Yearn Finance Contributor Suggests Major Overhaul
A contributor to Yearn Finance has put forth an ambitious plan aimed at revitalizing the decentralized finance (DeFi) protocol to better align interests among stakeholders and foster growth. The comprehensive proposal, created by the anonymous contributor known as 0xPickles, seeks to refocus the organization on revenue generation, enhance accountability among contributors, and distribute benefits to holders of the YFI governance token.
Revenue Redistribution to YFI Holders
The most notable aspect of the proposal is the suggestion that a significant portion of the generated revenue be redirected to individuals who stake their YFI tokens. “This proposal creates a new deal,” stated 0xPickles. “90% of future revenue goes to stYFI holders, empowering them.” Currently, Yearn Finance’s revenue is relatively modest, with just under $200,000 reported last month, according to data from DefiLlama. The goal is to pivot towards profitability and accountability to set Yearn on a trajectory of sustainable growth, thereby increasing both revenue and the value of the YFI token.
Context of Yearn’s Market Position
This proposal emerges during a time of increased liquidity within the DeFi space, which has led to record levels of deposits this year. Yearn Finance, once a dominant player in the DeFi ecosystem with nearly $7 billion in deposits in December 2021, is looking to leverage this liquidity to regain its former prominence. Presently, Yearn hosts only $546 million in deposits, reflecting a drastic 92% decrease from its peak, while the YFI token has experienced a staggering 94% drop from its highest valuation.
Previous Attempts at Revitalization
Yearn Finance has not shied away from attempts to reinvent itself in recent years. In October 2023, the protocol implemented a new vote escrow token model, which drew inspiration from similar frameworks used by other DeFi protocols like Curve Finance and Balancer. Despite some support from YFI holders, this new model failed to gain significant traction. “Only 3.8% of the YFI supply is locked, a figure that is in decline,” noted 0xPickles, highlighting a waning interest in the previous model.
Simplifying the Staking Mechanism
In a move to streamline user engagement, 0xPickles’ proposal suggests replacing the vote escrow model with a more straightforward staking system. Under this new framework, YFI holders would lock their tokens in exchange for a share of the protocol’s revenue. Additionally, the proposal includes restructuring the DAO to prioritize profitability and implement on-chain financial reporting, ensuring transparency in budget requests from contributors.
Comprehensive Changes on the Horizon
The final aspect of the proposal aims to formalize a strategy for distributing 1,700 YFI tokens to incentivize key contributors, establish a capped performance bonus scheme, and create a pool dedicated to retaining long-term contributors. Currently, these proposals are being debated within the Yearn governance forum, with a vote anticipated soon. Since the proposals are interconnected, they will be voted on as a single, comprehensive package, according to 0xPickles.
