YIP-110 Treasury Redemption re-Vote

Treasury Redemption re-Vote

Proposal by @ross, @ethe, @feddas, @Designer, @chilly
7/7/2020


There was a snapshot vote that recently passed to allow redemption of the assets in the YAM treasury with YAM tokens, with 54% voting for, 46% voting against, and meeting 410% of quorum (2.05M YAM voting). This vote was put up without any announcement or presentation in the public governance discussion spaces of the DAO (Discord and/or Discourse Forum) and passed on a last minute push.

As a DAO, we are beholden to the will of the token holders, and so this vote passing is a big event and must be respected. With that said, we are beholden to all token holders and the fact that this vote was created in what could be considered a sneaky and underhanded way cannot be ignored. A vote of this magnitude should be thoroughly discussed and announced, with ample time for stakeholders to weigh in and vote. There are rules around creating proposals and giving sufficient notice to token holders to make a decision. An unannounced vote does not meet these criteria.

Instead of making a unilateral decision that this vote is invalid, we recommend that it be re-proposed via the proper channels and announce it widely so that all token holders have the ability to weigh in and ample time to understand the issues and vote. If those who proposed the vote believe that a treasury redemption is the will of the YAM token holders then they should have no problem with a well publicized vote.

The Proposal

Because the proposer on the original vote is anonymous (address is 0x99a7eDB791c290194B7d037B15E51C7aA500080A), I will get this started by posting the text from their proposal here:


How much you would receive per YAM: ~ $0.25

Yam is trading at a significant discount to its book value. This proposal would allow token holders who would like to exit to do so and allow long term holders to remain. The primary argument against doing so has been that it would hurt the projects future by draining the treasury to the point where development cannot continue. This is provably false for several reasons with the main being that well over 80% of the YAM supply is in wallets that do not move and can be seen as stagnant as well as not voting or delegating. This means that a very significant percentage of the treasury will remain to sustain years(at the current burn rate) of future development for those who decide to hodl.

This is an off chain proposal to gauge if an on chain proposal should be made in order to determine if the majority of active and voting yam holders would like to have the option to redeem their yam from the equivalent ratio of the treasury assets.

There are several simple and secure solutions for the implementation of this if chosen by the community. The most obvious and secure solution would be to utilize the exact same smart contract used by Lobis[sic] to dissolve it’s treasury holdings: https://etherscan.io/address/0x889dfe07caa0baf3814ddcd1b933d208d9913b5e

Please signal you interest in being able to redeem YAM from treasury assets. I do believe it most practical to have this window open for the period of 1 week. After this time window, the assets would be transferred back to the yam treasury and redemptions closed.


This post will be up for a week after it is posted to the discord and socials, with another week to vote on snapshot. To ensure fairness, the snapshot block for the new vote will be set to the same snapshot block as the original vote. The votes will be announced on the discord, this forum, and via the official YAM Twitter.

One editorial note: The redemption price listed in the text above is innacurate. You can see the value and composition of the treasury here. There is ~$3.16M in the treasury and the supply of YAM is 14,692,088. That Yields a redemption value of ~$0.215 per token. This number will be subject to change as the value of the treasury changes, and the number of YAM increases by 12,000 weekly due to liquidity mining incentives.

Please discuss below.

2 Likes

I am against this idea, treasury arbitrage to say the least with many parts not in the ethos of what yam is. Conclusion, it will cause harm to yam than do any benefits. Additionally i see the yam protocol value way beyond whats proposed. Noting that contributors are working on many things, and as far as my efforts goes big plans for yam long term and what its future holds are in the works.

2 Likes

I Do NOT support this proposal

I have been an on and off contributor for Yam since 2020, my journey started with helping Yam Treasury’s investment strategy. I’ve recently restarted my work with Yam’s Treasury as it needs a more structured approach to rebalancing its assets: Yam Treasury Management and Maintenance Framework Silo

In my opinion, Yam’s Treasury is the life line of Yam DAO, without it, it will no longer operate. Do not take this vote lightly.

There is someone who wants to take advantage of the current situation where the Treasury value is higher than YAM MCap. I expected this situation to happen, especially in the bear market where people are selling tokens only because of the market sentiment.

