RFC: Replace Yam Rebase Mechanism

[feddas]

RFC: Replace Yam Rebase Mechanism

Authors: @feddas @HodlDwon

Basic Summary

This post is a request for feedback on removing the rebase treasury building mechanism and replacing it with a simpler and easier to understand inflation mechanism.

Abstract

In the Beginning:

https://medium.com/yam-finance/yam-finance-d0ad577250c7

We’ve come a long way since the launch of Yam back on August 11th. As we move forward and learn from past choices, some fascinating dichotomies of programmable money and the people that govern them arise; the features of Yam are incompatible.

Motivation

Yam seeks price stability by changing the supply of Yams in your wallet without trying to adjust the value in your wallet, but that hasn’t worked very well. The price moves in the direction of the peg, but the problem comes when the community, who govern the protocol, seek price appreciation and not stability.

Token holders want appreciation of Yam:

How do these two things all fit together? Well, they don’t…

There needs to be a positive feedback loop between community governance, the YAM governance token, and value creation by Yam Treasury investments, and by all accounts the rebasing mechanism is holding us back.

We are currently developing multiple products in tandem including Umbrella, UMA-Degenerative, and YAM DAO Set (YDS). All of which have some component of revenue generation. We are also installing the machinery for our Yam Factory to hopefully create even more products. I would like the Yam community to focus on what we are building and not the rebasing function.

Here are the Pros of a rebasing asset:

• It can be gamified (largely due to artificial price movements and supply changes)
• It’s an interesting experiment that could lead to unique use cases that non-rebasing assets cannot do.
• Stable-ish (in theory)
• If there is anything else, please comment below.

Here are the Cons of a rebasing asset:

• More complicated to understand and calculate profit/loss than a non-rebasing asset.
• Composability between other protocols like AMMs need to be whitelisted otherwise YAMs staked as a liquidity provider could be lost.
• Any centralized exchange needs to constantly update account balances according to the changes in supply.
• Stable-ish
• high gas fees for calling the rebase function an syncing whitelisted pools for the balance updates (high $100’s to low $1,000’s per month just in gas fees)

Instead of the rebasing mechanism, there are other ways to raise funds for the Treasury. We propose a simple 3% yearly inflation of Yams fed into the Treasury for future strategic investments.

Possible uses of the Yam to directly support the Yam ecosystem:

• Add additional distributions as farming incentives currently allocated to Yam/ETH Sushiswap pool.
• Buy ETH to pair with Yam to provide liquidity on the Yam/ETH Sushiswap pool and farm Sushi.

How does this help you as a token holder?

• Easier to understand provides less barriers to enter for new investors. They are able to understand the purpose of their investment and the goals of Yam.
• Composability is important for long term sustainability. We are already finding new collaborations with other DeFi protocols and we don’t plan on stopping there. Potentially some of these collaborations will be hindered by a rebasing asset.
• Easier to integrate for CEX.
• Additional liquidity allows for larger purchasers to enter and exit.
• Allows the treasury to continue to grow via Sushi farming.

Specifications

Developer light to implement. The scaling factor would be fixed at a specified time and the rebase function deactivated by calling this function:

yam._setRebaser(0x0000000000000000000000000000000000000000)

Making it so no address can execute rebase

Poll to Measure Sentiment

• Replace current rebase mechanism with 3% inflation.
• Do not replace, let’s discuss.

12.9.2020 Edit with additional poll due to comments from community members.

So we have a few options presented as ways to proceed:

• 1. Keep Rebase and Treasury Purchase
• 2. Keep Rebase, Remove Treasury Purchase, Add Inflation
• 3. Remove Rebase, Remove Treasury Purchase, Add Inflation

Seems like almost everyone is against Option 1, so looking primarily at options 2 and 3:

Option 2: We become a little more money like, and are a standard rebasing token. We can play around in the elastic finance space, but we’re still severely limited in our ability to interact with much of DeFi (as collateral, easy trading pair, etc).

Option 3. We become a standard ERC20 token more or less, able to do all the things normal ERC20s can. This limits some governance overhead (adding sync/gulp to everything) and opens up new possibilities of collateral inclusion. Also allows for centralized exchanges to more easily list, and incentivizes them to convert V2 to V3 (not that I really give a fuck about CEX’s but I know many of you do).

@rossgalloway has suggested to separate the treasury funding mechanism from this proposal. Here’s his post and poll.

