Specification for a Simple Ragequit-like Function

[TOTv3]

Basic Summary
A core value proposition for YAM has always been the unique value of our growing treasury model. A ragequit function has been a goal of the community as a way to create a price floor from the beginning. Full implementation of ragequit will not work as it was originally envisioned primarily because capital inside the treasury will be utilized to grow and develop the Yam ecosystem. This proposal is an alternative to initial ragequit designs and would allocate n% of the value of the treasury for use in executing buybacks if market cap is less than book value.

Abstract
A function will be created that is callable by anyone. When called, the function calculates the necessary size and makes a purchase accordingly. Funds for use in this function will be earmarked ensuring they are continuously available. This will effectively create a price floor for Yam as originally proposed by ragequit by providing a strong defense for YAM as price is falling.

Motivation
For info on initial motivation for a ragequit-like function see:

YIP: Add RageQuit Functionality

YIP: Add RageQuit Functionality Basic Summary Develop a function that allows YAM to be redeemed for a pro rata portion of the Treasury. Abstract A core value proposition for YAM has always been the unique value of our growing Treasury model. While it has been assumed that YAM value would be linked to the Treasury, this proposal would make it official that YAM will be backed by the Treasury and immediately signal a price floor. Motivation With market volatility and a complex story to tell (…

Specifications

1. Upon passing of this proposal, n% of the value of the treasury will be allocated for use in the function.

2. When the function is called:

• If market cap is above book value there is no action
• If market cap is below book value the necessary purchase as calculated by the function will be executed on the highest liquidity YAM pair.

3. YAM procured by this function will be used in the most productive way possible determined by the community. This might be burning, selling, using for incentives, providing liquidity, lending, etc.

4. The value of funds allocated to this function should increase as the treasury grows up to a maximum cap. Options for achieving this are open for discussion and determination by the community.

What percentage of the treasury should be allocated for this function?

• 5%
• 10%
• 15%
• 20%
• Do not adopt this design

[ross]

This design is a nice step back to simplicity but I still don’t feel like it adds value for committed YAM holders.
A few comments:

• The funds should not be earmarked until we need them. We can set up a framework for how and when funds get added to the sale.
• The limit order benefits sellers more than committed holders and leaves the treasury with a bunch of YAM that it can’t use effectively.
• People who believe in the project should be rewarded for holding through this sale and there is no mechanism here to determine who was committed and who wasn’t.
• Doesn’t lean in to the Meme enough

So with that said, I present:

The Great Yam Wall - Remix

“The Weak hands have smashed themselves upon our battlements and dealt us a fine blow. But We, mighty and strong of Yam, stood tall before them. O’ those wretched hordes did furiously bellow! But when the clamor cleared, We few did rebuild again with great Vigor.”
-Unattributed Inscription upon the Great Yam Wall

When all looks to be lost and the Barbarians are at the gate, we must buy ETH with our treasury and build a wall. The wall is built with ETH, but it is manned by fearless Defenders who are armed with their delicious and deadly YAMs!

The Treasury provides ETH and community members deposit YAM into the Great Yam Wall smart contract. This YAM and ETH get added to an AMM pool. Pool tokens are stored in the smart contract. Depositors are given an ERC-20 representation of their claim to the share of the YAM in the pool. If the price of YAM drops then the ETH gets eaten up and there are more YAM in the pool. This is bad for the treasury who provided the ETH but good for the YAM defenders as they end up with more YAM than they put in. In this scenario, the treasury absorbed the impermanent loss from the price drop while defenders were rewarded with impermanent gain. If the price of YAM goes up then the YAM defenders lose YAM but can be given a share of the ETH profits above the initial treasury contribution.

YAM governance can set a Market cap/Treasury ratio at which the wall gets built. It would need to determine what percentage of the treasury gets contributed to build the wall and where exactly those funds come from (investment arm, yUSD, selling other assets, etc). The Wall could be built in phases to make sure the treasury isn’t drained.

Let’s run through the process:

• YAM market cap reaches $4 million and YAM token holders vote to approve the building of the Great Yam Wall.

• The contract is deployed and treasury funds are allocated toward building the wall.

