YIP-10: Change the Delegator Reward Distribution

Abstract
The proposed delegator reward distribution in YIP-2 does not reward YAMv1 delegators sufficiently. 242,953 YAMv1 delegated to save YAM, yet according to YIP-2 only 173,588.83 YAMv3 will be awarded. This isn’t even a 1:1 reward. Under this model, delegators will receive a fraction of their original delegated amount as rewards. This proposal would remove the flat-reward model specified in YIP-2, correctly quantify the amount of YAMv1 delegated, multiply this amount by 2x, and distribute them by address on a pro-rata basis.

Motivation
YAMv1 delegators are not getting sufficiently compensated for doing all they could to save YAM. Individuals who delegated, exited the YAM/yCrv pool which was yielding 100% ROI. These individuals also implicitly committed to staying out of the pool for 3 days and essentially missing out on a 300% ROI.

The official YAM twitter even indicated that the original intention was that delegators would get “significantly more” YAM than those who remained in the pool.


Under the current model proposed in YIP-2, this is not the case.

YIP-2 calculated delegator rewards of 173,588.383, while 242,953 YAMv1 was delegated to save YAM. The proposed rewards do not even account all the YAM that was delegated to save YAM (https://raw.githubusercontent.com/yam-finance/yam-protocol/master/yam_delegator_snapshot_10650187_draft.json).

Proposal

  1. Correctly account for all the YAMv1 that was delegated (242,953), and multiply that by 2x.
  2. Distribute this amount as YAMv3 (485,906) on a pro-rata basis to addresses in this file (https://raw.githubusercontent.com/yam-finance/yam-protocol/master/yam_delegator_snapshot_10650187_draft.json) according to the percentage delegated.

Total YAMv3 delegator rewards would be 485,906 instead of 173,588.
Total YAMv3 supply would be:

3,726,411 (YAMv2)
1,100,000 (YIP-2 YAMv3 Liquidity Incentives)
485,906 (Delegator rewards)
= 5,312,317

Note: This excludes the 1m additional YAMv3 reserved for Treasury, which is under vote in YIP-12.
https://snapshot.page/#/yam/proposal/QmctSLYFvLhPoePehigZMwoLhdgyrMxjnrroFyPdmCVJoc

Currently being voted on-chain:
https://snapshot.page/#/yam/proposal/QmVG4r8Qm1A1no6VQPrxrQGNQ5c7T4x63ELLNXCRWupihm

Added here for deeper discussion.

7 Likes

I think this is based on a misunderstanding of “significantly more rewards than those who remain in the pool”.

Fundamentally, during the 12 hours that YAM holders were asked to delegate, only 107k YAM were distributed in rewards. The proposed 170k rewards then certainly meets the threshold of more rewards described.

I don’t think the number of YAMs delegated is relevant at all, as all communications related to the opportunity cost of delegating. The 100% ROI you are mentioning is based on a APR (Annual Percentage Rate). It’s misguided to apply that to a 12 hour period as you are doing, and thus your motivation for 242,953*2 for rewards I find fundamentally flawed.

3 Likes

The number of YAM’s delegated is certainly relevant and proposing an amount of rewards that is less than the delegated amount is in no way making the delegators whole, and at worst deceptive based on the tweet.

The “100% ROI” was the daily ROI - not an APR - received in the form of YAM rewards in the YAM/yCRV pool. It was from yieldfarming.info and I remember seeing it myself. It was not a 12 hour rate annualized into an APR, it was daily ROI.

In fact, I am completely baffled that the 170k YAM rewards were even proposed, this is no way compensates for the opportunity cost delegators were prepared to incur for not being in the yCrv/YAM pool for 3 days as they deleagted their YAMs to save the protocol.

2 Likes

I’ll be voting against this proposal.

For one, I believe that it’s important to keep flat portion of delegator rewards in order to help the small token holders. A flat reward ensures that everyone is at least compensated for gas cost + extra for delegating. Some could argue that small token holders may be receiving proportionally larger rewards with the flat model, but they also paid proportionally larger gas fees with delegating.

Secondly, a pure x2 reward system would further centralize our project around whales and widen the gap between small and large wallets. Situations where a 50K YAM wallet receives 100K YAM rewards while 10 YAM wallets only get 20 could lead to governance issues down the road.

3 Likes

Ah daily ROI, that makes more sense.

I think our difference in opinion is coming from opportunity cost YAM holders “were prepared to incur” vs. opportunity cost they actually did incur. Ultimately it was not required for users to delegate for 3 days – and in fact most did not delegate for three days.

