After a week of at times rancorous debate, an 11-author team of Yearn.finance core contributors and community members have submitted today a proposal to increase the supply of YFI by 6666 tokens — a quantity worth roughly $225 million at today’s prices.
The proposal is the culmination of a wider discussion about developer incentives for decentralized finance’s (DeFi) original yield vault project. While the Twitter discourse revolved around memes and namecalling, on Yearn’s governance forum debate of the pros and cons of a mint were far more sophisticated.
Community members analyzed team token allocations for popular DeFi platforms such as Aave, Synthetix, and 1inch, which tend to reserve around a quarter of token supply for team members and contributors, as well as the treasury holdings for these projects — treasuries which can be valued as high as $4 billion for projects like Uniswap.
Yearn, by contrast, has a $500,000 treasury, and 0% of the YFI token supply was reserved to incentivize the team during the project’s “fair launch” liquidity mining event.
While the fair launch attracted a fervent community, the team now argues that the lack of resources make it near-impossible to effectively compete with projects which can lure top talent away with massive war chests and generous compensation packages.
The token mint proposal seeks to rectify these flaws. The proposal, called “Funding Yearn’s Future,” calls for a one-time mint of 6666 tokens, increasing YFI’s current 30,000 supply by 22%.
Of those 6666 tokens, 4444 — roughly $150 million — will be used for the establishment of a treasury overseen by the Operations Fund and subject to Yearn’s governance, and 2222 would be used to compensate current and early contributors. A “Compensation Working Group” will be convened to determine the exact structure of the 2222 token distribution.
In an interview with Cointelegraph, semi-anonymous core contributor and co-author of the “Funding Yearn’s Future” proposal, Tracheopteryx, said that the Compensation Working Group will present a more complete picture of how the compensation tokens will be disbursed in the future, but the plan will “definitely” include a vesting schedule to protect the YFI market.
“Lots of ideas being discussed, the goal is to protect YFI holders from dumping via vesting while also finding something that works for the pace of DeFi,” he said. “We'd like the work group to be composed of both core contributors and yearn community and will be overseen by the multisig.”
Just two hours old, the proposal has attracted over a hundred yes/no votes, with over three-quarters of voters in favor of the plan. At the end of the week, the proposal will likely proceed as a formal YIP that YFI token holders can vote on.
In an interview last week, Tracheopteryx said that the process of debate has ultimately been an invigorating one.
"There is always a lot of noise and conflict in these moments [...] but I am far more moved by the positive creative energy exploding in our network."