YAMs Replanted and Rebased. What now?

Following a successful relaunch of the audited and fully functional YAM, it is time to turn our eyes towards the future. The relaunch of YAM was meant to largely replicate the initial YAM parameters in order to expedite the governance and auditing process. We are now able to begin gathering live data on the functioning protocol, tuning parameters for optimal functionality, and leveraging the treasury beyond high-yield stablecoins.

This is less of a roadmap than an opportunity set. It is the product of conversations I’ve had with multiple community members, but it is not exhaustive and there’s no mandate to address these opportunities for improvement, though I believe doing so will lead to the best outcomes for the protocol. It is ultimately up to community members as to where they would like to dedicate its time and resources.

At a high level, there are four main areas in need of development, each of which has several outstanding issues or areas for improvement.

Protocol Optimizations:

As mentioned, the relaunched Yam protocol retains most parameters from V1. This was to enable a efficient governance and audit process, and was not to signal the protocol is fully optimized. We should be thinking critically about key system parameters.

  • RageQuit Functionality. The RageQuit functionality would allow users to burn Yams for a proportional share of the treasury. This would fully enable the treasury to act as a price floor, as arbitrageurs would be able to purchase YAM and redeem from the treasury if it were to ever trade below its book value.

  • Treasury Purchase Asset. One of the difficulties that has arisen in the relaunch is low liquidity and poor routing when trying to purchase YAM with standard assets. Purchasing a more standard stablecoin or ETH and then wrapping into yUSD may make more sense. This may also lead to more organic liquidity in the treasury’s purchase asset, potentially allowing for fewer incentives and less inflation.

  • Rebasing Frequency. Currently the rebase occurs every 12 hours, which builds up demand and executes one large buy. It may be possible to rebase more frequently, resulting in less market impact from treasury purchases.

  • Liquidity Incentives. Most liquidity farming programs have not been very deliberate in their reward schemes. The incentivized LP for Yam is used for a very specific purpose: ensure liquidity for treasury purchases. We can fine-tune the amount of incentives necessary to reach that goal. This may allow us to reduce incentives.

  • Treasury Purchase Amount. There is potential to more systematically measure the appropriate treasury purchase amount (currently 10% of positive rebase).

  • Governance and Voting. There is currently an obstacle to full governance participation, in that LP tokens are not recognized by governance. Therefore, we are actively incentivizing people to not participate in governance by being in the LP pool. Changes may be made in the governance system to rectify this conflict.

Treasury Management:

Treasury management is key to the success of YAM in many ways, as its ability to generate yield increases the size of the treasury and value of the protocol.

  • Yield-bearing strategies. Currently the treasury employs a yield bearing strategy by utilizing yUSD. This allows for sustainable growth with limited downside, as it’s based in stablecoins. In the future, we could employ additional yield bearing strategies, utilizing aggregators or base protocols.

  • Strategic Investments. While stablecoin yield generation is great for sustainability and downside protection, in the event of a DeFi boom it is likely going to underperform many protocol’s native assets. Allocating a portion of the treasury to a DeFi index (potentially the new DeFi Pulse Tokenset Index) could be an effective way to ensure the treasury grows with DeFi.

  • Financial Protocols. This has always been the most exciting direction for the Yam treasury to me. Building financial protocols that Yam can help enable and seed liquidity to is probably the most impactful direction it can take, but also the most difficult and resource intensive.

Interface and Usability:

In addition to the direct functionality of the protocol and its treasury, there are a number of supporting tools and infrastructure that will improve awareness, usability, and transparency.

  • Creation of on-chain governance interface. We expect this to be completed in the next few days, and will allow for the final piece of the governance process (forum discussion >> Snapshot signalling >> On-chain proposal and execution) to be easily accessible.

  • Stats and trackers. On-chain analytics regarding market cap, price, rebasing, and treasury growth, would be extremely helpful to provide transparency and information. If helping build this is interesting to you, please reach out. I am committed to supporting community contributors being compensated by the protocol.

  • Uniswap Routing. Currently Uniswap executes inefficient routing when trying to purchase YAM, as yUSD is not included in the default routing options. Improvements can be made to this routing algorithm that will route more efficiently through, for example, ETH>>yUSD>>YAM. A pull request with this functionality has been written by Brandon Curtis of Radar Relay (and YAM ChainWiki fame), and is being reviewed and worked on by other community members.

  • Documentation. We need to create better documentation to onboard developers interested in working on or with the protocol.

Organizational Needs:

While a lot of attention has been paid to how to support and compensate the users of Yam who delegated or missed migration, there has been little directed to how to make Yam a sustainable protocol that compensates its contributors. We must appropriately incentivize the people who enable Yam through their time, effort, and technical contributions. I think a strong precedent has been set for this in directing 1% of treasury purchases to Gitcoin Grants, but we must also take care of our own.

