text:
---
yip: 55
title: Formalize the YIP Process
status: Implemented
author: Franklin (@franklin), Dudesahn (@dudesahn)
discussions-to: https://gov.yearn.finance/t/yip-55-formalize-the-yip-process/7959
created: 2020-11-12
---

## Summary

The purpose of this proposal is to standardize the Yearn Improvement Proposal (YIP) introduction, voting, and implementation process that governs the Yearn Finance protocol.

## Abstract

This proposal formalizes the process for introducing, voting, and implementing YIPs. Valid proposals are to be discussed for at least 3 days on Yearn’s [governance forum](https://gov.yearn.finance/) 6 and include a forum poll to gauge sentiment. If after three days there is a 25% “For” vote in the forum poll it will then move to formal voting via Snapshot. In order for a vote to pass it must have a majority support (> 50%) after at least five days of voting. Following a successful vote, necessary changes will be implemented by Yearn’s protocol or operations team and signed by the multi-sig, if necessary. Changes to this policy, including quorum requirements or what constitutes a majority vote, can only be enacted by a valid YIP that overwrites this policy.

## Motivation

Although there are several informal standards governing the YIP introduction, voting, and implementation process there is no single, clear policy. Recent proposals have not followed the quorum requirement defined in [YIP-12](https://yips.yearn.finance/YIPS/yip-12) 5. Additionally, no YIP or formal policy has been implemented that specifies votes conducted via Snapshot are formal and binding. This YIP would define and formalize the process in order for proposals to be valid and binding, and reduce any confusion in the YIP introduction and voting process.

## Specification

**_Introducing the YIP_**

In order to submit a potential YIP for voting a user must first create a thread for the proposal on the Yearn governance forum (https://gov.yearn.finance). Complete the auto-populated fields that appear when creating a proposal on the forum. A screenshot of these fields are below:

![](/YIPS/assets/yip-55/figure1.png)

Additionally, the thread should include a poll from the governance forum to gauge interest from the wider governance community. After the thread has been on the governance forum for at least 3 days and has received over 25% “For” votes it can proceed to formal voting via Snapshot. This allows the community to suggest potential changes to the proposal before it moves to the formal voting phase on Snapshot. Please do not assign your proposal a YIP number; numbers will be assigned by moderators prior to a vote taking place.

If a proposal was introduced on the governance forum and achieved at least a 25% “For” from the poll but is not submitted to Snapshot within 30 days, the author of the proposal must re-submit the proposal to the governance forum and restart the process. This ensures that proposals that previously received support from governance still retain support from the community.

**_Formal Voting Phase_**

Snapshot is used for formal, binding votes. The user who authored the YIP will also create the Snapshot proposal using this link ([Snapshot](https://snapshot.page/#/yearn) 8). Snapshot requires 1 YFI in a user’s wallet to create a proposal. If the author does not meet this requirement then contact a moderator who will submit the proposal on your behalf. Before creating the Snapshot vote, please wait for a moderator to assign your YIP a number and begin your Snapshot title with it.
A previous version of this proposal called for a minimum of 72 hours for voting, and a 20% quorum requirement. In response to feedback that a quorum requirement might be difficult to quantify and could lead to time-consuming rallying of apathetic voters, we have instead opted to extend the minimum voting window to 120 hours (5 days), with a maximum length of 7 days. This extension period, coupled with an active communication of YIPs via the governance forums and on social media should help ensure that no YIPs slip by, or malicious ones are approved. 5 days is sufficient time for the wider community to participate.

The block selected for the Snapshot vote should be a block close to the Snapshot submission. In order for a vote to pass it needs to have a majority approval (>50%) by eligible voters. The eligible vote is defined as YFI held in the governance staking contract and the yYFI vault at the time the vote is proposed on Snapshot. If the Snapshot vote does not meet a 50% majority approval then the vote is rejected and no changes will be enacted. Authors of proposals that are rejected may resubmit their proposal, but should include significant changes that address issues that may have prevented the YIP from passing during the initial vote.

### Scope

This specification aims to clarify which proposals should move to the YIP stage, how long they should be discussed for, and how long the vote should be open for. By only allowing proposals to move to YIP/voting after several days of discussion, we ensure that everyone’s voice is heard, and proposals should more accurately reflect community consensus.

Additionally, while some may think that three days is too short to adequately discuss a proposal, this is simply the minimum requirement. We expect most discussions to last for significantly longer than this (as they have in the past), with only a select few well-planned and researched proposals with near unanimous approval moving through so quickly. This proposal also will not stifle the open source protocol improvements that are made daily by dozens of Yearn’s contributors. It only aims to govern those proposals that seek community feedback and ratification as YIPs.

**_Other Uses for Snapshot_**

Snapshot may still be used for informal signal voting, including community contests, but its primary purpose will be to conduct formal, binding votes.

## TL;DR

1. All proposals must be discussed for at least 3 days with a forum poll before they will be assigned a YIP number and move to Snapshot voting.
1. The Snapshot vote will be binding, and must be open for at least 5 days. At least 50% must vote “For” the proposal for it to pass.
1. Most open-source protocol updates do not require YIPs; this process only governs those changes or proposals that wish to be discussed and enacted as YIPs.

**For**: Formalize the YIP introduction, voting, and implementation process as specified above

**Against**: Do not formalize the process. No changes made.

## Authors

@franklin @dudesahn

## Information

_Unavailable_

## Results

_Unavailable_

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

## Information

_Source: [Snapshot](https://snapshot.org/#/yearn/proposal/QmZA8zJtLPqQAHi1jMdYX9MdMQ1ZmtRP8zuHccm6HFSzpF)_

| Name          | Value                                                                     |
| ------------- | ------------------------------------------------------------------------- |
| Snapshot Space | [yearn](https://snapshot.org/#/yearn)                                    |
| Strategie(s)  | erc20-balance-of, yearn-vault                                             |
| Author        | 0x25B28EE7f335F0396f41f129039F1583345B21b8                                |
| IPFS          | https://ipfs.fleek.co/ipfs/QmZA8zJtLPqQAHi1jMdYX9MdMQ1ZmtRP8zuHccm6HFSzpF |
| Voting System | Single choice voting                                                      |
| Start date    | Nov 17, 2020                                                              |
| End date      | Nov 22, 2020                                                              |
| Snapshot      | https://etherscan.io/block/11275892                                       |

## Results

| Result | Value               |
| ------ | ------------------- |
| Yes    |                     |
| No     |                     |


text:
---
yip: 53
title: yAcademy
status: Approved
author: Ali Atiia (@aliatiia)
discussions-to: https://gov.yearn.finance/t/yip-53-yacademy-planting-the-seed-of-a-sustainably-secure-future-for-yearn-and-beyond , https://gov.yearn.finance/t/lets-poach-samczsun-and-plant-the-seed-for-an-auditing-academy/5507
created: 2020-11-11
implementation: https://yacademy.yearn.finance
---

# Simple Summary

We launch the yAcademy: a security wing tasked with auditing Yearn's contracts, attracting and retaining top talent, and eventually generating revenue by expanding its auditing services to the ecosystem at large. Mission: audit Yearn contracts in a collaborative and semi-structured process. Administrative costs are kept near zero, as the tasks of advocacy, event organizing, educational curriculum are handled by our partners at Gitcoin and Status. The yAcademy is net positive from day one since money that would have otherwise been an operational expense given to auditing firms is now an investment that should pay back the principle immediately (in the form of audits of Yearn contracts) and generate revenue eventually (once the team has expanded to offer services to the ecosystem).

yAcademy will be operated as a joint venture by the yAcademy partners—Yearn (through the Multisig Council), Gitcoin, Status and member-auditors (including the first five auditors to join). The alignment can be seen in the following figure:

![yAcademy incentive structure](https://aws1.discourse-cdn.com/business20/uploads/yearn/optimized/2X/4/4a46800d098c0f382f7cbb72147981fbd6e30bc0_2_690x408.png)

## _Glossary of terms_
**_Stakeholders_**: Yearn (through the Multisig Council), Gitcoin, Status, yAcademy permanent members (auditors)
**_Founding members_**: the first five auditors to join the yAcademy. They get membership interests in yAcademy.
**_Mentees_**: outstanding participants in the KERNEL program that complete the curriculum and show promise, they are invited to shadow audit in yAcademy in close collaboration with Founding Members and Yearn core team.
**_Menbership Interests_**: non-transferable governance and economic rights in the yAcademy joint venture.

## Abstract

The Yearn technical community is innovating at a rapid speed. Efforts must be made to mitigate software bugs. Auditing talent is currently scarce and will continue to be for sometime because the pace of innovation in smart-contract products is much faster than that of producing auditors.

The Yearn community already expends a significant amount of time negotiating audit contracts or coordinating one-off informal audits. Planting the seed for an auditing wing of Yearn will bring immense benefits in the short and long term. Money spent on audits is a realized cost, while money spent on yAcademy is an investment. Yearn has thus far this year spent more on audits/bounties more than the projected budget for yAcademy. By keeping administrative costs near zero, the yAcademy should be a net positive to YFI holders from day one. If structured and run efficiently, we should witness the rise of a new breed of excellent auditors that get vetted by going through the KERNEL program run by our partners at Gitcoin and Status.

The Yearn community should incentivise rising stars to stay and continue to work on Yearn contracts full time. As Yearn matures over-time, yAcademy can begin to offer services to the outside world. At that point, the yAcademy becomes a self-sufficient, and potentially massively profitable. To align incentives, equity in the yAcademy is distributed to YFI holders (65%), Gitcoin (10%), Status (10%), and the first five permanent auditors (5%, 4%, 3%, 1.5%, 1.5% to the 1st, 2nd, 3rd, 4th, and 5th members respectively).

## Motivation

-  Yearn is innovating at an ever increasing speed.

-  Software bugs are a matter of "when" and "how bad", not "if". We must make mitigation efforts.

-  Auditing firms are overbooked, they have financial incentive to speed up audits which can affect quality.

-  Negotiating audit contracts with auditing firms is a laborious and clunky analog process.

-  Audit contracts are very expensive.

-  Yearn is a hub of innovation and as a result should attract top talent.

-  Smart contracts will probably experience an even bigger cambrian explosion once the enterprise starts using permissionless networks such as Ethereum as a settlement layer. Hence, the yAdademy will most likely become a highly-profitable organization, thereby paying back all the investment put into it, and then some—this could lead to a new source of sustainable research & development funding for Yearn ecosystem grants.

