I support the use of funds for the security and development of the project. Additional thoughts follow.
YIP 30 and YIP 31 are so intertwined that it is difficult to discuss them separately. I have made my opinion clear in the YIP 30 thread that that we do not need a 50k cap (it can be lower); whatever the cap, it need not be dolled out over 8 years (it can be given to the Multisig/DAO immediately); and that YFI need not be the incentive/reward for LPs (it could be aDAI, yUSDC, yCurve, or something else). Here I will focus on this last point. To attempt to keep the YIP 30 and YIP 31 ideas somewhat separated, I’ll assume that we agree to cap YFI at 50k (i.e., mint 20k more YFI).
YFI is divisible to 18 decimal points. We can have an unlimited number of YFI holders with whatever cap we decide. Any increase in YFI, however, will invariably dilute existing YFI holders. There may be good reasons for doing this, for example, to improve decentralization. Ok, current YFI holders will be diluted, and I am fine with that.
That dilution can benefit LPs or it can benefit the project. If it benefits the project, then all current the future YFI holders benefit. How? If YFI goes to LPs, then many of those LPs will sell, make money, and the YFI will end up in the hands of those interested in governing the project. There is nothing wrong with LPs making money, but those profits directly benefit the individual LPs and not the project. If, however, the YFI goes to the Multisig/DAO, then the Multisig/DAO enjoys those profits. This could be because there is a vote to sell some of the YFI or because the YFI earns rewards that go to the project for future uses.
But we need to provide incentives to LPs you say? Some would disagree – if Yearn products are providing attractive yields then no incentives are necessary. Let’s say LPs do need incentives though. Do they need YFI as that incentive or would incentives in the form of other tokens be valuable? There is no reason those incentives must be YFI. aDAI, yUSDC, yCurve, or other existing or to be developed tokens can provide any LP incentives necessary. If the Multisig/DAO held all 20k newly minted YFI, it would generate about 40% of all the revenue generated by Yearn. Without ever selling YFI, some of that revenue could be used as LP incentives. Some could be used to purchase more YFI from the market. Some could be distributed to YFI holders.
Governance is not diluted. Flexibility is increased. Additional value is retained by the project. If I am wrong, the YFI held by the Multisig/DAO could be given away directly, just as is being proposed now.