inflation schedule.

Motivation
To create an inflation schedule after the passing of YIP-0.

FOR : Implement an inflation schedule of 20,000 YFI over the next 8 years, with 12,802 distributed in the first 3 years, ending with a trailing tail of 1% inflation.

AGAINST : No changes.

Specification

  1. Inflation schedule to follow [YFI Inflation Schedule].
  2. Beginning annual inflation: 22.384%;
  3. Mint period duration: 1 week;
  4. Weekly emissions reduction multiplier: 0.9937;
  5. Week that terminal inflation starts: 416;
  6. Fixed % ongoing inflation (tail emission): 1%;

Rationale:

  • Liquidity provider yields are maintained at reasonably competitive levels in various YFI price and TVL scenarios (see modeling sheet).
  • Lower initial inflation (22%) to keep long-term rewards reasonable.
  • 8 year emission schedule to support long-term development.

Reference Links:

  1. https://docs.google.com/spreadsheets/d/1yomUGpAWR8svL9RXD-_vL2ArgQPGj1x2XPNKDEuZR9Q/edit?usp=sharing

Status: Proposed

YIP: https://yips.yearn.finance/YIPS/yip-30
Vote: https://ygov.finance/vote

8 Likes
2

I notice the new v2 Gov pool has rewards.

  1. Are these the same rewards as the previous rewards pool?

  2. If I stake the YFI in the v2 gov pool, will I be able to remove the BPT in the other Gov pool without effecting my ability to gain rewards?

3

strongly agree, voted “FOR”!

2 Likes
4

30k in a week and 20k over 8 years, yep cant see a future problem with that at all.

1 Like
5

If we do this YIP and YFI goes to 10 trillion per token, we will incentivize our pools massively above market rate.

6

I am a strong believer in no inflation without reason.

I’m therefore disappointed to be voting for inflation without knowing how that YFI will be distributed.

However, as I understand it, this will be held by the multi-sig until there is quorum on how to spend this distribution.

I will therefore place my trust in the community to spend this extra YFI responsibly, if it is to be spent at all. And vote FOR.

8 Likes
7

This does not set a fixed emission schedule to pools, or even mean that the YFI will be distributed to pools.

That is still to be decided.

My hope is the community remains flexible, spending inflation-produced YFI only when needed, and constantly checking that inflation is providing value to existing token holders.

2 Likes
8

Strongly in favor of this proposal.

1 Like
9

Ok I guess I like it more then. I’d still want the keys burnt after this though.

11

The earlier thread on a YFI inflation schedule ([POLL] $YFI Inflation & Reward Distribution Policy) was continuing to generate new ideas and perspectives (yes, including mine). It is unfortunate that it was closed. I invite those that shared ideas on that threat to contribute here. @n00b, @Joey, @karma9000, @Dark, @hc.link, @ceterisparibus, @iTo, @Manfred

Here is one of the replies I made to that thread.

What about a different way forward that may appeal to a larger group of us? There are clearly disagreements about inflation/distribution and related polices, but I am confident that from the most altruistic of us to the most greedy of us, nearly all of us want to see this project thrive. Here are some thoughts of a different mechanism. I am not committed to this, they are ideas for consideration and discussion.

Mint 12k YFI and put in the hands of the Multisig/DAO.

Sell 2k of that 12k YFI on the market over a set and publicly disclosed period of time (perhaps 250 each month over 8 months). Some of the proceeds could be used for immediate expenses (e.g., audits). Remaining proceeds could be invested in Yearn products to earn yield. This would be like dogfooding and would also show that we believe in the project. This may put downward pressure on the price of YFI for a short time, but would allow those interested in YFI an opportunity to buy in. At today’s prices that would inject approximately $8M for use by the project.

Remaining 10k of that 12k YFI could be staked for rewards (assuming this is where the community is headed). The YFI rewards pool (pool 4) was earning about $60k per week. Multisig/DAO would hold about 24% of all YFI (10k/42k) and could be expected to earn about $750,000 per year at that rate. If the use of Yearn products increases such that fees bring in twice as much, that would be about $1.5M / year for the Multisig/DAO.

In addition to the proceeds remaining from the sale of the initial 2k YFI. That $750,000 or $1.5M or whatever per year could be used for a variety of purposes. Audits? Dev funds? LP rewards could be paid as yCurve or yUSDC (or other y products). If YFI is determined necessary for a particular pool or for a particular time, those funds could be used to purchase YFI on the open market and then distributed.