- Yearn are better off having auditing expenditure be an investment that pays itself back and more, rather than a realized operational cost lost to auditing firms.

- Yearn has spent on security audits/bounties this year more than the projected budget for Yearn.

## Specification

The figure above summarizes the flow, responsibilities, and expectations.

### Overview

- The academy is governed by all of its stakeholders but not micro-managed. The day to day by the auditors themselves autonomously, in close collaboration with the Yearn core team and supervision of the multisig holders (with input from YFI holders).Gitcoin, and Status may get involved if major decisions are to be made.

- Start with 1 founding auditor, with the expectation to add 1-2 more at the end of each KERNEL-Curriculum-Shadowing iteration depicted in the figure above (2-4 iterations per year).

- Communication between auditors and mentees is kept as efficient as possible. No endless tm discussions, but rather a streamlined lines of communication using productivity software.

- Being a mentee in the yAcademy is trial-by-fire type of situation: mentees walk along the process of auditing a contract, receiving hints and/or assignments, results are shared in a certain format etc..

- Mentees join by invitation only, and are unpaid. A few select mentees are selected based from the cohort of ~100 participants in the KERNEL program, but may be invited from the outside as founding auditors, core team, and the community at large see fit.

- Mentees that show merit begin to receive rewards. If they continue shining, they may be extended an offer to become permanent members with competitive compensation and membership interests ( full membership interests to the first 5 founding members only).

- Yearn gets a 65% membership interest in the yAcademy in return for bootstrapping funding, sponsorship of KERNELs, and rewards to outstanding shadow auditors. The Yearn core team will be instrumental in the early stages of yAcademy to bring auditors up to speed and share their expertise. The remaining membership interests go 10% to Gitcoin, 10% to Status, and 15% to the first five founding members: 5%, 4%, 3%, 1.5%, and 1.5% to the 1st, 2nd, 3rd, 4th and 5th founding members, respectively.

### Rationale:

-  Traditional ways of education and collaboration are obsolete.

-  Invitation-only is an efficiency measure, to make sure time and energy is not wasted hand-holding mentees. But anyone who shows interest and meets the basic minimal requirements should get an invitation.

-  Merit-based: auditors that stick around and bring value are rewarded.

-  Synchronous communication is inefficient.

-  Some structure in the collaboration between mentors and mentees is needed to reduce time waste.

-  No time is spent authoring and delivering educational materials: this is a trial-by-fire type of situation, mentees learn by walking along the auditing process of **real** contracts.

- Membership interests ensure incentive alignments and reduces bootstrapping operational costs to the absolute minimum. By granting membership interests to founding members, yAcademy can stay competitive with the industry standard while not allocating too much money on salaries. At the same time, auditors are incentivized to perform well since yAcademy's growth means the growth of their membership value.

### Short-term operational outlook (1-2 years):

We expect a budget of ~150-200k in the first year out of the Multisig Council treasury, covering the funding of 1-2 founding members and including mentee rewards and kernel sponsorship. The second year's budget will be decided when the time comes, but is expected to not exceed the first year's significantly because the founding members may by then have reached a level where they can take on outside contracts for a premium, which then goes back to funding the yAcademy itself.

yAcademy may go through iterations as we learn and adjust during the first 1-2 years. Current stakeholders all have a track record of being good actor in the ecosystem, and so the happy case outlined in the figure above has a good chance of squeezing out incredible value for the stakeholders and the ecosystem as a whole.

# Vote

**Yes**: launch the yAcademy, allocate the budget, hire the first member, and start scouting for the second after the first KERNEL event Jan-Mar 2021.

**No**: do not launch yAcademy, keep the status quo of Yearn paying auditing firms and/or having the core team take on security and/or rely on white hackers to find bugs for bounties.

## Copyright
Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

repo_name: yearn/YIPS

repo_language: HTML

file_name: config

mime_type: text/plain


text:
---
yip: 37
title: Participate in CRV governance and 2.5x CRV reward boost
status: Implemented
author: Andre Cronje (@andrecronje), Artem K (@banteg)
discussions-to: https://gov.yearn.finance/t/pre-crv-rewards-distribution-liquidation-or-boost/2481

created: 2020-08-17
---

## Summary

Use early LP rewards to enable YFI holders to participate in Curve DAO governance and vote-lock them for 4 years to boost yVault CRV generation by up to 2.5x.

## Abstract

All vested CRV tokens earned by StrategyYfii will be vote-locked to give YFI holders voting rights in Curve DAO and to boost the rewards earned by yCRV pool.

## Motivation

yVault currently holds 609,688 CRV with 1 year linear vesting. Starting August 28th, 2020, we can leverage these rewards to increase CRV generation and greatly incentivize capital inflow into Yearn.

## Specification

### Overview

Funnel all the vested CRV into 4 year vote lock and enable delegated voting with it with YFI.

### Rationale

Forum poll snapshot:

- 80% Participate in CRV governance and 2.5x boost
- 12% Distribute to YFI treasury and holders
- 8% Distribute to yVault LPs

### Technical Specification

- Total early LP CRV rewards collected: 609688.7992009243
  - 0x8816B2Fb982281c36E6c535B9e56B7a4417e68cF = 1606.9780365084564
  - 0xBE197E668D13746BB92E675dEa2868FF14dA0b73 = 39433.37196717059
  - 0x2De055fec2b826ed4A7478CeDDBefF82C1EdFA70 = 568648.4491972453
- Vesting: from 2020-08-13 to 2021-08-13
- Unlocked per day: 1670 CRV

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).


text:
---
yip: 59
title: Temporarily extend Multisig empowerment
status: Implemented
author: lehnberg (@lehnberg)
discussions-to: https://gov.yearn.finance/t/yip-59-temporarily-extend-multisig-empowerment/9746
created: 2021-02-18
---

## Author

[@lehnberg](https://gov.yearn.finance/u/lehnberg)

## Summary

Extend Multi-sig powers by another three months until end of May 2021 whilst an in-progress replacement proposal matures further.

## Abstract

If adopted, this proposal seeks to extend the existing Multisig empowerment as was established by YIP-41[[1]](https://gov.yearn.finance/t/yip-59-temporarily-extend-multisig-empowerment/9746#References) for another three months until May 24 2021. This is done in order for a currently in-progress governance architecture proposal to mature further, and ultimately have longer time to be discussed in the community, prior to it being proposed.

## Rationale

The existing mandate expires on February 24 2021. As is stated in YIP-41, the Multisig was empowered for rapid decision making until the protocol transitioned to a "multi-DAO structure". A plan to decentralize power away from the Multisig, led by [@tracheopteryx](https://gov.yearn.finance/u/tracheopteryx), is in-progress of being finalized. It has been delayed due to recent Governance activities.

The three month extension would be used to introduce the proposal to the wider community, iterate on it further to incorporate feedback, without being rushed by the somewhat arbitrary deadline that the mandate expiration sets.

### Alternatives considered

#### Rush the new governance proposal

One alternative would have been to instead publish the current draft of the proposal as is, and hurry to have it adopted by YFI voters before the existing empowerment expires on February 24. The outcome of this process is uncertain. It is likely to result in a less mature YIP being adopted, if one is adopted at all.

#### Let mandate expire, replace with some alternative

Another alternative would be to let the Multisig mandate expire, and be replaced by some other Governance alternative. It is unlikely that a feasible alternative solution could be devised, proposed, and finalized in the little time that remains before expiry.

## Specification

- Extend the current Multisig authority and remit as was granted by YIP-41 for an additional three months, expiring on May 24 2021.
- Do not change or modify the existing mandate in any way.
- Any changes made by YIPs adopted after YIP-41 still apply.
- Further changes to the mandate can be made through Yearn's Governance process.

## References

1. https://yips.yearn.finance/YIPS/yip-41

## Information

_Source: [Snapshot](https://snapshot.org/#/yearn/proposal/QmdRCXH6BQpNcucoZqAtS5hQKjckE2428qiZoWjxmJXbs3)_

| Name          | Value                                                                     |
| ------------- | ------------------------------------------------------------------------- |
| Snapshot Space | [yearn](https://snapshot.org/#/yearn)                                    |
| Strategie(s)  | erc20-balance-of, yearn-vault, delegation                                 |
| Author        | 0x7A1057E6e9093DA9C1D4C1D049609B6889fC4c67                                |
| IPFS          | https://ipfs.fleek.co/ipfs/Qmb6gBzjvgLMazSrQQGVcjutLNdkVyM2Lh6yckMzdoaHWZ |
| Voting System | Single choice voting                                                      |
| Start date    | Feb 18, 2021                                                              |
| End date      | Feb 23, 2021                                                              |
| Snapshot      | https://etherscan.io/block/11884857                                       |

## Results

| Result | Value             |
| ------ | ----------------- |
| Yes    | 379.59 YFI (100%) |
| No     | 0 YFI (0%)        |


text:
---
yip: 72
title: Launch yETH
author: 0xkorin, 0xPickles
discussions-to: https://gov.yearn.finance/t/proposal-launch-yeth/13158
status: Approved
created: 2023-04-21
---

<!-- %% START OF YIP BODY %% -->
<!--You can leave these HTML comments in your merged YIP and delete the visible duplicate text guides, they will not appear and may be helpful to refer to if you edit it again. This is the suggested template for new YIPs. Note that an YIP number will be assigned by an editor. When opening a pull request to submit your YIP, please use an abbreviated title in the filename, `yip-draft_title_abbrev.md`. The title should be 44 characters or less.-->

## Summary

<!--"If you can't explain it simply, you don't understand it well enough." Simply describe the outcome the proposed changes intends to achieve. This should be non-technical and accessible to a casual community member.-->

Launch yETH - a permissionless and self-governing representation of a basket of ETH Liquid Staking Tokens (LSDs).

## Abstract

<!--A short (~200 word) description of the proposed change, the abstract should clearly describe the proposed change. This is what *will* be done if the YIP is implemented, not *why* it should be done or *how* it will be done. If the YIP proposes deploying a new contract, write, "we propose to deploy a new contract that will do x".-->

**If adopted**, this proposal seeks to:
* Ratify the Design Specification of yETH and endorse its deployment.
* Specify the bootstrapping and implementation process.
* Specify parameters and initial configurations.
* Specify functionality during normal operations.