  • Ecosystem Contributors. The creators of Zippo, the Yam Chainwiki, and yieldfarming.info have provided the Yam community indispensable information and interfaces for the Yam community (and more), and deserve to be rewarded.

  • Community Moderators. The YAM Telegram and Discords have a combined over 9,000 members, and the community moderators have volunteered their time and energy tirelessly to answer questions, provide customer support, and help the team think through their decisions. It has at times been a thankless job, and I again believe it is imperative to reward these individuals –– the project would not be here today without their many hours and late nights of service.

  • Yam Core Contributors. Upgrades and maintenance to core functionality of the Yam protocol require a deep understanding that should ideally compound over time. We need to think critically about the best way to reward those who dedicate their time and expertise to Yam, and not rely on altruistic intentions or compensation through potential existing investments. If we want high quality, long term committed individuals working on a project, we need to compensate them accordingly.

As you can see, there is a lot of work that can be done to improve Yam. Despite the last month of progress, the relaunch of Yam is truly a starting point.

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Protocol Optimizations:
I fully support:

  • RageQuit Functionality: this will make the price based on something real as opposed to hype
  • Treasury Purchase Asset: increase efficiency in buying is a great for growth
  • (increased) Rebasing Frequency: The more often the better, up to once an hour in my opinion.

Treasury Management:
financial products/yield bearing strategies etc doesn’t feel much like what Yam is for or should specialize in. Im all in favor of offloading this to Pickle/YFI/other protocols and focusing on being the best dynamic supply stablecoin we can be.

Interface and Usability:
Of course we should do all of these things. I have front end (and solidity) skills and would be happy to help, although I would want to be paid out of the treasury, Happy to take some of the yams in treasury in compensation :slight_smile:

Integrations

Yam should be integrated in to as many other protocols as we can manage. Lets discuss more about this.

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Oh, and why are we targeting yUSD as the price? Why not USD? yUSD is above a dollar (by design), and targeting it means YAM is not very useful as a stablecoin…

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I can’t think of anything that should be a higher priority than this. Making sure that the pool has deep liquidity is essential for building the treasury, which is essential to the health of the entire protocol.

YAM holders should not have to choose between participating in governance and supplying liquidity. All the other amazing ideas here will be easier to implement and move quickly on once LPs can also participate in governance.

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This is another one that I think should be addressed fairly quickly! If YAM holders want core team dedicated to this full-time, then we need to make sure they get paid! That’s at a minimum. But beyond just making sure they can pay rent and feed their family, we need to align incentives so that the core team can also reap the rewards of massive growth and success. If YAM holders make a lot of money, then so should the core team. There needs to be upside. I look forward to discussing this and finding solutions here. Without the core team, then this will slowly die.

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One thing that’s a little unclear to me is the structure of this. For example, I think we should definitely move forward with YAM Crop Protection. I think the community is excited. The market demand is clearly there. And it sounds like the core team is also excited about this (and Brock has already written some code). This is an obvious area to move forward on.

In an earlier comment I mentioned how we definitely need to figure out how to make sure core team is compensated and has plenty of upside. Once that’s done, and the core team is happy and pumped about their upside potential, can this insurance product live under the umbrella of YAM?

Basically what I’d hope doesn’t happen is that the YAM treasury “invests” into this new insurance protocol and gets some governance tokens for that investment. As if it were some seed-stage VC deal or something. That just doesn’t make a lot of sense to me if it’s the exact same core team as the people getting paid by the YAM treasury. I’d like to see that product live under the YAM umbrella, the YAM suite of products. Instead of treated like some external investment.

How does the core team imagine this? What would be the structure of this?

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So my thoughts were originally this, but I can be persuaded to a different viewpoint:

Its not an investment like VC or anything. Basically the way it would work in my head is that the protocol would be akin to Uniswap. A factory would exist that anyone could deploy a new protection pool and if the arbiter accepts its role, they would get the fees. In general, YAM would pick a few pools it wants to support initially and launch supporting UI. YAM holders would then be arbiters over the system, and the treasury, if holders vote for it, could be a liquidity bootstrapper. The arbiter gets a 2-5% fee on premiums paid.This would be instant cashflow for the arbiter, which in many cases would be YAM holders.

i.e. New protection pool created that wants YAM holders as arbiters (but in theory could be any address, but we will have additional infrastructure and knowledge which would lead to YAM being the default and likely main arbiter) -> pool liquidity is bootstrapped -> premiums start rolling in -> cashflow to treasury -> hack? yam holders vote on legitimacy of hack and either set contract to payout coverage or kick it back into coverage mode. Does that make sense? It is designed to be cashflow positive for the arbiter, in which case would be YAM holders/treasury. Not an investment into some token

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Its not an investment like VC or anything. Basically the way it would work in my head is that the protocol would be akin to Uniswap.