Here’s my take on Yam DAO and what the treasury holds for the future

The past 8 months, I’ve been assisting Yam reducing expenses and holding contributors accountable for their compensation. I’ve been doing this solely as a tokenholder and not a compensated contributor. Expenses has gotten significantly better but it is still not as lean and efficient as I think it could be but it is 100% moving in that direction. My purpose is to protect the treasury at all costs, reduce expenses, consolidate, then build again.

The next phase for me is to help the team finalize Yam DAO’s minimal governance structure. Redesign treasury management structure to minimize and simplify maintenance. This will create a streamlined structure so Yam is able to start building during the bear market. I will be driving this forward as my primary goal.

Why should YOU support YAM and vote against this?

Currently the MCAP of yam is approx 50% of the value of the Treasury.

  1. Yam is at a 50% discount to the treasury which has preformed very well during this bear considering the fact it holds mainly stablecoins / ETH / BTC / DPI. Here’s a Dune dashboard for more information:
    Dune
  2. This treasury has performed better than my personal account YTD because the investment strategy was built for the long term. Holding Yam at this price has minimal downside risk vs potential upside given the discount.
  3. Treasury rebalancing will further reduce risk. It is a no brainer to buy and hold YAM now because of the asymmetric upside when the treasury holds a diversified basket of Stable/ETH/BTC/DPI and at a significant discount.

You can always vote to dissolve the treasury but once it is done, it cannot be undone.

Feddas

I Do Not Support This Proposal

My Thoughts on this Vote

I have spent the last year working full time on YAM and I am committed to making it a truly decentralized organization in which token holders have the power to decide upon and implement the direction of the DAO. Their mechanism to do so is via voting and public discussion. I will respect the opinions of token holders if they want to make the treasury redeemable, but it must be done in a way that is transparent and gives all stakeholders a chance to weigh in.

In the sections below, I am going to bring up some irregularities I have noticed in the recent vote, explain why I think it is a bad idea and the logic is flawed, and finally, make a case for why the treasury is a valuable asset that all YAM stakeholders should want to maintain as well as the plans to make the treasury work for token holders.

Irregularities with the first Redemption Vote

There is evidence that this is a coordinated effort by one person, or a small group to make the treasury redeemable for their own personal benefit.

  • As previously mentioned, this vote was not announced by the proposer at any point on any of the public discussion channels that the DAO uses.
  • It was posted on a public holiday in the US when many voters would not be around their computers.
  • The 2nd, 3rd, and 4th largest voting addresses for the proposal (253k Bou / 632k unscaled YAM total) have 1 or more transactions between them, implying that it is one person or a coordinated group. The second largest “for” voter was 0x2281a3cd35ad0314f4aab831017930078ed461f7. This wallet received ETH from the 3rd largest “for” voter (0xcb84879f21ba61ebe5d0484e807b74a28947f9f0) in this transaction. It also received ETH from the 4th largest "for voter (0x301d71929e484daed55e9d8da63debcbdbbbfe40) in this transaction
  • These wallets have been funded by, or are connected to this wallet which received ~1.6M YAM from Huobi on June 27th.

None of this makes the vote “an attack” as there is nothing saying that someone can’t create a snapshot vote whenever they want, but it is context that should be considered, especially when deciding whether a re-vote is warranted.

Why I Do not Support This Proposal

The text of the original vote states:

The primary argument against doing so has been that it would hurt the projects future by draining the treasury to the point where development cannot continue. This is provably false for several reasons with the main being that well over 80% of the YAM supply is in wallets that do not move and can be seen as stagnant as well as not voting or delegating.

While I can’t argue that only a minority of token holders vote, this is no different from most DAOs, which have a smaller core of committed voters. It also has no bearing on whether the treasury should be redeemable.

At no point has the Yam DAO ever sold tokens directly or implied that direct treasury redemptions would be provided. The treasury that the DAO currently has was built via the rebase mechanism, which was stopped over a year ago (Dec 2021). The only stakeholders who may have any shred of an argument for a claim on the treasury are the people who owned YAM during the rebasing phase of the project. But realistically, the way the system worked was perfectly clear and the code was all public, so anyone who owned or bought YAM at the time implicitly agreed with how it worked.