## Background

Yearn ETH (yETH) is minted when users deposit into a basket of various ETH Liquid Staking Tokens (LSDs). yETH enables reclaiming the deposited value and, when staked, earning the associated Ethereum PoS staking rewards with a more blended risk/reward profile through diversification of LSDs.

With an ever-growing number of LSDs, each has different yield, risk, and decentralization profiles, as well as varying degrees of market liquidity. Diversifying and hedging staked ETH positions across these protocols to reduce the impact of one failing is challenging. Market pricing inefficiencies can lead to trading opportunities against the underlying backed ETH value of the protocol. Staked ETH in a standard liquidity pool is not ideal from a collateral perspective, as the pool is only ever as safe as the least safe LSD in it. Meanwhile, new LSDs may struggle to grow and attract enough usage and liquidity to be competitive against protocols with large market share.

yETH is conceived as a solution to these challenges.

### yETH in a nutshell

* The protocol functions as a Curve-style stable asset pool containing a dynamic number of assets. Unlike a Curve pool, the pool composition can fluctuate only within predefined ranges - each asset has a target weight as a % of total pool assets and a band within which it can fluctuate. This helps protect yETH's function as collateral in severe depegging or slashing events.
* Users deposit LSDs or ETH into the pool and receive yETH. Users burn yETH to receive LSDs.
* 1 yETH corresponds to 1 ETH staked in the underlying LSDs and owned by the yETH pool.
* Vanilla yETH does not earn yield. Instead, users stake yETH as Staked yETH (st-yETH) to earn compounded yETH according to the earnings of LSDs and other protocol rewards.
* Users can swap assets with the yETH pool, paying a fee to st-yETH holders.
* st-yETH holders govern all aspects of the protocol. They decide which LSDs to include in yETH, set the target composition of the pool, and configure protocol parameters.
* LSD protocols can use yETH as a liquidity source for their protocol. They can reward st-yETH holders for whitelisting the protocol in the yETH pool, for increasing the protocol’s relative weight in the pool, or increasing uptake and usage of their LSD.

### Design Principles

The yETH protocol is designed to be:

* **Self-governing.** yETH token holders (via st-yETH) control the protocol in its entirety.
* **Immutable.** yETH is not upgradable. Improvements require deploying a new version.
* **Trust-minimized.** No third-party should be able to access funds or alter the state of the protocol. Users remain in control of their own funds.
* **Autonomous.** Critical operation of yETH should not rely on any third-party individuals, group, or entity.

### Out of scope

Yearn contributors and YFI/veYFI token holders are not involved in:

- ETH staking.
- Operating ETH validators, Consensus Layer clients, or Execution Layer clients.
- Evaluating LSD protocols for yETH inclusion.
- Setting asset weights or altering yETH protocol behavior.
- Yield and product performance. This is determined by the protocol's configuration, which is governed by its users.

## Motivation

<!--This is the problem statement. This is the *why* of the YIP. It should clearly explain *why* the current state of the protocol is inadequate.  It is critical that you explain *why* the change is needed, if the YIP proposes changing how something is calculated, you must address *why* the current calculation is innaccurate or wrong. This is not the place to describe how the YIP will address the issue!-->

### Use Case Examples

* As a **user**, I can hold yETH to potentially achieve a better risk-adjusted yield than any single individual LSD.
* As a **searcher**, I can arbitrage yETH when price imbalances arise to earn profits.
* As a **DeFi protocol**, I can accept yETH as collateral and enjoy greater guarantees around its value compared to any single individual LSD token.
* As an **LSD protocol**, I can incentivize my token's inclusion in yETH to increase demand and usage while raising awareness of my product.

### Future Possibilities

* Use yETH as collateral in other smart contract systems, including Yearn.
* Deploy yETH-related vaults and strategies.
* Allow third parties to optimize asset weights and allocation permissionlessly.
* Introduce new smart contract systems/protocols for various asset types.

### Risks

Some potential risks include:

* An LSD in yETH experiences severe depegging, failure, or exploitation.
* A critical flaw in yETH's design or implementation results in unintended behavior.
* Poor asset choices or incorrect protocol parameters by st-yETH voters lead to subpar performance and functionality.
* Unattractive yield due to increased competition in ETH staking, causing reduced demand.

### Alternatives Considered

- Creating a Yearn-themed ETH LSD: Rejected due to lack of perceived competitive advantage over existing protocols.
- Utilizing an existing pool design: Rejected as no existing designs allow stable assets to be swapped within bands while their composition is dynamically updated.
- Granting veYFI governance power: Rejected to prevent yETH from becoming reliant on third-party operation and functionality.

## Specification

<!--The specification should describe the syntax and semantics of any new feature, there are five sections
1. Overview
2. Rationale
3. Technical Specification
4. Test Cases
5. Configurable Values
-->
### 1. Design Spec

1. Approve the yETH protocol specification described in `SPECIFICATION.md` [[#1]](#References).

### 2. Role Assignment

1. **Treasury:** Yearn Treasury or an autonomous splitter contract directed by yBudget.
3. **Management:** yChad, to execute st-yETH voters' decisions only. Replaced by a smart contract after successful launch.
3. **Guardian:** "yETH-guard", a Gnosis Safe with a 2-of-7 signing threshold, consisting of Yearn contributors to monitor the protocol and trigger Pause mode if needed. Guardian participation is done on a gratuitous, volunteer basis–no duty of care or ongoing monitoring is assumed or implied.

### 3. Normal Operation Requirements

#### 3.1 Epochs & Voting

1. The duration of an Epoch is four weeks.
2. Epochs start every Thursday at `00:00:00 UTC`, aligning with Curve's veCRV epochs.
3. One week before the start of a new epoch is the voting period.
4. At the start of the voting period, a snapshot of st-yETH holders' voting power is taken, and st-yETH holders vote using this snapshot.
5. st-yETH voting power increases asymptotically weekly.
6. Vote weight of st-yETH tokens resets upon transfer.
7. There are three types of governance proposals:
   1. **Weight Allocations:** The distribution of yETH asset weight based on voter preferences.
   1. **Whitelisting Proposals:** The selection of assets for yETH inclusion.
   1. **General Proposals:** Suggested parameter changes and other matters.
8. Each voting period has one Weight Allocation vote and may have one Whitelisting vote (if there is at least one LSD protocol applying for inclusion), and any number of General Proposals to vote on.
9. General proposal submission occurs in a dedicated Yearn governance forum section.
10. Voting starts with Snapshot, transitioning to on-chain later.
11. No quorum requirements.
12. Fractional voting is permitted.
13. Votes are final and irreversible.
14. General proposals require a 2/3 qualified majority vote (66.66% in favor).
15. General proposals execute in submission order; later proposals override earlier ones.
16. No proposals are accepted during active voting periods.
17. At the start of each epoch, new assets are whitelisted, approved proposals are enacted, and weight votes are applied.
18. Yearn contributors may add proposal warning notes but are not required to. No proposal review process exists.

#### 3.2 Whitelisting

1. Whitelisting is the process of adding an asset to yETH's composition.
1. Only one new asset can be whitelisted per epoch.
1. The maximum number of assets in yETH is 32.
1. LSD protocols seeking whitelisting pay an application fee (in yETH) before the voting period starts.
1. The application fee is distributed to the POL Contract.
1. Application fees are used to seed whitelisted assets into yETH, gradually introducing them into the asset composition.
1. The yETH used for seeding is distributed by the POL Contract to st-yETH holders as yield.
1. During the voting period, st-yETH holders vote on asset inclusion (if any).
1. Voters may choose not to whitelist any assets, maintaining yETH's current composition.
1. The option with the most votes is chosen as the outcome.
1. LSD protocols may apply for whitelisting in multiple epochs, paying application fees for each attempt.
1. Whitelisted assets start with a target weight near 0%, gradually increasing to the Initial Weight parameter, adjusting other assets accordingly.
1. A Rate Provider contract must be deployed before the whitelisted asset's inclusion.

#### 3.3 Parameters

Default values of the parameters below can be changed by st-yETH token holders voting to pass General governance proposals:

| Parameter | Description | Configurable Range | Default |
|---|---|---|---|
| `t_half` | Time taken to accumulate half the voting weight | 7-365 days | 60 days (180 days to reach 75% voting power) |
| Weight to be voted on | Weight allocated to each whitelisted asset for voting on reallocation per epoch | 1-33% | 10% |
| Amplification parameter `A` | Same property as in a typical Curve pool, determines the sensitivity to pool imbalances | N/A | 450 |
| Tolerance range | Permissible deviation range of assets from their target weight (configurable per asset) | +/- 100% | +/- 5% for all assets |
| Application Fee | Fee to apply for whitelisting as an LSD protocol | 0-10 yETH | 1 yETH |
| Initial Weight | Initial weight assigned to a whitelisted asset | 0.1-1.0% | 1.0% |
| Pool Swap Fee | Fee charged for swapping assets with the pool, paid to st-yETH holders | 0.00-1.00% | 0.03% |
| Protocol Fee | Performance fee paid to Yearn Treasury | 5-20% | 10% |

#### 3.4 Incentives

1. yETH natively supports LSD protocols offering rewards as an incentive for st-YETH holders to integrate and support their respective protocols.
2. Any asset can be offered as a reward for passing a specific outcome of a Governance proposal (Weight allocation, Whitelisting, or Governance proposal).
3. Both positive (vote in favor) and negative (vote against) incentives are accepted.
4. Inventives can be posted during the three-week interval between voting rounds.
5. Incentives are not accepted during active voting rounds.
6. If an outcome doesn't occur, the poster can claim their incentive after the voting round concludes.
7. If an outcome occurs, incentives are distributed to **all** st-yETH voters who participated, regardless of their vote.
8. A 1% fee on successful incentive rewards is paid to Yearn Treasury.

#### Figure 1. Normal Operation Timeline
```markdown
|--week1--|--week2--|--week3--|--week4--|--week5--|...
| epoch 0                               | epoch 2...
| incentives for vote 1       | vote 1  | incentives for vote 2...
                              x st-yETH snapshot for vote 1
                                        x update yETH according to vote 1 results
                                        x distribute vote 1 incentives
```

### 4. Minting Permissions

Only three smart contracts are allowed to mint yETH:
   1. The Pool, holding LSD assets and minting yETH at a 1:1 ratio to the ETH equivalent of these assets.
   2. The Bootstrapper, used to launch yETH, with minting enabled only for a limited time period.
   3. The POL contract, providing protocol-owned liquidity in pools.