This gets YFI minted; allows those interested in obtaining YFI to get in; and gives flexibility for paying expenses and also rewarding LPs with different types of incentives.

I am not convinced that we need as much as 50k YFI total, that the newly minted YFI should be dolled out over years, or that we should adopt a schedule to distribute YFI to LPs at all (I will reply to the new thread on YIP 31 for that discussion).

YIP 0 prevailed. Whatever the views before that vote, out of respect for the process we should accept that there will be more than 30k YFI. That does not mean that 50k is the right cap, however. I would suggest that something lower is more appropriate and that all of the newly minted YFI be directed to the Multisig/DAO.

It also does not mean that the additional printed YFI should be distributed according to an 8 years schedule (plus a tail). If the intent is for the Multisig/DAO to hold YFI, and for us to vote on distribution, why not distribute all the YFI now and allow us to vote over time. We are not 10 year olds waiting for an allowance. By distributing it to the Multisig/DAO now, we gain flexibility. In addition, the Multisig/DAO can enjoy a larger percentage of the rewards generated by the project immediately.

3 Likes
12

Thanks. Ill reiterate my view briefly: i am in the no print camp. I do want to reward LPs. Currently 100% of aDAI reserves goes to YFI holders, this could be redirected towards LPs to provide slightly better rates than any competitor. Other option from my viewpoint is releasing a secondary token that shares in rewards but not voting as the incentive token which will also redirect some of the aDAI pool. None of this requires a YFI print. Same for using aDAI funds to govern essentially “living within our means”. Note: I invested, not farmed.

Edit: to those saying we must print because of yip0 i would add 5 YFI printed that goes directly to Andre for appreciation

13

Great work! I don’t agree with the no-printers on this one. I see low emission as a great tribute to Andre, who left us with an indelible message in launching the YFI token reward, " Don’t buy it. Earn it." I believe there should always be avenues for those who want to “earn” YFI to do so in the future. And capping inflation at 50k (with tail emission of 1%) is a great way to allow new users to “work for” (=farm) YFI.

So, I wholeheartedly support this proposal. However, I think work still needs to be done on how this inflation is to be spent. Don’t necessarily think the arbitrary 50-50 split between LPs and Ops is ideal. I think emissions should start nonetheless; they can be locked in a contract to be retroactively distributed according to a more thought out distribution proposal.

To be clear: I am FOR YIP 30 & AGAINST YIP 31 (as it stands).

1 Like
14

Just voted against. I’d encourage everyone else to do the same until a higher emission proposal is submitted. YFI is known for fair token distribution and YIP30 undermines that.

No to YIP30, Yes to YIP31

1 Like
15

I think is is okay, while I am generally against inflation, I am willing to make a concession here. The amount of inflation (40% over ten years) will not have a significant impact on price of YFI, and it will not have a dilutionary effect on governance of yearn.

I think it is in the interest of the community to vote FOR prop30. Passing a reasonable emission model will ease concerns of many, and will allow us to move on to other pressing issues, such as setting up a robust DAO. I think the passage if prop30 will reflect positively for YFI, as the proposed model is reasonable and out governance and initiative is proving effective.

Having some weak inflation is not the end of the world for a rapidly growing protocol, and we can use it to our advantage. Incentivising LPs is good in the beginning, and large LPs who are taking risk should be rewarded with governance. I like the idea of bringing farmers back into yearn with a bit of incentive.

I am also FOR prop31, which allocates 50/50 to LPs and the multisig. This weak degree of centralisation may prove to be beneficial later on. The proposed emission rates to LPs would then be of order 3k coins over year one, which will easily be consumed by growth with virtually zero impact on price. I withhold however, that tokens allocated to the multisig should not be able to vote.

Prop 30: FOR
Prop 31: FOR

1 Like
16

For even knowing the keys will live on? This could be the first of many

17

I am AGAINST any emission outside the 50k prop 30 model.

2 Likes
18

If this is just one of many votes for more inflation, are you still ok with it?

Also, 40% more YFI outside the Multisig/DAO appears to be a dilution on current governance of yearn. Put that 40% inside the Multisig/DAO and prohibit it from voting, and yes, there is no governance dilution.

1 Like
19

No. Only one move to the 50k model and that is it. I will leave yearn if additional inflation is proposed outside the context of prop 30.

2 Likes
20

I understand where you are coming from. Not only could there be additional inflation; we could also vote to change the emissions schedule. I’m all for flexibility, but that level of uncertainty will harm adoption and bring ongoing debates/votes that will undoubtedly take focus away from other issues and drive wedges between groups in this community.

1 Like