Separate Rebasing and Treasury Funding Questions

The discussion of removing the rebasing mechanism and how we fund the treasury should be separate proposals. They are not necessarily dependent on each other and the proposed solution of 3% inflation is understudied. Can we build a new mechanism that keeps the treasury funded autonomously and is fair to YAM holders? This is a separate question from “should we remove the rebasing mechanism”. Combining these proposals risks creating a sub-par funding solution and either adding to developer overh…

@rossgalloway has heard concerns from the community members that potentially would like to continue experimenting on the rebase:

RFC: Replace Yam Rebase Mechanism

I have considered whether I want to post this here or as a new post. In the end I decided to put it here since I don’t want it to appear that I am making a competing proposal. This is almost the same proposal with concessions to those who want to keep the rebasing mechanism. Modified Rebase Removal Basic Summary We stop the Rebase Now. Create a rebasing token experimentation lab with treasury funds.* Provide funding from the treasury for research into an improved token and treasury funding m…

[Diesel]

Because YAM rebases, its market cap is a better indicator than price per YAM. The rebases do not put a cap on market cap. However it does slow price appreciation. On the other side, it also slows price deprecation via rebases. I believe that YAM can work and exceed expectations with the rebase intact. There are ways that we could make the mechanism work better.

[trollbox]

Interesting to read that CEX play any role in cons.

Pro:
Has functioned to fill the treasury and likely will fill the treasury again during expansion time.
Far too little data points collected for data driven decisions about the experiment .

[daddypig]

I like this idea and let’s turn it off until we fully understand rebase itself.

[Diesel]

You can’t fully understand the rebase as it relates to YAM if you turn it off. You need to observe it in different market environments.

[Diesel]

I agree that during expansion, it will continue to expand the treasury. As market cap increases and price increases, even at marginal rebases (i.e. TWAP 1.06) the returns increase at an increasing rate. If treasury acts as a price floor, then holders/LPs/farmers should feel secure that there is less downside risk.

[sombody]

I vote Yes. but I think the inflation of 3% need
to be discussed

[leehom]

what a amazing idea.hope it is not too late

[leehom]

In the future, we can discuss how to enrich the treasury income according to the product income situation.

[roninchow]

替换Rebase机制的讨论说明

概述

这篇帖子的主要目的是就以下讨论的问题收集反馈信息，我们正在考虑是否有必要采用更为简单易懂的温和通胀机制，以替换现有的Rebase机制。

摘要

Yam最初的协议描述如下：

Yam协议是一个实验性项目，在治理模式和货币的可编程性上，融合了一些当前最令人激动的创新。Yam的创始团队和开发成员均为来自于DeFi领域内，极具经验的从业者，其主要特点如下：

• 采用弹性供应机制并寻求价格稳定的最终目标；
• 建立一个由社区治理的金库；
• 通过可链上验证的去中心化治理方式推动项目的发展；
• 采用公平分配原则，激励社区关键成员积极参与治理。

原文链接：https://medium.com/yam-finance/yam-finance-d0ad577250c7

自8月11日Yam发布以来，我们共同经历了一段漫长的时光。随着项目的推进我们也在不断的学习和调整，现在可编程货币领域显露出一些极具吸引力的二分性特征，但Yam并不能很好的兼容这种二分性。

动因

Yam通过调整供应量的方式来寻求价格稳定和价值提升，目前为止，这一做法的效果似乎并不理想。代币价格的确在向锚定价格靠拢，但伴随的问题是，掌握治理权的社区似乎并不希望看到代币价格维持稳定，而是希望看到Yam价格的提升。

稳定和升值似乎是矛盾的……

Yam代币、社区治理、用于创造价值的金库、Rebase机制等等这些因素，我们需要在它们中间找到一种可以形成正反馈循环的机制。

目前Yam团队正在同时开发多个产品，包括保险产品保护伞协议，UMA衍生品系列，YAM资产管理系统（YDS）等等，所有这些产品都会带来一定的利润增长点。同时我们也在积极布局Yam孵化工场的体系结构，以期在未来可以创造更多产品。因此我们也希望通过该调整，使Yam社区能够将注意力集中在我们当前正在开发部署的工作内容上，而不是过多关注Rebase。

Rebase类资产的优点：

• 采用游戏化的设计方式，用户可以更多的参与代币互动行为（主要归于价格变动和供应变化的人为参与）；
• Rebase作为一个有趣的实验，可以产生一些特有的使用模式和可能性，这是非Rebase类资产无法实现的；
• 稳定性（理论上的）。

如果还有其他关于Rebase类资产的想法，可以在下面回复留言。

Rebase类资产的缺点：

• 与其它类别的资产相比，带有Rebase机制的资产更难于理解，具体的收益/损失计算也更为复杂；
• 与其它协议（如AMM）的可组合性会受到一定的限制，必须将组合协议列入白名单，否则会对Yam的流动性提供者造成损失；
• 每次执行Rebase功能调用后，中心化交易所都需要手动更新用户账户中的代币余额数量；
• 不稳定性（现实上的）；
• 调用Rebase功能并更新同步流动池余额需要支付额外的昂贵Gas费用（每月的Gas费用从$ 100到$ 1,000不等）。

现实中，除了Rebase机制外，还有许多方法可以为金库带来增长。我们提议采用更为简单的方式来替代目前的Rebase机制，以相对温和的3%年通胀率向金库注入资金用于项目未来的发展和投资。这样，YAM代币便可直接用于支持Yam生态系统的发展。