### 5. Bootstrapping Requirements

#### 5.1 Whitelist
1. Duration: 3 weeks
2. To be included in yETH bootstrapping, LSD protocols must pay a 1 ETH non-refundable fee, which turns into yield for st-yETH users.
3. Protocols then fill out a form with basic screening questions.
4. Yearn contributors review responses, filtering out fraudulent applications without evaluating protocol quality. They may add warnings, but their absence shouldn't imply support.
5. Screened LSD protocols are whitelisted for the bootstrap phase.

#### 5.2 Incentives
1. Duration: 2 weeks, overlapping the final week of whitelisting.
2. Incentive reward requirements resemble Normal Operation but prioritize votes for whitelisted LSD protocols during bootstrap.

#### 5.3 Deposit
1. Duration: 2 weeks, concurrent with the incentive phase.
2. Future yETH users deposit ETH in the Bootstrapper contract, receiving 1:1 st-yETH.
3. The contract logs its yETH debt.
4. Bootstrap st-yETH is locked for 16 weeks, unless the yETH pool is 'killed'.
5. At the deposit phase end, Bootstrapper disables deposits and yETH minting.

#### 5.4 Vote
1. Duration: 1 week, following Incentives.
2. Voting resembles Normal Operation but focuses on selecting LSD protocols for yETH at launch.
3. The top 5 LSDs with the most votes are included.
4. No single LSD can exceed 45% of the total pool weight.
5. If fewer than 5 LSDs apply, protocols with votes are included, and pool weight is assigned based on vote share.
6. Included LSDs have tolerance ranges of +/- 5%.

#### 5.5 Launch
1. Duration: 2 weeks (approx)
2. Incentive rewards are given to st-yETH holders who participated in voting.
3. Rate Provider contracts are deployed for each approved LSD.
4. 90% of deposited ETH buys LSDs for the initial yETH composition, as determined by voters.
    1. LSD purchases occur via yChad, using CowSwap and the Yearn SeaSolver (when possible) for best execution.
    2. Bought LSDs enter the yETH pool, minting yETH.
    3. This yETH repays the bootstrapper's debt (up to 90%).
    4. Surplus LSDs from market discounts are distributed as yield to st-yETH holders.
5. The remaining 10% of deposited ETH serves as POL.
6. A yETH/ETH Curve Pool is deployed.
7. A yETH/ETH Curve Pool Gauge is requested.
8. If a Gauge is approved, a yETH/ETH Curve yVault is deployed from the Yearn Curve Vault Factory.

#### Figure 2. Bootstrap Timeline
```markdown
|--week1--|--week2--|--week3--|--week4--|--week5--|--week6--|--week7--|...
| Whitelist                   |
                    | Incentive         |
                    | Deposit           |
                                        | Vote    |
                                                  | Launch
```

### 6. Protocol Owned Liquidity

#### 6.1 Initialization
1. Transfer 10% of ETH acquired during Bootstrapping to the POL contract.
2. The debt owed to Bootstrapper contract is repaid during POL operations or in case of a Full Redemption.

#### 6.2 yETH Minting and Usage
1. The POL contract can only mint yETH equivalent to its available ETH.
2. yETH minted for POL is exclusively used to provide liquidity in various protocols.
3. The POL contract burns yETH after providing liquidity.

#### 6.3 POL Modules
1. POL operations are managed via privileged function calls through POL Modules attached to the POL Contract.
2. Function calls are executed by a Gnosis Safe multi-sig managed by the yETH yTeam.
3. The POL Contract transfers minted yETH to POL Modules for operations.
4. Call capabilities are limited to predefined operations for ongoing POL management, prohibiting arbitrary actions.
5. The POL contract and POL Module contracts are immutable.
6. POL Module contracts can be attached and detached to the POL contract with st-yETH voter approval.
7. The POL contract can be replaced via governance proposal approved by st-yETH voters.
8. At launch, there will be a yETH/ETH Curve pool POL Module and a Full Redemption Module.

#### 6.4 Full Redemption Module
1. If yETH pool enters "Killed" state (via st-yETH vote), the POL contract accepts redemptions.
2. The POL contract unwraps LP positions and burns excess yETH.
3. Users can send yETH to the POL contract to redeem ETH.
4. Received yETH repays outstanding Bootstrapper debt.

#### 6.5 Excess Assets
1. Unused ETH from bootstrapping may be converted into LSD tokens and deposited into yETH, to improve yield for st-yETH holders.
1. Excess resulting from POL operations can be:
   1. Divested to st-yETH holders as extra yield.
   2. Reinvested into expanded POL operations, such as additional liquidity pools or protocols to increase yETH liquidity.

### 7. Implementation
1. After this proposal's approval, yETH begins the bootstrapping phase.
2. Yearn contributors are mandated to execute and deploy contracts according to the design specification in this section.
3. Once yETH is operational and functioning correctly, Yearn contributors are mandated to codify all operations on-chain using smart contracts, achieving full immutability.
4. The aim is to achieve full immutability within 90 days of yETH operation.

### 8. Use at Own Risk
yETH is designed to be governed by its token holders who decide on assets to onboard and configure the protocol. Yearn contributors and YFI token holders are not involved and will not compensate users for any critical failure or loss of funds resulting from yETH usage.

## References

1. https://hackmd.io/@0xkorin/BJDmRreMh

## Changelog
- _Apr 13:_ Original post
- _Apr 17:_ Explicitly permit POL to convert ETH position into yETH (6.5.1), Add changelog section

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

## Information

_Source: [Snapshot](https://snapshot.org/#/veyfi.eth/proposal/0x8969cde98d5d8a7be745e442a3288ce0cf3b35bf99ab72265f66c96d117a0f78)_

| Name           | Value                                                                           |
| -------------- | ------------------------------------------------------------------------------- |
| Snapshot Space | [veYFI.eth](https://snapshot.org/#/veyfi.eth)                                   |
| Strategie(s)   | veYFI, delegation                                                               |
| Author         | 0x2f5504C9AC9E3B26cBFd656627c3CbF39db7Bea6                                      |
| IPFS           | https://cloudflare-ipfs.com/ipfs/QmNxWT18NXKcvJJVbR63bYHSbKenw1oKP95wuzLM8dicrc |
| Voting System  | Single choice voting                                                            |
| Start date     | 2023-04-21                                                                      |
| End date       | 2023-04-26                                                                      |
| Snapshot       | https://etherscan.io/block/17094722                                             |

## Results

| Result | Value             |
| ------ | ----------------- |
| Yes    | 152 veYFI (100%)  |
| No     | 0 veYFI (0.00%)   |


text:
---
yip: 56
title: BABY:\ Buyback and Build Yearn
status: Implemented
author: banteg (@banteg), lexnode (@lex-node), lehnberg (@lehnberg), milkyklim (@milkyklim), tracheopteryx (@tracheopteryx), RyanWatkins
discussions-to: https://gov.yearn.finance/t/yip-56-buyback-and-build/8929
created: 2021-01-16
---

## Authors

[@banteg](https://gov.yearn.finance/u/banteg), [@lex_node](https://gov.yearn.finance/u/lex_node), [@lehnberg](https://gov.yearn.finance/u/lehnberg), [@milkyklim](https://gov.yearn.finance/u/milkyklim), [@RyanWatkins](https://gov.yearn.finance/u/ryanwatkins), [@tracheopteryx](https://gov.yearn.finance/u/tracheopteryx)

## Summary

Use YFI staking rewards to buy back YFI on the open market. Use bought back YFI for contributor rewards and other Yearn initiatives. Retire the YFI governance vault as it no longer has a use, opening up for it to be replaced in the future with a regular vault. Make it possible to participate in Governance even if one's YFI is being used elsewhere.

## Abstract

If adopted, this proposal seeks to:

1. Replace YFI staking rewards with YFI buybacks, until further notice.
2. Enable YFI that's actively being used in ways that bring benefit to Yearn to participate in Governance.
3. Retire the YFI governance vault (yGov).

This benefits Yearn as a whole by:

- Simplifying Treasury design and operation.
- Simplifying YFI token mechanics to equally align interests across Yearn stakeholders.
- Builds up a treasury of YFI that can be deployed through Governance for various uses.

This benefits YFI holders in particular by:

- Removing the need to stake YFI to enjoy rewards; in contrast to staking (which only benefits stakers), buybacks should benefit every YFI holder.
- Potentially making gains more tax efficient as capital appreciation through buybacks could be taxed less than dividend income through staking rewards.
- Allowing participation in YFI Governance even whilst the YFI tokens are utilized elsewhere, for example providing liquidity in SushiSwap.

## Motivation

### Previous proposals

This proposal comes on the back of previously made proposals and YIPs:

- The adoption of YIP-54[[1]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) formalized an Operations Fund and allowed for discretionary YFI buybacks.
- [@RyanWatkins](https://gov.yearn.finance/u/ryanwatkins) proposed a rethink of Yearn's capital allocation strategy.[[2]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) Arguing for protocol rewards to be used to buy back YFI rather than to reward YFI stakers, distributing protocol income as dividends would be a suboptimal capital allocation strategy given Yearn's stage of maturity. Instead, the proposal claimed it would be more optimal to use income to drive growth and asset appreciation instead.
- [@dudesahn](https://gov.yearn.finance/u/dudesahn) called for the existing Governance vault and strategy to be replaced with more conventional investment strategy.[[3]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) Utilizing MakerDAO to mint DAI, this would be used for liquidity mining. One part of the returns would be rewarded to stakers, and the other would be used to fund Yearn's Bug Bounty program and yAcademy.
- Joel Monegro (Placeholder VC) recently published the essay "Stop Burning Tokens -- Buyback And Make Instead"[[4]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) where he suggested that protocols should buy back and reissue tokens to incentivize growth rather than buying back and burning tokens to return value to token holders. This buyback strategy could be especially well suited for Yearn as the YFI supply is capped at 30,000, meaning that the initial conditions for Yearn's wealth distribution have been set, and no YFI can be further issued to incentivize growth. Such a "Buyback and Make" strategy could allow Yearn to receive the benefits of YFI inflation without any inflation.