Ultimately due to the emergent properties of the bug and delegation proving fruitless, the opportunity costs and corresponding rewards changed significantly as the situation developed.

I also still am having a hard time understanding the number of YAMs delegated thing. Is that because of the 100% daily ROI? This number would have decreased if all those YAMs were in that staking pool. The amount of rewards is not percentage based –– it’s a hard number. About 107k YAM in this case for the 12 hour delegation period.

To be clear, I’m not specifically arguing against additional rewards –– I am just addressing the rationale presented here.

Personally lost, willingfully, over $15k to save YAM. Now I am awarded 65 votes, roughly will worth $5k, delegators should be awarded more. Otherwise next time you will not have “community” support.

Its not only about ROI. It also about rewarding the right community members in order to build a community.

Think about the demographic of members who actually paid attention, willing to let go of profit for the greater goods, willing to trust that you can do the right thing. Those are members you want to build a strong communities. Betray that trust, you will leave a bad taste. The new Yam 2 communities will be profit driven and most treat it as another pump and dump instead of a fun experience.

Personally, I delegated. After seeing the vote passed, I went to sleep. The thing was scheduled past midnight in U.S (where I believe many members reside). Do you expect everyone stay up and wait for the fucked up announcement at 3 am in the morning? Yam lost 90% when people woke up. Is that my fault for trusting you guys? Probably. I am sure you guys never think bout people like me cause you probably sold everything and get out at the right time.

Everything will be decided by “the community” as you guys said. But have you asked: “Who is the community now?”

6 Likes

I would take it a step further and give rewards only to those we remained delegated through the rebase.

Certain people remained delegated through the rebase because we trusted the team to fix the bug. Other people saw this tweet and sold their YAMs before the rebase.

I argue that the delegators who delegated until the end should get the delegation rewards and not the people who jumped ship beforehand.

5 Likes

Ouch :confused: I’m sorry to hear that…

Can I ask how you lost $15k on the delegation? It feels like some delegators are trying to get recouped for the price collapse more than the actual delegation costs… which if that’s the case, I hear that, but it’s at least outside the twitter’s stated goals.

A proposal that says “hey, we were led to believe YAM could be saved, and it turned out it couldn’t, but we took on a lot of risk to remain faithful to the project and think we should be rewarded beyond the team’s proposal, as we’re clearly dedicated community members” rings a lot stronger to me than trying to pick apart the meaning of “opportunity cost” and “significantly more.” But, that’s just me and I have little actual voting weight in any of this, and there are a lot of conflicting self-interests among the community.

One idea to not impact the total supply numbers would be to shift 1.1M in LP incentives to 1M and apply that 100k to delegators.

Its absolutely RELEVANT! I can’t fathom how your team does not even considered about loss due to the crash. You wanted people to leave the coins in there not moving for couple hours to 3 days.

It was 3 am in the morning in USA, and you announced on Twitter the solution didn’t work to trigger the bank run, with a blog post 1 hour and a half after. Since this seems to be an English speaking project and many founders were in the USA, I assume many supporters were in the US.

The “potential profit in the pool” is relevant BEFORE the FUCKED UP. The Bank Run is MUCH more relevant AFTER the incident. The loss due to “too late to get to the exit door” is much higher than just “potential profit in the pool”.

You guys are “the community” now because there is no real community yet, its unbelievable to see the short thinking from the leaders of this project. Your promises of potential profit in the pool does not account for the tragic loss of people money in 1 -2 hours bank run. Its irrelevant to discuss bout ROI without addressing that.

3 Likes

As for someone who is new to the community, can i say, shit happens. The community pulled together like a good community should and you didn’t lose all your investment, That’s your win, your still in the game.
Don’t come up with fiscal policies that line your own pocket and do not look after the community as a whole.
If you want to do anything that will enhance the community reputation, helped those who missed the swap. I was involved in a project that had to do a token swap because of a contact error. As the marketcap grew , so did the voices of those who missed out on the swap

1 Like

The team’s original proposal lead on delegators to believe that they would be rewarded significantly more than what has been presented in YIP-2. Further, the tweet is not the ultimate arbritator; this proposal, outlined above, compensates delegators more fairly for actually trying to save YAM, than how YIP-2 currently does.

As for accounting for gas costs for smaller users. They would receive more YAM under this proposal than YIP-2 as well, without significantly increasing the supply. It benefits everyone.

1 Like

I think it’s clear the team’s proposal is going to get amended somehow and after hearing from many, I think that makes sense.