In other words, these financial protocols would be governance minimal similar to Uniswap. They’d be fully operational on their own, but YAM treasury (liquidity) and/or holders (governance/arbitration) would add some form of significant value that would generate a fee.

I can’t think of anything that should be a higher priority than this. Making sure that the pool has deep liquidity is essential for building the treasury, which is essential to the health of the entire protocol.

I entirely agree with this. It’s a fairly complex problem from a balancing of incentives and technical implementation angle… definitely giving it a lot of thought. I’ll start a specific thread for it.

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First things first. Human capital is most important for any project to survive.

Devs and Mods to paid first.
Mods have done excellent job answering all questions in Discord.

Devs have done it on the protocol level which is not visible for normal users.

So both should be paid well.

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I think it would be valuable having governance determine a core development team and support them through the treasury.

I also would strongly approve of some kind of development reward system for independent developers who want to build YAM-driven DAPPs to contribute value to the ecosystem. In my view, one way this could work would be for independent projects that could demonstrate quantifiable value added through verification by a governance vote to receive a pre-determined reward from the treasury upon governance approval and execution.

Quantifiable value added is something the community could parse, but ideas of metrics that might prove valuable in this could include thresholds for average tokens staked in a contract, average volume through an exchange, contributions to the treasury, etc.

Basically, in the same way that bug bounty systems reward people for spotting errors in the code, I’d love to find a way to let the YAM community loose so to speak and encourage them to develop/build out YAM’s ecosystem independently, but with the guidance of the core development team and final approval of community governance. I think the more uses the community can find for YAM, the greater longevity and health it will have.

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100% in support of paying the original dev team with the items that Trent listed in this post as the roadmap. Through community discussion these can be adjusted/removed/added to as needed.

I quite agree with this idea, and I would like to make some Suggestions:

  1. Whether can be out from under the vault of quite a number of flow pool of mot as reward, let more people to join to provide liquidity pools are rewarded, thus can greatly increase the depth of the liquid pool, but also promote the vault is converted to a stable monetary impact on liquidity, has increased the enthusiasm to join the yearly check to provide liquidity, very apt to price stability, rapid appreciation and vault.Although the vaults have lost some of their money in the liquidity pool in return, they have grown rapidly thanks to compound interest.

  2. Yam is proposed as a means of payment to developers in order to increase Yam’s usefulness and attractiveness, liquidity and influence.

As for the voting time of the proposal, it can be further shortened (like 24 hours) because there will be a 4 times rebased in 48 hours. The duration can be set by dividing the importance of the proposal, or by the total number of votes cast

use YAM was a good idea

As for rebase time, 24 hours may be better. Secondly, funds after rebase should not be sold immediately, but should be operated manually at a certain time point

Hi everyone,

SUMMARY: lets incentivize development, ideate and push Yam Crop Protection protocol, and pass RageQuit().

most of this TL;DR is reiterations of previous ideas which i think are important along with my reasonings.

i think it is paramount we push and pass a proposal that will begin generating additional cash flows (however small) for the YAM treasury asap. the sooner we get this ball rolling, the faster our holdings/treasury will compound and the harder it will become to compete.

this means im 100% in support of incentivizing developers and community members who contribute to development. if YAM has value (which i believe it certainly does) much of the value right now is its active community members. further, imo it would be contradictory to Yam if we did not establish these incentives right now. perhaps some sort of simple reward system where someone is rewarded YAM from the treasury if they contribute will suffice (obviously this depends on the work, wherein full time work and therefore full time compensation might become a consideration).

while we establish these incentives, i personally think we should push a proposal to vote on Yam Crop Protection. we’d generate arbiter fees (at the very least) with a product that has immediate pmf as well as deploy an extremely useful protocol from which everyone in the DeFi ecosystem can benefit… not just YAM holders (i bet WNXM holders who did not KYC would love to generate income… great ju-ju). im trying to think of the risks associated with creating and using these non-kyc’d insurance coverage pools (feel free to DM me)… would like to discuss this further and think communicating with nexus mutants would be prudent in this regard.

having said that, im not an insurance expert - i know nexus had to do a bunch of legal and regulatory research before launching - but assuming we follow a similar model as nexus which is arbiters are voting on the claims and providing coverage, it should be fine (?). again im not an insurance expert, i could be wrong. whatever the case, again, i think communicating with nexus mutants to walk through potential risks would be prudent.

i would also like to push forward with the RageQuit (). right now some potential YAM holders cannot overlook the treasury purchases mechanism - YAM holders receive 90% of the newly minted supply and the treasury keeps 10% - they view this as an automatic 10% loss. incorporating the RageQuit () will help mitigate these concerns. i view this as a short-term cosmetics improvement that will appeal to more defi users (I believe other short-term cosmetics such as rebasing/treasury mechanisms, frequencies, and %'s will become more clear as we gather more data).