### Rationale

![](/YIPS/assets/yip-56/figure1.png)

_Figure 1. Staking rewards earned over time (USD).[[5]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References)_

#### Replace staking rewards with buybacks

- More suitable at this stage in the lifecycle. It is unconventional to pay out returns in the form of staking rewards this early in a project's lifecycle. Typically this would happen at a stage where funds no longer can be allocated efficiently.
- Better aligns with YFI's use case. YFI is primarily intended to be used for the governance of Yearn. Token mechanics should cater to those who take interest in the protocol and wish to actively participate in its improvement, over those looking to passively collect staking income.
- Potentially more tax-efficient for YFI holders. The gains on YFI staking may be treated as ordinary income. In contrast, a buyback program enables growth in YFI while YFI holders should only be taxed on a capital gains basis for a sale. Results may vary by jurisdiction and this does not constitute tax advice; consult your own tax advisor.
- Recycles YFI that can be spent through Governance. The resulting accumulation of YFI in the Treasury could enable future governance proposals on the use of this YFI for the further benefit of Yearn.

#### Widen YFI accepted for Governance voting

- Acknowledge more uses of YFI for the benefit of Yearn. There are other ways than holding YFI in your wallet that can benefit Yearn, for example by providing liquity to a YFI pair on SushiSwap. These YFI are not allowed to vote in Governance today, but they should be.
- Remove capital efficiency and governance trade-offs. Similarly, there shouldn't need to be a trade-off between participating in Governance or utilizing YFI efficiently.

#### Retire the yGov vault

- Vault no longer needed. Without staking rewards, there is no need for a yGov staking vault that's tied to Governance.
- Staking returns are aenemic. At the time of this writing, the APY estimate is 0.9% annually [[6]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References). This is not competitive, and may even dissuade YFI holders from participating in governance. In comparison, Binance recently announced up to 4.49% APY for staking YFI.[[7]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References).

### Future possibilities

- Introduce contributor retention program, with vesting YFI rewards to create long term skin-in-the-game for existing and new contributors.
- Re-introduce dividends once Yearn has matured and protocol income no longer can be re-invested as efficiently into growth.
- Introduce a conventional vault for YFI, using the v2 vault design. Such a vault would not be related to governance or staking rewards, and would be free to pursue other, to-be-determined strategies.

## Specification

### Replace staking rewards with buybacks

#### Buy back YFI

- All funds that are used for YFI staking rewards are to be used to buy back YFI. Staking rewards cease until further governance action.
- Buybacks should be handled in a continuous and automated way, and not be discretionary or requiring any sign-offs.
- Care should be taken to avoid creating arbitrage or front-running opportunities. Detailed specification of design is left to the developers implementing.

#### Use of bought YFI

- There are no changes in how funds are spent.
- The YFI bought back flows into the Operations Fund established by YIP-54 and can be spent accordingly.
- Example of current spends include: Security audits, Bug bounties, Contributor funding, Grants, Gas reimbursment, Development overhead. See the recently published quarterly financial report[[8]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) for a detailed breakdown.

### Widen YFI accepted for Governance voting

- Link snapshot to use guest-list[[9]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) to determine which YFI is eligible for voting.
- This functionality is already supported and excludes protocols such as Aave which could be utilized in governance attacks. The list of supported protocols is configurable and is being reviewed continuously, improvements and suggestions can be submitted to the repo.
- Any YFI in the Yearn Treasury / Operations Fund is not eligible to vote.

### Retire YFI Governance vault

- Retire the ygov.finance[[10]](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929#References) staking vault and the YFI yVault YFIGovernance strategy that relies on it.

## Changelog

- Jan 13: Clarified voting specification to explicitly state that YFI in the treasury cannot be used to vote. [DL]
- Jan 16: Snapshot poll link added.

## References

1. <https://gov.yearn.finance/t/yip-54-formalize-operations-funding/>
2. <https://gov.yearn.finance/t/proposal-rethinking-capital-allocation/>
3. <https://gov.yearn.finance/t/proposal-yfi-governance-vault-yacademy/>
4. [Stop Burning Tokens -- Buyback and Make Instead --- Placeholder 21](https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead)
5. Data available upon request.
6. [yearn - stats.finance 6](https://stats.finance/yearn)
7. [Binance Staking Launches YFI Staking with Up to 4.49% APY | Binance Support 8](https://www.binance.com/en/support/announcement/de1dfcb0846a422a9d1f50f98ee0e8b8)
8. [yearn-pm/2020Q3-yearn-quarterly-report.pdf at master - iearn-finance/yearn-pm - GitHub 20](https://github.com/iearn-finance/yearn-pm/blob/master/financials/reports/2020Q3-yearn-quarterly-report.pdf)
9. [GitHub - banteg/guest-list 10](https://github.com/banteg/guest-list)
10. [https://ygov.finance/ 13](https://ygov.finance/)

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

## Information

_Source: [Snapshot](https://snapshot.org/#/yearn/proposal/Qmb6gBzjvgLMazSrQQGVcjutLNdkVyM2Lh6yckMzdoaHWZ)_

| Name          | Value                                                                     |
| ------------- | ------------------------------------------------------------------------- |
| Snapshot Space | [yearn](https://snapshot.org/#/yearn)                                    |
| Strategie(s)  | erc20-balance-of, yearn-vault                                             |
| Author        | 0x7A1057E6e9093DA9C1D4C1D049609B6889fC4c67                                |
| IPFS          | https://ipfs.fleek.co/ipfs/Qmb6gBzjvgLMazSrQQGVcjutLNdkVyM2Lh6yckMzdoaHWZ |
| Voting System | Single choice voting                                                      |
| Start date    | Jan 16, 2021, 10:00 AM                                                    |
| End date      | Jan 19, 2021, 10:00 AM                                                    |
| Snapshot      | https://etherscan.io/block/11667095                                       |

## Results

| Result | Value               |
| ------ | ------------------- |
| Yes    | 790.83 YFI (99.44%) |
| No     | 4.47 YFI (0.56%)    |


text:
---
yip: 64
title: Adjust fees on non-stablecoin yVaults
author: wavey, philbert, saltyfacu
discussions-to: https://gov.yearn.finance/t/yip-64-adjust-fees-on-non-stablecoin-yvaults/11716
status: Implemented
created: 2021-10-21
---

## Summary

Experiment with introducing a new fee structure for non-stablecoin* yVaults:
- 25% performance (25% increase)
- 1% management (50% decrease)

Some of the expected implications are:
- Improved profitability for yVaults with lower yields
- Reduced treasury income
- Unchanged incentive alignment for strategists

**Stablecoin = fiat-pegged tokens*

## Motivation

In DeFi, stablecoins are often able to generate higher yields than crypto native assets. Since the heights of "DeFi Summer" yield has slowed down on the Ethereum mainnet, and it has become common for non-stablecoin crypto assets to return in the lower single-digit APRs.

#### Opportunity Cost of High Fees
The current 2% management fee is a flat rate taken from invested assets over the course of a year. Therefore, if a strategy is earning 2.5% APR or less (after combined mgmt + performance fees), users stand to realize no profit on harvest. Yearn tries to avoid deploying funds in these situations which are unprofitable to users. The downsides to this are:
- all farms which earn between 0% - 2.5% APR become non-viable strategies
- in these situations, treasury earns no fee income
- creates additional management burden on Yearn operations to actively monitor strategy APR and react when it dips too low.

Finding 2.5%+ APR farms for crypto assets like ETH and BTC is difficult, especially for the scale Yearn operates at. Lowering the management fees on these tokens will help improve APR while also creating access to new farms.

#### Maintain Protocol Revenue by Shifting to Performance fee
For lower performing vaults, performance fees are a more attractive option because . to anything below 100% will not result in users earning 0% (or less) on a harvest as fees are charged from profits rather than the initial deposit. This is a straight forward way to balance the reduction of the management fee.

#### More to come...
This proposal is viewed as a temporary measure to take action and collect data while further ideas for fee revisions are discussed by the community.

### **Data for claims**
The image below shows sample data for 2/20 versus the proposed 1/25 fee structure across a range of yield scenarios.

![](upload://b5JdzAbncnrNMq6VYvt2nl38mg4.png)
Source: [Fee Adjustment Calculator](https://docs.google.com/spreadsheets/d/1U66cFgymIW4Qdmo3lgCx5-lrMunBbLI_6cbxplWAE1U/edit?usp=sharing)

**Increasing profitability for yVaults with lower yield:**

The proposed fee structure change provides a very tangible benefit for low earning vaults, with diminishing results as APY increases. This is why it makes sense for the adjustment to be isolated to crypto native asset yVaults rather than all yVaults in general. When a vault is earning above 30% APY, this fee change actually reduces profit for users.

**Reduce treasury income:**

Adversely, the proposed fee change would have a greater impact on the treasury when applied to lower earning vaults. Still, percentage wise, the benefit to token holders greatly outweighs the loss of the treasury.

Additionally, since the lower earning vaults aren’t bringing in as many fees as an equivalent TVL higher earning vault, the relative loss of treasury revenue will be negligable when compared to the benefits.

## Specification

Adjustments to vault management and performance fees require transactions from the governance multisig (`ychad.eth`). If passed, the following should take effect.

**Non-stablecoin yVaults**

- 1% annualized management
    - Full amount allocated to Treasury
    - Applied only to invested funds
    - Collected on each harvest
- 25% performance fee
    - 15% allocated to Treasury
    - 10% allocated to the Strategist

**Stablecoin yVaults:** (unchanged)

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

## Information

_Source: [Snapshot](https://snapshot.org/#/ybaby.eth/proposal/0xfe7296601d199b89a8aa53f95d6243ef935d736bea2f13109979d8d5098017d2)_

| Name           | Value                                                                           |
| -------------- | ------------------------------------------------------------------------------- |
| Snapshot Space | [ybaby.eth](https://snapshot.org/#/ybaby.eth)                                   |
| Strategie(s)   | YFI, delegation                                                                 |
| Author         | wavey                                                                           |
| IPFS           | https://snapshot.mypinata.cloud/ipfs/QmQ84V6aj3W4aW8fqKyk344dZUMaQAMWJP9jwPYzHvyx6V |
| Voting System  | Single choice voting                                                            |
| Start date     | Nov 21, 2021                                                                    |
| End date       | Nov 26, 2021                                                                    |
| Snapshot       | https://etherscan.io/block/13656678                                             |

## Results

| Result | Value             |
| ------ | ----------------- |
| Yes    | 308 YFI (64.84%)  |
| No     | 167 YFI (35.16%)  |


text:
---
yip: 36
title: System rewards as operational capital
status: Implemented
author: Andre Cronje (@andrecronje), iTo, n00b (@jchi18), Artem K (@banteg)
discussions-to: https://gov.yearn.finance/t/system-rewards-as-operational-capital/1974

created: 2020-08-10
---

## Simple Summary

Assign system rewards as operational capital for expenditures instead of streaming them to governance.