• YAM defenders are allowed to deposit YAM for our brave soldiers to take up arms.

• Those YAM are matched with the ETH and deposited to the Sushiswap ETH/YAM pool.

  • If there is a surplus of YAM then they are contributed proportionally from each defender and the excess can be reclaimed or left to be used if another round of wall defense is needed.
  • If there is not enough YAM contributed then what is contributed will be matched with ETH and added to the pool. The rest of the ETH will be used to buy YAM from the pool until there is an equal proportion and that can be staked.
    • For example, $50k of YAM is needed but only $25k is deposited, then that will be matched with $25K in ETH and the rest will be used to buy YAM until all the ETH can be deposited with the YAM.

• Scenarios:

1. After the wall is built the price of YAM continues to drop. Then the AMM pool will gain YAM and lose ETH. When Wall defenders leave the pool, they claim their share of the YAM. In this case, they will get more YAM than they put in. The Treasury will get less ETH than it put in.
2. After the wall is built the price of YAM increases. Then the defenders will end up with less YAM than they put in and the treasury will get more ETH than it put in. After reimbursing the treasury, excess ETH can be distributed to Wall Defenders.
3. After the wall is built, not enough YAM is contributed by Defenders to match the treasury allocation and some is sold for YAM to match liquidity. The purchasing of YAM by the treasury should increase the price and cause a net loss of YAM for the defenders. But if the staked defenders are given the rights to the YAM from the treasury LP tokens then this loss is offset. The treasury has just bought YAM for the defenders
4. After the wall is built all of the ETH contributed by the treasury is used and there is excess YAM that isn’t matched. We Either allow it to be reclaimed or left and added to the wall later if additional ETH is voted to be committed.

At some point you will reach an equilibrium where no one left wants to sell, defenders have gained lots of additional YAM, and some of the treasury has been sold off to keep it a certain level below marketcap.

In doing this, the treasury rewards committed holders with more YAM without giving them away to sellers. Defenders are taking a hedged short position on YAM, but the rewards are such that at the end of the process they either end with more YAM or less YAM and more ETH. Let’s reward the strong hands.

“All in all you’re just another Yam in the wall”
-Orange Floyd

[feddas]

@ross

• The funds should not be earmarked until we need them. We can set up a framework for how and when funds get added to the sale.
• The limit order benefits sellers more than committed holders and leaves the treasury with a bunch of YAM that it can’t use effectively.

Funds need to be earmarked in order for this to be actually usable. ie. What happens if all the funds are lent out when we need it?

There are plenty of ways to use the Yams effectively. ie. instead of the treasury taking Yams from the positive rebase, it can be taken from the pool and sold off. effectively refilling the treasury and pool without taking from the positive rebase. In this case all Yam Holders receive the full positive rebase instead of 90%.

[alex]

Appreciate your ideas and excellent work. We should take the initiative to solve the problem instead of finding excuses. At present, people call the money flowing into the treasury a tax. Try to change this concept and solve this problem. We Will develop healthier.

[xphe119]

do you hold any yam? ssssssssssb

[xphe119]

Appreciate your ideas, handsome man

[feddas]

@ross

Those YAM are matched with the ETH and deposited to the Sushiswap ETH/YAM pool.

• If there is a surplus of YAM then they are contributed proportionally from each defender and the excess can be reclaimed or left to be used if another round of wall defense is needed.
• If there is not enough YAM contributed then what is contributed will be matched with ETH and added to the pool. The rest of the ETH will be used to buy YAM from the pool until there is an equal proportion and that can be staked.
  • For example, $50k of YAM is needed but only $25k is deposited, then that will be matched with $25K in ETH and the rest will be used to buy YAM until all the ETH can be deposited with the YAM.

While your idea is very elegant and would likely work better theoretically, in reality it might not work as planned. There is too much reliance in “defenders” and more complex than @TOTv3 and I idea.

We want to create a simple idea that is easily executed and really put this behind us. The point of this function is to never actually have to use it, but it is there for all Yam token holders benefit.

[feddas]

Unless there are any other comments, suggestions or questions, we will be putting this idea up for a snapshot vote with the same poll above. After snapshot it will go into the developer queue.