The Yearn Finance community has been discussing expanding the supply of YFI as a way to compensate the decentralized finance (DeFi) platform’s de facto staffers. The vote went live on the web app Snapshot on Jan. 28 and ended today at 18:00 UTC (1 p.m. ET).
There’s a total of 30,000 YFI in existence, per the project’s original “fair launch.” If the new tokens were minted right now and had no impact on the market capitalization, then one would expect the value of YFI to drop to something like $25,000 (meaning the new tokens would be worth $167 million), but these things are not predictable.
The final vote to increase the supply was 1,670 YFI for versus 331 against.
To participate in a vote, YFI holders have to stake to the governance contract in advance of a vote by a specified Ethereum block number. The total amount of YFI staked to vote on YIP-57 was 4,089.
Final changes are approved by six of the nine members of the Yearn multisig, which is something like the DeFi equivalent of a board of directors.
Under the proposal, 33% of the new tokens would be set aside for key contributors. Which contributors the allocation would be for and how much each would get is unknown. There will be some sort of staking set up so contributors only get their allocations for sticking around, but none of that has been decided.
The other 66% will be set aside as a treasury, for everything from protocol acquisition to further development.
The decision marks a clear shift for the team, which accrued a unique amount of buzz for eschewing the convention of setting aside governance tokens for insiders.
The authors of the newly passed proposal wrote:
“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.”
The community remains somewhat divided on the initiative. As the vote indicates, though, most YFI holders are for it.
“This seems to be the equivalent of an equity raising round. In these rounds an early-stage venture will issue equity and in effect dilute current shareholders. … The overarching idea being that the cash raised will increase future value enough to offset any dilution.”
“I don’t like it, so I voted against. It doesn’t even specify what type of vesting we’re talking about. I want it to be for 5 years, equal amounts per year.”
UPDATE (Feb. 2, 18:43 UTC): A prior version of this story reported that quorum for a vote to pass was 20% of the YFI staked to governance, based on Yearn’s documentation. It has been updated to reflect changes made to the process since YIP-55.