## Abstract

Cover operational expenses with no immediate issuance of YFI required.

## Motivation

The YFI community is currently working with Delphi and Gauntlet to develop an economic model and inflation schedule. Until this process is complete, the project lacks the funds for any operational expenses including, but not exclusive to, security audits, deployment costs, consulting expenses, and compensations.

But with the state of the market, the system rewards are adequately sufficient to cover operational expenses. The YIP proposes that the system rewards are directed to the multisig instead of streamed to governance stakers. This allows the multisig to cover operational expenses without minting additional YFI.

**FOR:** Use system rewards for operational expenses with \$500k treasury cap and surplus distributed to governance stakers.

**AGAINST:** Keep streaming rewards to governance stakers.

## Specification

100% of rewards collected by the system are directed to multisig treasury.

Treasury should maintain a buffer of 500,000 USD equivalent, with further rewards distributed to YFI staked in the governance pool.

All surplus rewards are directed to the governance pool.

## Metadata

| Name                | Value                                      |
| ------------------- | ------------------------------------------ |
| Proposed by         | 0x24394A4758DBdCf6fcbC14dc35af64Ac0D9a450A |
| Total for votes     | 2002.4442 (94.51%)                         |
| Total against votes | 116.1982 (5.48%)                           |
| Quorum              | 45.11% ✔                                   |
| Start block         | 10633194                                   |
| End block           | 10650474                                   |

Source: [yieldfarming.info YFI Governance Information](https://yieldfarming.info/yearn/vote/)

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).


text:
---
yip: 52
title: Make Strategist Skin in Game Partner for Make Benefit of Glorious Brain of Yearn
status: Approved
author: banteg (@banteg), lehnberg (@lehnberg), milkyklim (@milkyklim)
discussions-to: https://gov.yearn.finance/t/yip-52-make-strategist-skin-in-game-partner-for-make-benefit-of-glorious-brain-of-yearn/
created: 2020-11-09
---

## Summary

- With 97.5% of the Vault's performance fee going to the Yearn treasury, Strategists have barely any skin in the game–**39x less than Yearn's Treasury** to be precise.
- Such a misaligned balance of interests does not make it attractive for Strategists to build on Yearn. This could turn into an **existential threat** to the protocol.
- This proposal sets Yearn and Strategists out to be **equal partners** in the success of a Vault, with each allocated an even share of the 20% performance fee:
  - Treasury allocation: 10%
  - Strategist: 10%

## Background

### What is Yearn's competitive edge?

#### Yearn as an aggregator

Yearn is often referred to as a "Yield aggregator", in the context of Ben Thompson's Aggregation Theory[[1]](#1).

![Aggregation Theory|1816x780, 30%](assets/yip-52/figure1.jpg)

Similar to Google for search, Facebook for social, Netflix for movies, Airbnb for holiday rentals, and Uber for rides, the idea is that Yearn should be the go-to source for users who want to earn the best and most predictable ROI on their DeFi investments.

Unlike these big tech companies however, there are some important differences in the case of Yearn as an aggregator:

- **The code base is open source.** If Yearn solves a hard problem, this means that others can now solve it too. The code base itself is not the competitive moat that it is for other aggregators. As we've seen it's straightforward to create forks/clones and launch competitors to Yearn.
- **There is no stickiness.** Aggregators have different degrees of stickiness. The Facebook Social Graph is extremely hard to replicate and makes it very difficult for users to switch to a competitor. While it's easy to switch to a Netflix competitor, they will miss out on exclusive original Netflix content so it comes at a cost. Uber's driver pool and Airbnb's housing stock is less unique and easier for its competitors to bootstrap or poach, but is still not trivial to replicate. Yearn on the other hand has no systemic stickiness. It does not even require canceling a subscription, or closing of an account. In the DeFi space, money flows to where it earns the best and most predictable returns.
- **What's on offer is ever changing and not easily commoditized.** The aggregators turn "the hardest problem digitized" into a commodity. For Facebook it is news articles and social content. For Netflix it's movies and tv-shows. In the case of Yearn, this would be yield-producing investment strategies. _But these cannot be easily commoditized:_
  - As soon as a strategy goes live, it can be replicated by competitors, thus affecting its performance.
  - As more capital flows into the strategy, it can become harder to realize the same opportunities, thus affecting its performance.
  - As time passes, a successful strategy will lose its alpha as the rest of the market adapts in response, thus affecting its performance.

#### Yearn's Gingerbread Man strategy

When Snap filed to go public, they wrote in their S-1 filing:

> In a world where anyone can distribute products instantly and provide them for free, the best way to compete is by innovating to create the most engaging products. That’s because it’s difficult to use distribution or cost as a competitive advantage—new software is available to users immediately, and for free. We believe this means that our industry favors companies that innovate, because people will use their products.

This triggered the same Ben Thompson to quip that Snap was pursuing a Gingerbread Man strategy[[2]](#2):

> Run, run, run as fast as you can.
> You’ll never catch me, I’m the gingerbread man.

This applies well to describe Yearn and the advantage it has over its competition. It's not the total value locked. It's not the APY returns. It's the ability to ship more innovating products, that are more secure and better performant than anything else on the market. This at a faster pace than the competition can keep up with and try to imitate.

#### Yearn's edge is the collective brain power it attracts and can retain building for it

If Yearn's business is aggregating yield-bearing strategies, its Strategy creators are the equivalent of Uber's drivers. **Strategy creators are however very different from Uber drivers.** They have much more unique skill sets, making them harder to replace, and more important to retain.

### A Strategist's choices

Someone who develops an investment strategy that results in a positive yield has the following choices today:

1. **Work for Yearn.** Partner up, work with protocol devs to integrate Strategy in a vault, hope for launch with a large influx of capital, be compensated as part of the performance.
2. **Create competing project or work for a competitor.** Either launch a competing project to Yearn, or work for an existing competitor, in the hopes of earning more fees.
3. **One man wolf pack it.** Deploy strategy solo, perhaps raising funds from friends and family, and keep all the fees.

In order for Yearn to remain competitive over the long term, the best and the brightest strategists must consistently choose to work with Yearn. This an existential question, necessary in order to ensure the long term sustainability of the protocol.

### How are strategists rewarded today?

The next version of Yearn vaults will launch with a two-pronged fee structure[[3]](#3):

1. A 2% management fee levied on AUM that goes to the Treasury;
2. A 20% performance fee levied on returns from the vault, which is split as follows:
   - 19.5% to the Treasury
   - **0.5% to the Strategy creator**

Strategists are expected to cover their own development, testing, gas, and monitoring costs. Under the current allocation, Strategists are not breaking even at times.[[4]](#4)

## Motivation

### Why not share the management fee?

- **The protocol requires predictable income.** There are a lot of constant costs on the protocol side. Operations, Development, maintenance, and R&D. These require a stable source of funding and should not be affected by Strategists.
- **Survival of the fittest.** Strategists should "eat what they kill", rewarding only the most ambitious and best performing, filtering out the rest.

### Why split the fee equally between Treasury and Strategists?

- **Establishes a partnership.** The message is clear: Yearn and Strategists are in this together, and it's a symbiotic relationship, where both are held accountable and are equally responsible for success.
- **Acquisition.** Creates success stories of high earning Strategists that will make it more aspirational and attractive for others to become Strategists.
- **Retention.** Strategists with a lot of skin in the game will work and further Yearn as opposed to a competitor.

### Future possibilities

**Tiered fee system.** As the Strategy creation space matures, there could be justification to distinguish between different qualities of strategies, creating a tiered system that rewards a different share of the performance fee based on the novelty and the sophistication of the strategy, as proposed in [[5]](#5). At this stage, it's recommended to keep a simple structure that is easy to reason about and for Strategists to understand the appeal of. This should be revisited in the future when needed.

### Comparing allocations

Drawing from the backtesting data produced in [[6]](#6), below is the Vaults V2 fee model applied to the yUSD vault, showing the difference in earnings between Strategists and Yearn treasury between allocation models.

#### Previous allocation

![Previous model sankey |2400x1400, 20%](assets/yip-52/figure2.png)

#### Proposed allocation

![Previous model sankey|2400x1400, 20%](assets/yip-52/figure3.png)

#### Comments

- The previous allocation to Strategists is disproportionately small compared to the value created by them.
- In the proposed allocation, the **Yearn treasury receives 64% of all fees** as it is paid the entirety of the management fee.
- The Strategist now earns a sizable reward that is entirely based on performance.

## Specification

### New performance fee structure

- 20% performance fee
  - 10% allocated to Treasury
  - 10% allocated to the Strategist

The Strategist is expected to pay for all expenses incurred, including those of development, testing, gas, monitoring, and operation.

## Vote

**For:** Accept proposal.

**Against:** Reject proposal.

## Metadata

| Name                | Value                                      |
| ------------------- | ------------------------------------------ |
| Proposed by         | 0x0Cec743b8CE4Ef8802cAc0e5df18a180ed8402A7 |
| Total for votes     | 1.34k YFI/yYFI (83.76%)                    |
| Total against votes | 260.13 YFI/yYFI (16.24%)                   |
| Start date          | Nov 9                                      |
| End date            | Nov 12                                     |

_Source: [Snapshot](https://snapshot.page/#/yearn/proposal/QmbAq6jPB6ocrihjkDo5TLNF4D4w9dw1HsEsJ7vwdwd9g3)_

## References

1. https://stratechery.com/concept/aggregation-theory/
2. https://stratechery.com/2017/snaps-apple-strategy/
3. https://snapshot.page/#/yearn/proposal/QmSaYHR97LDMDvg9xeTfdNZw6aqL9njxBKM6JVFtCYxKvB
4. https://gov.yearn.finance/t/proposal-increase-strategist-rewards/7299/8
5. https://gov.yearn.finance/t/proposal-increase-strategist-rewards/7299/10
6. https://gov.yearn.finance/t/restructure-fees-and-align-incentives/

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).


text:
---
yip: 70
title: ApeWorX <> Yearn Partnership
author: fubuloubu, defidipshit
discussions-to: https://gov.yearn.finance/t/yip-70-apeworx-yearn-partnership/12721
status: Implemented
created: 2022-09-19
---

## **Summary**

ApeWorX is proposing a partnership with Yearn contributors to add dedicated support for their use of the Ape open-source framework. During this partnership, ApeWorX will work closely with Yearn contributors to continue to meet their production needs for the project.