Two further notes:

  1. Under this proposal, anyone delegating less than about 13.5 YAMs (hundreds of delegators) will be getting less YAM – many definitely not even recouping gas costs.
  2. Where is the 242k number coming from? Based on snapshot total delegated was 302k? Where is that change coming from?

[Edit: I failed to account for pro rata with the 13.5 YAM getting less thing. It’s actually a far higher number of delegated votes that get less in this proposal than YIP-2 when accounting for pro rata. 13.5 would be correct if it was a straight 2:1. But this is further evidence of why I do not support this proposal. I feel it’s not completely thought out and is misleading.]

1 Like

I agree the YIP-2 delegator rewards were too small. I think the proposed rewards here are much more reasonable. I bought more YAMs and I know others who didn’t sell theirs due to the confidence and incentives given before the rebase. It turned out to be mistaken and caused a huge loss in value for the earliest and most loyal supporters of the project. Mistakes happen, that’s fine. But we are an early community, and we should try to find the number that tries to make the earliest supporters whole without causing a negative effect on the project.

I think this number is fair with that in mind. It doesn’t come close to making delegators whole, but I think it’s sizeable enough to show the community that strong support is rewarded.

Edit- I do think it should be not more than 80% pro-rata and the rest a flat rate as there were many small addresses who had to pay gas costs that need to be re imbursed.

3 Likes

I think the original YIP-2 was not thought out well. It merely backed out the delegator rewards from a 6m total supply, which is a sloppy and backwards way to do it. Anyone with over 100 YAM delegated, which is worth ~1,400, will get more rewards under this proposal than under YIP-2. I’ll note that 100 YAM is less than 0.03% of the total amount delegated, in other words a very, very tiny amount of the delegation despite there being tens or perhaps a hundred addresses out of a total of thousands or tens of thousands addresses delegated.

The intention was to take the amount delegated according to the snapshot, multiply it by 2, and then distribute it pro-rata. If the amount delegated at snapshot was 302k then it would be based on that number. The treasury allocation alone is 1m YAM, highlighted in YIP-2, and the incentive rewards are roughly 1.1m. This proposal is hardly adding to the supply significantly, it is more about making it right to delegators, and sending a good-faith gesture to current and future YAM holders that if something goes wrong the community will rally together and make it right.

This 170K vs 107K YAMs is INCREDIBLY misleading.

At the time of delegation, the 9x Rebase already had occurred. The community delegated 242,053 x 9 (rebase multiplier) YAMs @ a price of ~$14 (or $126 for 242,053 OG YAMs) at the snapshot. So the actual amount YAMs delegated at the snapshot was 2.178M YAMS. You keep referring to “OG” YAMs which is incredibly disingenuous here since the impact of the failure needs to also be quantified in dollar terms, NOT JUST YAM TERMS.

The community is incredibly triggered because you keep marketing this as a 54% bonus in YAMs which on the face is technically true but is absolute BS misleading because in actuality is a 3-4% “bonus” in $ terms.

If you are speaking in OG YAM terms, the delegator rewards are being anchored to a price post failure (now $13-14). The delegator rewards should be anchored to the price PRE failure ($126) given the opportunity cost prior to Brock publicly declaring the project failed

I actually think this proposal is still extremely light on rewards but I’ll support it.

3 Likes

This is utterly unrealistic. That capital doesn’t exist. There is no ability to pay delegators that kind of money even if the current owners of YAMs wanted to.

Also the “opportunity cost” of delegating instead of LPing through the price collapse was avoiding a loss of 90% of capital which is what actually happened to the LPs who stayed in the pool, not the 300% gain mentioned in the proposal.

1 Like

I’m saying anchoring to the accurate price data, not rewarding that price. There are certainly fair mechanisms to distribute a much healthier reward to delegators …e.g a % distributed and a % vesting over an extended period of time.

2 Likes

As one of the current owners of the project (I bought when people dumped it, and I farmed) I feel giving around 5% of current equity to delegators seems fair).

Giving way more than that seems excessive, and I won’t support that. I’m also not going to support any proposal that takes funds away from small delegators like this one does.

1 Like

The bottom line here is Delegators were the original true supporters of the project willing to save the project. One of the founders then stated it had failed and some people held and some people sold in which was signalled to a resonable person as " it’s over ". A line needs to be drawn in the sand to recongize this.This is a case of early supporters not being rewarded. Within all the confusion many have sat back waiting for direction whilst people who don’t even care in the project have capitalized on cheap yams. If OG delegates are not in a better position than before this all went wrong then what type of message does it send to the project and what it stands for. I invested early in Yams to support a vision and now i feel that vision has been lost.

3 Likes