可能的用途如下：

• 可以增加额外的配给用于Yam挖矿奖励；
• 用于购买ETH，并与Yam进行配对以增加目前的Sushiswap YAM/ETH流动池内的流动性。

这样做对Yam代币持有人有什么益处？

• 为新来的投资者扫清有关Rebase机制理解上的障碍，使他们可以更清楚的了解Yam的发展目标并做出投资选择；
• 不同项目间的可组合性对于Yam的长期可持续发展非常重要，我们已经在寻求与其它DeFi项目的合作创新，并且我们打算继续执行这一路线，因此，未来Rebase机制可能会对这些合作造成阻碍；
• 取消Rebase机制可以方便中心化交易所上架Yam相关交易对；
• 取消Rebase后所带来的流动性增加，有利于更大规模的交易进出；
• 金库依然可以通过挖矿获取Sushi代币来获得增长。

具体说明

开发人员可以轻松实施此项部署，比例因子（Scaling Factor）将会在指定的时间被固定，并通过调用以下函数来停用rebase功能：

yam._setRebaser(0x0000000000000000000000000000000000000000)

投票测试

1. 保留Rebase机制，保留正向Rebase 5%购买金库储备金资产（Keep Rebase and Treasury Purchase）
2. 保留Rebase机制，取消正向Rebase 5%购买金库储备金资产，添加通胀机制（Keep Rebase, Remove Treasury Purchase, Add Inflation）
3. 取消Rebase机制，取消正向Rebase 5%购买金库储备金资产，添加通胀机制（Remove Rebase, Remove Treasury Purchase, Add Inflation）

[Hanson]

I support the cancellation of rebase, and there can be three sources of treasury finances -

1. 3% annual inflation rate to issue Yam, but only if the market value of Yam increases by more than 30% from the previous year’s average.
2. Reinvestment income
3. Introduce sub-projects or strategic cooperation, and return profits to the Treasury.

In order to avoid constant disputes between the team and the community on the use of the treasury, it is strong recommended that the treasury should be divided into two units, and the existing treasury funds and future treasury funds should be divided into two parts in average, including the annual 3% inflation increase -

1. Working capital: freely used by the team based on legitimate needs, but a monthly report needs to be provided to the community. If the community thinks it is too inappropriate, it still has the right to make suggestions and even vote for amendments.
2. Investment funds: The funds needed for sub-projects, strategic cooperation and reinvestment are intended to feedback 100% to the community and currency holders. How to feedback can be further discussed.

[feddas]

Good discussion everyone.

The more I think about rebasing the more I feel it’s a shell game designed to obfuscate what is happening to draw in the under informed, I don’t see any good use cases where a standard token isn’t superior.
As far as a funding mechanism for the treasury it is sub-optimal at best.

I am open to ideas on how to improve the rebase, but when I see a duck, I call it a duck. If you want to play games with the rebase like all the other rebasing tokens (IMHO they are all zero sum games). Fix Yam then let’s design and build a rebasing token that can actually compete in the rebasing games.

[alex]

I think the problem lies in the sale of the vault after the positive basis. It will continue to dilute the proportion of people. It may not have a big impact on the price once, but after dozens of positive foundations, the proportion of people will be diluted to a very high level. Terrible point

[Hanson]

Supplement:
Regardless of whether it is a cooperation case for a sub-project developed by the team or the community, its profit should be given to the Yam holder as the first priority, and must not be less than 50%

[Diesel]

I was drawn in by curiosity, but I don’t feel like I was under informed at any time. I listened to what the founders had to say publicly. I never felt hoodwinked. I watched on the sidelines until V3, because V1/2 felt like a hot potato. There seemed to be some clarity by V3. I understood what I was getting into and what to expect.

I don’t feel like the rebase as applied was meant to be a zero sum game. As intended the funding mechanism did allocate a decent amount of funds to the treasury.

If getting rid of the rebase was the end game, there should have been some treasury target or other measurable goal. Also, I’d be less protective of the rebase if we had live tested products/services that generated a modicum of revenue.

We have only scratched the surface of elasticity. Maybe it doesn’t work as a governance token, but it can still be used as a fundraising mechanism. It’s other uses is only limited by our creativity.

At the very least, we should release Umbrella (or any of the other projects in pipeline) prior to retiring the rebase.

[leehom]

iThe treasury draw should be cancelled and sold directly, and the rebase should not be cancelled

[0x149]

@feddas Feddas, I think you missed one potential option for the vote:

Remain the rebasing mechanism, cancel the treasury growth from rebasing, and add 3% annual inflation.

Pls add this option and vote again. Thanks!

[0x149]

@0x149

Pls add this option and vote again. Thanks!

I agree with you to remain the rebase and stop the treasury growth from rebasing.

[siriusye]

i think entirely remove rebase may be too aggressive for the current situation. change the treasury income can be the first step…

[Marc]

Can’t agree more!!!
Go ahead!’