Read on Twitter
Way I see it, are two levels of incentive alignment for token based networks
1st is simple price exposure - if I govern well, network value and token price should increase
2nd is a little bit more complex and specific to each protocol - "skin in the game"
1st is simple price exposure - if I govern well, network value and token price should increase
2nd is a little bit more complex and specific to each protocol - "skin in the game"
Looking at $MKR or $AAVE, they have both of these features
Voters/gov participants are exposed to token price, but they also backstop their protocols with insurance
$UNI or $BAL have skin in the game in a different way - they backstop their protocol with dev funding and grants
Voters/gov participants are exposed to token price, but they also backstop their protocols with insurance
$UNI or $BAL have skin in the game in a different way - they backstop their protocol with dev funding and grants
even $ETH has skin in the game - minimum necessary issuance is basically ETH holders' commitment to backstop the network with dilution if necessary
skin in the game is absolutely crucial for token based networks to be sustainable
skin in the game is absolutely crucial for token based networks to be sustainable
$YFI holders have price exposure, but so far they do NOT have skin in the game
no protocol insurance for vaults
no inflationary subsidy for LPs
no backstop for dev funding and incentives
no protocol insurance for vaults
no inflationary subsidy for LPs
no backstop for dev funding and incentives
why would a contributor choose to participate in a token network that is purely extractive?
**note that "but muh salaries" is not a coherent response, devs built a revenue generating product which is able to cover their expenses, YFI token has still contributed nothing
**note that "but muh salaries" is not a coherent response, devs built a revenue generating product which is able to cover their expenses, YFI token has still contributed nothing
WRT higher revenue share for devs instead of minting
If devs are creating 100% of network value (they are), they should receive 100% of revenue
Granting devs a higher share of revenue they earned independently of the YFI token is not solving anything
If devs are creating 100% of network value (they are), they should receive 100% of revenue
Granting devs a higher share of revenue they earned independently of the YFI token is not solving anything
Bottom line, if YFI the token is unwilling to make itself useful to Yearn the network, it will be written out and forgotten
And then it can return to being a "completely valueless token" :)
And then it can return to being a "completely valueless token" :)
Now for one productive idea to deal with the impasse:
- mint a new revenue token and assign it perpetual rights to v1 vault revenues
- auction revenue token for YFI, grant to devs
- YFI token holders permanently give up v1 vault revenues, but avoid dilution
- mint a new revenue token and assign it perpetual rights to v1 vault revenues
- auction revenue token for YFI, grant to devs
- YFI token holders permanently give up v1 vault revenues, but avoid dilution
