YIP Allocate Andre a Portion of Current Protocol Earnings

Summary:
Allocate 33% of weekly protocol earnings (~$20k) directly to Andre as compensation. The other 67% (~40k) is allocated to an operational expense fund.

Abstract:
Yearn.finance is currently generating roughly $60k in weekly earnings. These earnings are distributed to YFI holders who vote on recent proposals. This proposal would allocate 33% of weekly earnings directly to Andre as compensation; the other 67% to an operational fund used for audits, UI/website improvements, contract deployments, technical documentation and/or user guides. Weekly earnings would be distributed to the multi-sig to hold the 67% and send the other 33% to Andre.

Motivation:
In response to a recent article (https://decrypt.co/37995/exclusive-yfi-andre-cronje-broke-quitting-defi?utm_source=twitter&utm_medium=social&utm_campaign=auto ) it has become apparent that a portion of the protocol earnings should be immediately set aside for developer compensation, audits, UI improvements, smart contract deployments, technical documentation and/or user guides that will help users correctly utilize yearn.finance products.

Specification:
Protocol earnings will be distributed to the multi-sig wallet, which will directly send Andre 33% of weekly earnings. The remaining amount will be set aside for audit expenses, UI improvements, contract deployments, and/or costs related to the creation of technical documentation.

Earnings will be allocated to this fund until they reach $500k. Once $500k is accrued in the treasury, protocol earnings will no longer be diverted to the multi-sig and instead will be allowed to be claimed by YFI holders in the governance contract (current model).

Expenses under $50k and used for the items mentioned above do not require a governance vote; however, single expenses over $50k and not listed above would be voted by governance before spent.

For: Reallocate earnings in the manner described above.

Against: No change to the distribution of protocol earnings.

  • For
  • Against

0 voters

I think this need a lot more thought to be honest.

The numbers sound out of thin air, not to mention that removing the incentive for voting on governance proposals will dilute the voting pool and effectively lead to more centralization. That incentive is there to be a small incentive to remain in the voting for those not holding a large share.

I do not disagree that Andre deserves compensation and that a portion be distributed to treasury for use on audits and other costs the protocol needs. $50k for a non vote seems like a bit, let’s be more specific. Outline the audit teams we can use, their average cost for audit costs, history etc. We need to be as specific as possible with some of these proposals or risk larger issues.

Happy to discuss terms around how this can work. I have stated before potentially allocating a larger amount of the % upfront that scales back over time to allow a large pool of Capital to be captured early and as the protocol grows and the fees grow while the % reduces the amount of capital will hopefully be consistent.

Anyway lots more to discuss here still I believe.

2 Likes

Agree with intent.
Numbers feel like they are emotionally driven.

Has anyone asked Andre what he wants?
My impression is that he just wants to build cool stuff. I resonate on the design side.

There will come a point in the future where YFI will have to ask how dependent on Andre should the project be. When will one become many beyond that of governance?

I agree with using cashflow to fund development. Growing the team and project.

In response to Andre’s comment on the recent Bankless podcast, I both earned and bought YFI. I earned what I could, I bought to have more say. More of a voice. But I hear you. @andre.cronje Having bought, I do want to reduce my cost basis, which relies on the dividend. It’s a mental battle.

Again to Andre’s comment.
I agree with monthly or quarterly dividends if there are any. Monthly would be ideal imo bc at least those of us putting time in with Governance feel like we too are rewarded.

I agree that cash flows should build the project first and ensure Andre (and a team he creates) are well compensated. But I’d like Andre to state what it is he thinks is fair.

Time to turn off.
It’s the weekend and I need to give some time to my family too. It’s not all about yield you know.

Best to all.

Good point. Andre’s contribution should be acknowledged and awarded.

1 Like

Initial post just meant to be a introductory proposal with some of the specifics narrowed down. Perhaps 33% is too much, but how much is sufficient? Right now it is zero, maybe a happy medium is $10k monthly. That should be sufficient to give some compensation.

Smart contract audits are approximately $20k per contract and he is launching 4-5 weekly. The $50k limit was meant to reduce time constraints related to governance votes (i.e., initial forum discussions, then a 3 day on chain vote). Can be lowered, however, what would you suggest $30k?

Happy to hear more discussions and input. One thing I didn’t mention is that this would likely be a temporary implementation (3 months), until a more sustainable, formal budget plan could be discussed and implemented. But I think we should get something rolling and on-chain soon.

1 Like

I am collecting on-chain data to get exact numbers for fees. Please, wait a bit with proposals.

I appreciate that forum wants to give money to Andre and cover other expenses but we need exact numbers. I’ll make them public as soon as we have them.

8 Likes

How long until Delphi/Gauntlet complete their analysis? We all want to reward Andre for the tireless brilliance he’s put into the protocol, but it may be worthwhile investing time invested in a well thought out compensation plan. The community rallied with grants and offers of financial support, but he’s returning all $.

Some things to ponder…

  • Ask Andre what his preference is.

  • We could allocate a one-time payment/advance for retrospective earnings

  • Although the YFI token is a bit contentious, perhaps a combination of fees + future YFI once Delphi/Gauntlet complete their analysis is best

  • Incentives for new strategies

The idea of a ceiling for the treasury e.g $500k that is when the cap is reach funds are then dispersed to the holders, when used funds are diverted until replenished. As time goes on we can raise this ceiling if needed.

2 Likes

Yeah I would support this and makes a lot of sense to keep treasury funded, while at the same time allowing holders to still accrue fees. I’ll update to include this specificity.

1 Like

@DeFi_Ted Great call! Ceilling treasury is exactly what’s considered now. Need data to support this idea, though.

Personally, see no use in money sitting in treasury when they can be sprayed on YFI holders.

1 Like

Agree with Andre need to be compensated accordingly.

The idea for a ceiling is not mine but one in raise by @iTo when discussing how allocating funds for a treasury should work. This idea is sound, depending on how long funds stay dormant there could be a vesting period in which allotments are paid out etc. Or open up other opportunities with the funds as the protocol progresses.

2 Likes

Thanks for making this concrete, @milkyklim.

Building off @acedabook’s post, I’m curious what other community leaders think the next few weeks should look like.

From what I can tell, it seems like as long as we have numbers that are getting us in the ballpark, we don’t need to have the perfect yip right now - we just need something that will broadly direct earnings toward audits and Andre as an emergency stopgap. The particulars can be adjusted and fit within the context of a larger and more nuanced framework later, as it seems like people are still studying what an ideal and holistic budget/incentive system might look like.

2 Likes