In addition to technical support, ApeWorX will create content for our Ape Academy learning portal demonstrating how to use the Yearn template to create strategies and deploy them, and promote that content to our growing user base. We will also continue to develop Vyper tooling and integration to support the project’s focus and growth on Vyper for v3. Lastly, we will develop any requested smart contract development content to help find and onboard new contributors for protocol development and data analysis functions.

## **Background**

Ape is the smart contract development tool for Pythonistas, Data Scientists, and Security Professionals. ApeWorX was founded in 2021 by @fubuloubu, who designed Yearn v2, with the assistance of the creator of Brownie, based on his feedback of a redesign to that framework. Yearn contributors have been using Brownie, the predecessor of this framework, for nearly all of its smart contract and strategy development work since late 2020.

However, Brownie has entered into a maintenance-only stage of its lifetime, while Ape is actively being developed and has been growing significantly over the last year. Looking to the future, ApeWorX plans on building out a suite of products and services around smart contract development, data exploration, and security research which are all areas Yearn contributors will benefit from with better tooling and support.

## **Motivation**

We've identified four ways that ApeWorX can assist Yearn contributors and the Yearn project moving forwards:

### Support Services

ApeWorX will provide a continuous point of contact between core contributors to Yearn and the ApeWorX team. We will collect and triage any issues with the framework, as well as collect further feature ideas and improvements, and work them into our development roadmap based on a balance of the Yearn project’s priorities and our other internal/partnership goals. With our team’s expertise and guidance, we can help support the safety and robustness of the Yearn protocol and it's continued development.

### Prioritized Development

We will provide two (2) dedicated engineering resources to drive the project’s priority roadmap, including development of core features and plugins to support production milestones. These resources will ensure that we are always making the progress necessary on our development roadmap to support priorities as they grow and change.

### Best-in-class Vyper Tooling and Integrations

For v3, Yearn contributors has decided to double-down on developing their protocol using components written in Vyper. To maintain a competitive edge, ApeWorX will continue to innovate Vyper tooling in the framework for Yearn contributors, speeding up product development and security work, in order to make Yearn v3 the most secure, scalable, and decentralized protocol yet.

### Attracting Developer Talent

In order to thrive, the project needs to further develop a talent pool onboarding more protocol developers, strategists, and other contributors. ApeWorX will promote these objectives by leveraging our Ape Academy product, which is a project-based learning platform for building in Web3 using Ape Framework. Through this platform we will collaborate with Yearn contributors to develop Ape Academy content for strategy creation and onboard more Vyper developers, which is a key area of improvement for the project.

## **Specification**

For this partnership, ApeWorX is proposing a grant totaling 100 YFI tokens. These tokens will be streamed to `wallet.apeworx.eth` using a Llamapay stream over a period of 24 months. The stream can be canceled at any time, signifying the end of any advanced collaboration between ApeWorX and Yearn contributors. At the end of the 24 month period, a renegotiation of these grant terms can occur to continue the arrangement into the future.

The grant amount will align ApeWorX significantly with the long-term success of the Yearn project, and ensure mutual benefit from the work being provided on their behalf.

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

## Information

_Source: [Snapshot](https://snapshot.org/#/ybaby.eth/proposal/0x1d34233f80a83c3fc4e41583ba115bfd51d3308c7b35249198cab0e49cd527f3)_

| Name          | Value                                                                           |
| ------------- | ------------------------------------------------------------------------------- |
| Snapshot Space| [ybaby.eth](https://snapshot.org/#/ybaby.eth)                                   |
| Strategie(s)  | YFI, delegation                                                                 |
| Author        | wentokyo.eth                                                                    |
| IPFS          | https://snapshot.mypinata.cloud/ipfs/bafkreickx3qv4zd3cztyuthvxr5melbssq5znybfrkqk523zllcaztfdsy |
| Voting System | Single choice voting                                                            |
| Start date    | Sep 19, 2022                                                                    |
| End date      | Sep 24, 2022                                                                    |
| Snapshot      | https://etherscan.io/block/15569179                                             |

## Results

| Result  | Value             |
| ------  | ----------------- |
| Yes     | 1000 YFI (100%)   |
| No      | 0 YFI (0%)        |


text:
---
yip: 10
title: Transitionary YFI Only Voting
status: Implemented
author: Rewkang (@rewkang)
discussions-to: https://gov.yearn.finance/t/yip-10-transitionary-yfi-only-voting/481
created: 2020-07-24
implementation: https://etherscan.io/address/0xBa37B002AbaFDd8E89a1995dA52740bbC013D992
---

## Simple Summary

<!--"If you can't explain it simply, you don't understand it well enough." Simply describe the outcome the proposed changes intends to achieve. This should be non-technical and accessible to a casual community member.-->

The current Yearn governance mechanism puts the protocol at risk of a hostile takeover. The best immediate course of action would be to temporarily transition the protocol to a new voting contract recently deployed by Andre.

## Abstract

<!--A short (~200 word) description of the proposed change, the abstract should clearly describe the proposed change. This is what *will* be done if the YIP is implemented, not *why* it should be done or *how* it will be done. If the YIP proposes deploying a new contract, write, "we propose to deploy a new contract that will do x".-->

Update the ygov.finance voting page to link to the new voting contract where only YFI can be staked.

Contract: [Etherscan](https://etherscan.io/address/0xad7e09665caa3404d9c6525d5997a10fc6c12cfe)

## Motivation

<!--This is the problem statement. This is the *why* of the YIP. It should clearly explain *why* the current state of the protocol is inadequate.  It is critical that you explain *why* the change is needed, if the YIP proposes changing how something is calculated, you must address *why* the current calculation is innaccurate or wrong. This is not the place to describe how the YIP will address the issue!-->

The current Yearn voting contract accepts BPT (Balancer Pool Tokens) from a pool consisting of 98% yCRV / 2% YFI. This creates a dynamic where large stablecoin holders hold a disproportionate amount of voting shares and thereby governance power, while those whom have a high proportion of YFI vs. stablecoin are underrepresented in governance. Governance should be dictated by those with the most vested long term interest of the protocol - YFI holders - irrespective of their portfolio composition. More importantly, the protocol is currently vulnerable to a hostile takeover of governance by stablecoin whales who could potentially pass a proposal to mint a large supply of YFI and disproportionately reward themselves (via favoring large stablecoin holders).

There are multiple different long term governance/voting approaches being debated, and it will take time to align on community consensus. While these are being analyzed/discussed, we should immediately transition to a temporary governance structure where only YFI can be used to vote in order to mitigate hostile takeover attacks.

The community can replace this temporary YFI only voting structure after passing a new YIP.

**FOR**: Governance moves to newly deployed YFI only voting contract.

**AGAINST**: No governance changes.

## Metadata

| Name                | Value                                      |
| ------------------- | ------------------------------------------ |
| Proposed by         | 0x09173487b272311Edda01F45f97911aEB6aBd602 |
| Total for votes     | 13641124.8956 (77.08%)                     |
| Total against votes | 4054142.5578 (22.91%)                      |
| Quorum              | 45.92% ✔                                   |
| Start block         | 10518707                                   |
| End block           | 10535987                                   |

Source: [yieldfarming.info YFI Governance Information](https://yieldfarming.info/yearn/vote/)

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).


text:
---
yip: 57
title: Funding Yearn’s Future
status: Implemented
author: aleks-blockchaincap, banteg (@banteg), dudesahn (@dudesahn), ekrenzke, lehnberg (@lehnberg), ryanwatkins, srs-parafi, tracheopteryx (@tracheopteryx), vooncer, yfi-cent, milkyklim (@milkyklim)
discussions-to: https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319
created: 2021-01-28
---

## Authors

[@aleks-blockchaincap](https://gov.yearn.finance/u/aleks-blockchaincap), [@banteg](https://gov.yearn.finance/u/banteg), [@dudesahn](https://gov.yearn.finance/u/dudesahn), [@ekrenzke](https://gov.yearn.finance/u/ekrenzke) [@lehnberg](https://gov.yearn.finance/u/lehnberg), [@ryanwatkins](https://gov.yearn.finance/u/ryanwatkins), [@srs-parafi](https://gov.yearn.finance/u/srs-parafi), [@tracheopteryx](https://gov.yearn.finance/u/tracheopteryx), [@vooncer](https://gov.yearn.finance/u/vooncer), [@yfi-cent](https://gov.yearn.finance/u/yfi-cent), [@milkyklim](https://gov.yearn.finance/u/milkyklim)

## Summary

Safeguard Yearn's future development. Mint 6,666 YFI. Use ~1/3 of minted YFI to reward key contributors and put ~2/3 of minted YFI in the Treasury under the control of the community through future proposals.

## Abstract

If adopted, this proposal seeks to:

1. Mint 6,666 YFI.
2. Allocate ~1/3 of the minted YFI to key contributors as vesting retention packages.
3. Allocate the remaining ~2/3 to the Treasury, which will be deployed through existing Governance for various uses, for example:
   - Future contributor incentives
   - Liquidity mining programs
   - Staking rewards
   - Protocol mergers & talent acquisitions
   - Cross-protocol incentives to tighten co-operation across the ecosystem family of projects

This benefits Yearn as a whole by:

- Retaining existing contributors
- Incentivizing new contributors
- Capitalizing the Treasury to a scale comparable to industry peers in order to better support growth

This benefits YFI holders in particular by:

- Creating a strategic reserve to advance Yearn as one of the world's leading DeFi protocols
- Aligning incentives across stakeholders
- Providing for Yearn's future

## Motivation

### Evolve the fair launch

- Yearn's launch was exceptional at creating a decentralized and engaged community, but it did not provide adequate incentives to retain existing and future contributors on an ongoing basis, nor did it provide the protocol with a war chest to fund future activities.
- Viewing the fair launch as a living concept rather than a single event, this proposal seeks to remedy this
- It does so with an emphasis on funding the Treasury for the benefit of all active protocol participants over the existing contributors at a ratio of rougly 2:1 in terms of allocated YFI

### Remove Yearn's Competitive Disadvantage

_Excerpt from [[1]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References):_

> Team token allocations\
> Projects such as Uniswap, Aave, Synthetix, Compound, 1inch, Curve, and Balancer hold anywhere from $300 million-$2.13 billion in tokens aside for [contributors], with the average being between $500-600 million. This is generally 20-30% of the total token allocation. Newer projects such as SushiSwap, Badger, CREAM, Harvest, and Cover vary more between teams, but allocate between 10-25% of token supply to their teams and early contributors.
>
> Treasury/operations token allocations\
> While the numbers vary here more widely, most of the major projects still have significant token amounts set aside for operations. Uniswap is on the high end with $4 billion, Aave, Synthetix, Balancer, and 1inch all have between $200-$570 million, and likely other projects without any tokens set aside for operations have ample funding from investors (Curve and Compound).