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Fundamentally, I agree all of these protocol optimizations will be important to incorporate into Yam over the coming weeks. After that though, I believe we should have some way to contract blockchain engineers, advisors, and experts to accountably work on Yam’s protocol.

If there was a governance model that created incentives for people to improve Yam’s protocol, that would be great. Yam’s market capitalization can increase with the following feedback loop:

  1. Positive rebase increases treasury holdings.
  2. Yam community members vote on proposals to add new functionalities to Yam’s protocol.
  3. Yam partners with a protocol to contract blockchain engineers to quickly program such proposals.
  4. Proposal gets implemented, market cap increases from new elastic finance instrument deployment, positive rebase increases treasury holdings…

Elastic finance is early and has almost no competition, instruments, or recognition. Creating any instrument in elastic finance would increase Yam’s presence in leading the DeFi space and help fund the treasury.

In the long term, I believe exploring elastic lending, derivatives, and insurance would be the best play. In the short term, however, I believe we should add a DeFi protocol (Uma, Aave, or Nexus Mutal) into Yam’s ecosystem. Building a new elastic ecosystem from scratch may take months and I think Yam urgently needs a financial instrument to utilize a temporary use case while longer-term projects are developed.

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+1 RageQuit, gives a direct, fundamental value (not just indirect governance value) and will help establish a rising price floor (currently there is no bottom support). (YFI had this on launch day, although few used it, I remember the fact that it was there in theory helped establish week 1 price floor.)

–> We should base it on time held x amount, not just amount. 1) promotes long-term gov participation and rewards early supporters (currently bleeding since launch) 2) discourages pump and dump (buy and burn) arb traders. “Time Held” = number of rebase cycles

  • Take the farming theme one step further: what if you can only ragequit after holding for a minimum time period like a week or month? Or 90 rebase cycles? Just like real crops.

–> Should the name be RageQuit? Seems to go against the design ethos of a friendly, welcoming farm. Perhaps TimeToHarvest or HarvestSeason or CropBurn or CandiedYam or something?

Treasury strategy:
–> This can be a full-time team just dedicated to treasury strategy and hunting alpha
–> Innovation: Having a treasury that simply does yUSD type investments is not innovative and does not provide anything new to the market. A treasury fund that has a unique strategy to invest in non-standard pools could be very attractive. Yearn Vaults make farming automatic and easy. Yam Treasury could make complex/emerging new markets automatic and eary. Such as:

  • NFT art (what if we became the biggest art dealer? lol)
  • NFT insurance futures
  • “Day 2” farming (flash audit and invest in newly launched farms; Yearn doesn’t do this, too risky)
  • YAM VC treasury fund investing in pre-launch of promising projects --> this has a really great story of ecosystem building
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Is there a specific reason why we wouldn’t want YAM holders to always be the arbiters… to basically connect/tie this insurance product to YAM more directly? If we’re gonna be spending YAM funds to build this out (which I think makes sense), I’d love to see some value always accrue back to YAM. I’d like to see this become a YAM product. I’d like the success/growth of this product more directly related to the success/growth of the YAM treasury (which means growth of the YAM token).

Furthermore, it seems unrealistic to expect that there is no governance on this protocol. There are many params that might need to fine-tuned and changed over time. For example, the breakdown of the premium distribution between insurance pool, PCF holders, and arbiters. That might need adjustments as we learn and go live.

I think this protocol needs governance to improve and progress. Why not let YAM token holders govern this protocol, since it’s a financial primitive that was homegrown on the YAM farm?

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An excellent outline of opportunities. I’ll be referencing this frequently.

I’m in agreement with Mick and others. Prioritize fixing governance/liquidity issue and starting discussion on contributor compensation. The first is fairly straightforward. For the second, I’m very much in agreement with Mick. We need attractive compensation for our people.The sooner we get the discussion started the sooner we can make that happen. I would also caution against bloat here going forward, as I think it’s crucial to remain lean as I expect that will be a significant edge over competitors.

Then, beyond any other straightforward items like fundraising optimizations, I think we should prioritize YCP to secure a cash flow as quickly as possible. Things like strategic investments and yield strategies should definitely be pursued, but they should be peripheral and in support of YCP.

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