Bitcoin

Yearn.finance proposes a new strategy for YFI owners

The Yearn.finance community is making a proposal to reform the current YFI token economy. Popularly called “Buyback and Construction” or “buyback and construction”, The proposal aims to strengthen the treasury of the project while creating value for the stakeholders. Her list of authors includes Yearn’s top developers, Banteg, Tracheopteryx and Lehnberg, as well as Gabriel Shapiro, Partner of BSV Law and an occasional employee of Yearn.

Currently, Yearn.finance uses a stake and dividend model. Holders must insert their tokens into the yGov contract and receive a portion of the revenue generated by their performance strategies. This mechanism is similar to traditional dividends..

An alternative method of capturing values ​​that some use, such as: Manufacturer, puts the protocol buyback tokens on the open market and then “burns” them or withdraws them. This mechanism creates buying pressure on the price of the token. This ideally leads to a tight link between the success of the protocol and the price of the token and finally, the wealth of the stakeholders. This type of strategy has gained significant importance in the securities and cryptocurrency markets in recent years due to its flexibility and tax efficiency for holders.

Yearn.finance proposes a new strategy for YFI owners
Yearn.finance proposes a new strategy for YFI owners

Yearn’s suggestion suggests a slightly different mechanism, inspired by an essay by Joel Monegro of Placeholder VC. Instead of withdrawing the purchased tokens from the market, they would be held in the treasury to be redistributed for development and community initiatives. Future governance proposals could use tokens in the Treasury Department as funding.

The proposal emphasizes that the buying process must be continuous and automated, avoiding the possibility of premature execution or other exploitation mechanisms. From a financial point of view The proposal seeks to allow the YFI Treasury Department to take advantage of inflationfor example by staking out or reducing liquidity, without expanding its offer of 30,000 YFI.

However, The fact that tokens are expected to be in circulation again limits the effectiveness of this value accumulation strategy. This is largely by design: One of the motivations for activating the mechanism is Focus all resources on protocol growth. According to the authors, Yearn.finance is still too immature to be able to afford to pay dividends to its owners.

Other more practical advantages are: the ability of all tokens to participate in governance and earn protocol rewards. Staking out yGov would also allow the construction of more traditional revenue-generating vaults that the YFI token is involved in.

The proposal is still at an early stage. An informal survey shows more than 90% support among community membersHowever, the decision should be formalized through chain voting.

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