### Why mint?

_Excerpt from [[2]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References):_

> [The decision] comes down to the market for talent and the opportunity cost for YFI contributors. We looked at other successful DeFi projects to see what the market says top-tier talent is worth:
>
> [![](/YIPS/assets/yip-57/figure1.png)
>
> The UNI team has 21.3% of tokens (which includes tokens for future employees) and UNI holders collectively control a treasury with 43% of the supply. At current market prices of $9.2 (which reflects a fully diluted valuation of $9.2B), each bucket has several billion dollars worth of UNI -- team ~$2B and treasury ~$4B -- giving the Uniswap team significant fire power for hiring and enabling a lot of future growth spend from the treasury (both buckets are subject to 4-year vesting).
>
> The COMP team has 26% of tokens and a smaller but still significant treasury with 7.8%. At the current market price of $226 per COMP, the team allocation is ~$580M and treasury ~$176M.
>
> You can quickly see that a treasury of $500K and a team allocation of 0% is way off market. The reality is that for Yearn to allocate even 5% (which would be well below the examples above), at current market prices (~$37K) Yearn would need to either earn $56M or mint $56M worth of YFI. Given that a conservative figure is presently an order of magnitude higher than annualized YFI holder income, the only reasonable way to bridge the gap in the near-term is through a mint.

### Why 6,666 YFI?

- 6,666 is 22% of the current total supply of 30,000 YFI.
- After gathering feedback, modeling a number of mint scenarios and various retention package estimates, a ~20% increase was determined to be the minimum viable amount to provide competitive retention plan, using only roughly 1/3 of the total mint amount.
- 22% is in line with yearn's peers, for example Aave minted 23% when they migrated from LEND to AAVE.[[3]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References)

### Improve Talent Retention & Acquisition

- Contributors have recently been poached by other projects.
- With the current operational treasury size of $500,000 and 0% token allocation to the team, Yearn struggles to compete with the compensation packages offered in the current market. These are becoming increasingly competitive.

### BABY is a great first step, but not enough on its own

Buyback and Build Yearn (BABY)[[4]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References) establishes a moving target for YFI buybacks in USD terms. As Yearn earns more revenue in USD terms, it's possible that the YFI price in USD adjusts upwards to reflect those increased earnings. So it would be like trying to catch your own tail. Modeling shows that using 50% of Treasury earnings for buybacks would purchase 100-300 YFI per year (see sensitivities below). Even with the assumption that V2 vaults end up being very successful, earnings will likely not be enough to accumulate a sufficient amount of YFI for the Treasury.

Below are two different BABY scenarios. One sensitizing aggregate yields on V2 vaults and their effect on YFI buybacks. The other sensitizing operating expenses and their effect on YFI buybacks. The other with 100% of net income.

_Aggregate Yields Sensitivity_\
![](/YIPS/assets/yip-57/figure2.png)

![](/YIPS/assets/yip-57/figure3.png)

_Operating Expenses Sensitivity_\
![](/YIPS/assets/yip-57/figure4.png)

![](/YIPS/assets/yip-57/figure5.png)

## Previous Proposals

There have been a number of previous proposals relating to the YFI supply.[[5]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References)

| Title                                                     | Comment                                                                                | Outcome                                                                              | Ref.                                                                             |
| --------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- |
| Proposal 0: YFI Supply                                    | For: Allow future YFI to be minted. This will be superseded by a new proposal to discuss (and then vote) on weekly YFI allocations.                                   | Passed                                                                               | [[6]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References)  |
| Proposal 5: Reducing YFI weekly supply                    | At the time of this proposal a weekly emission was planned, this proposal sought to introduce a weekly halving over 25 weeks                                          | Did not pass                                                                         | [[7]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References)  |
| Proposal 8: Halving YFI weekly supply the same as bitcoin | Another attempt to introduce a halving                                                                                | Majority for, but did not meet quorum                                                | [[8]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References)  |
| YIP 30: YFI Inflation Schedule                            | FOR : Implement an inflation schedule of 20,000 YFI over the next 8 years, with 12,802 distributed in the first 3 years, ending with a trailing tail of 1% inflation. | Did not pass                                                                         | [[9]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References)  |
| Burn YFI minting ability permanently                      | Signaling poll to burn the minting keys after on-chain governance is deployed                                                                                | Majority for, but was not followed up with a binding proposal or on-chain governance | [[10]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References) |

## Specification

## 1\. Mint 6666 YFI

A proof of concept for minting has been produced [[11]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References). If accepted, Yearn Governance would need to do these things:

1. Deploy the vesting contract (deployed at [`0x0C97B9E8bdEc88fe683DD11607f66F351cEc6110` 18](https://etherscan.io/address/0x0c97b9e8bdec88fe683dd11607f66f351cec6110#code))
2. Call `TimelockGovernance.setTargetGovernance(YearnPact)`
3. Wait 3 days
4. Call `TimelockGovernance.updateTargetGovernance()`
5. Call `YearnPact.brrr()`, which will mint and then revert the YFI token governance back to `TimelockGovernance` immediately thereafter.

## 2\. Allocate ~1/3rd to vested retention packages

- Out of the 6,666 minted YFI, allocate roughly 1/3rd (5% margin on either side) to retention packages in order to provide the sufficient face melt required for effective contributor stickiness.
- All YFI allocated to retention packages will be subject to vesting.
- Retention package details, including eligibility, amounts, and overall terms, will be prepared and presented by a *Compensation Working Group:*
  - Working group members are recommended by the Operations team and should include a variety of project contributors.
  - The Multi-sig approves the proposed members of the working group.
  - The working group can gather feedback and input from existing community groups or form new ones as required.
- Once appointed, the working group's tasks will be to:
  1. Finalize compensation packages
  2. Finalize vesting terms
  3. Identify eligible recipients
  4. Prepare a Compensation plan for the Multi-sig to review
- After review, the Multi-sig approves the Compensation plan, or requests changes.
- Separately, the working group is also tasked with formalizing the qualification process and retention packages for future contributors. Funding for this comes from the portion allocated to Treasury (see below).

## 3\. Allocate ~2/3rds to Treasury

- Allocate the remainder of the minted YFI, i.e. roughly 2/3rds (5% margin on either side) to Treasury.
- This allocation flows into the Operations Fund established by YIP-54 [[12]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References) and can be spent accordingly, which includes through ad-hoc Governance proposals brought forward as YIPs.
- The Operations Fund remains under the supervision of the Multi-sig.
- As YIP-56 [[4]](https://gov.yearn.finance/t/yip-57-funding-yearns-future/9319#References) makes clear, YFI in the Treasury, including those in the Operations Fund, cannot be used to vote.

## Changelog

- Jan 28: Clarified in the Specification that YFI in the treasury cannot be used to vote.
- Jan 28: Clarified in the Specification that all YFI retention packages will be subject to vesting.
- Jan 28: Changed title to YIP-57 and added binding snapshot vote link.

## References

1. <https://gov.yearn.finance/t/token-allocations-at-peer-projects>
2. [Keeping Yearn Great - Funds, Incentives & Rewards - #19 by aleks-blockchaincap 14](https://gov.yearn.finance/t/keeping-yearn-great-funds-incentives-rewards/9167/19)
3. [Flashpaper - Aavenomics 1](https://docs.aave.com/aavenomics/flashpaper#aave-token-migration)
4. [YIP-56: Buyback and Build 18](https://gov.yearn.finance/t/yip-56-buyback-and-build/8929)
5. h/t to [Nick Almond 2](https://twitter.com/DrNickA) for his tweetstorm that informed this section: [https://twitter.com/DrNickA/status/1350792604754075649 12](https://twitter.com/DrNickA/status/1350792604754075649)
6. <https://gov.yearn.finance/t/proposal-0-yfi-supply>
7. <https://gov.yearn.finance/t/proposal-5-reducing-yfi-weekly-supply>
8. <https://gov.yearn.finance/t/proposal-8-halving-yfi-weekly-supply-the-same-as-bitcoin/>
9. <https://gov.yearn.finance/t/yip-30-yfi-inflation-schedule>
10. <https://gov.yearn.finance/t/burn-yfi-minting-ability-permanently>
11. [GitHub - banteg/yfi-pact: our pact with the devil 8](https://github.com/banteg/yfi-pact)
12. <https://gov.yearn.finance/t/yip-54-formalize-operations-funding/>
13. [YIP-55: Formalize the YIP Process 18](https://gov.yearn.finance/t/yip-55-formalize-the-yip-process/7959)

## Information

_Source: [Snapshot](https://snapshot.org/#/yearn/proposal/QmX8oYTSkaXSARYZn7RuQzUufW9bVVQtwJ3zxurWrquS9a)_

| Name          | Value                                                                     |
| ------------- | ------------------------------------------------------------------------- |
| Snapshot Space | [yearn](https://snapshot.org/#/yearn)                                    |
| Strategie(s)  | erc20-balance-of, yearn-vault, delegation                                 |
| Author        | 0x7A1057E6e9093DA9C1D4C1D049609B6889fC4c67                                |
| IPFS          | https://ipfs.fleek.co/ipfs/QmX8oYTSkaXSARYZn7RuQzUufW9bVVQtwJ3zxurWrquS9a |
| Voting System | Single choice voting                                                      |
| Start date    | Jan 28, 2021, 12:00 PM                                                    |
| End date      | Feb 2, 2021, 12:00 PM                                                     |
| Snapshot      | https://etherscan.io/block/11745800                                       |

## Results

| Result | Value               |
| ------ | ------------------- |
| Yes    | 1.67k YFI (83.46%)  |
| No     | 331.03 YFI (16.54%) |