YAM is a communally directed treasury. Token Holders vote to determine how it is spent. Redemption breaks this model and provides an attack vector for opportunistic arbitrage that drains the treasury without supporting the price. Allowing redemptions is the beginning of the end for YAM. It benefits those who have recently bought YAM over those who have held it and worked to make it better.

Furthermore, YAM is already redeemable. As an organization, I believe YAM should guarantee that it is always possible to enter and exit the DAO, but doing so via direct redemption, while there is a liquid secondary market is asking for attacks. We have liquidity incentives and are discussing buying protocol owned liquidity to allow permissionless participation. Direct redemption and deep liquidity are contrary to each other. We want to provide deep liquidity so that joining is frictionless even for large purchases. But in doing so, if we allow redemption then we also provide the means for which anyone can buy tokens when cheap and use them to vote to claim part of the treasury. This can only lead to a slow eroding of the treasury while doing nothing to support the actual work being done by the DAO.

You bought YAM. The DAO does not owe you anything unless you want to come work for it. If you no longer believe in the project we provide the means to sell the tokens like everyone else.

Kill me Quickly or Not at All

Framing treasury redemptions as “just another day in the office” where work will be able to continue but with a slightly smaller treasury is bullshit. It is the beginning of the end. If voters no longer believe that YAM should exist then they should signal as much. For wallets that have not participated in YAM before a few weeks ago to come in and suddenly decide that they deserve some of the treasury is ridiculous. We continue to pay contributors to build out the DAO, with little objection on forums or discord, and few votes against other than those occasionally from the contributors.

If we want a referendum on the state of work that is going on at the DAO, that is fine. We provide the means to do that. Those of us who are left, care about the DAO. We are working to build a better organization that lives up to the original goals and ethos present at its founding. We have made very public changes to the way we work, pushing for greater transparency and accountability and trying to put the power to decide the fate of the DAO into the hands of the token holders. This is all visible and anyone can comment and make objections at any time.

I have laid out my vision for what YAM can and should be: A truly decentralized hyperstructure that funds public goods, builds useful tools and products for its participants, and blazes new paths in how we organize in a decentralized way. We are at the beginning of building something interesting and innovative. It won’t be easy, but bear markets are for building and that is what I plan to do.

I have ridden YAM down from highs of 5 dollars, and I plan to put in the work to make it valuable again. Getting $0.21 per YAM is a terrible RR for anyone that has held YAM for more than a month and is nothing more than capitulation. I don’t want to succumb to opportunistic vultures who see a juicy arbitrage and opportunity to make a quick buck when this space has so much opportunity. We can build real value and we are just getting started. I hope that I can convince the rest of you of that in the coming week.

Everyone who cares about DAOs, Decentralization, and YAM in general should vote no to this proposal.

1 Like

I Don’t Support – Repeat – I Don’t Support

From what I have gathered, this proposal is a deceptive attempt to arbitrage the Yam treasury.

  1. It was submitted on July 4th, a holiday - (similar to an attempted attack on the Yam DAO on Christmas)

  2. The proposer(s) did not follow the Yam governance conventions of pre-notification of the snapshot proposal so that the Yam community was made aware and was able to become engaged.

  3. There is a question about the integrity of the duration of the announced snapshot timeframe and the actual amount of time before expiry.

  4. Allowing redemptions will benefit a small group of addresses that wish to arb the treasury and diminish the longer-term potential for Yam.

  5. Because the treasury redemption proposal was executed with highly questionable intentions and because it could be an existential event for Yam, I support a discussion period and a new vote that is executed within the proper Yam governance processes.

2 Likes

I Do Not Support This Proposal

It is unacceptable for early holders of YAM to redeem treasury assets at a price of $0.25 per YAM.
For those who buy under $0.20, there will be huge profits.
This proposal is very unfair to long-term YAM holders.

2 Likes

Long-time holder of yam here, I do not support this proposal, this seems like it would be disaster for the project and for early holders like me. It also seems to have been a coordinated effort to sneak this vote through. I didn’t see anything about it, if i had i would have voted No. We should not let this pass.

2 Likes

Hey I’m writing about this vote.

Was there a forum conversation for the original proposal? I don’t see it but I could be wrong.

1 Like

Hey Brady, There was no discussion anywhere about the original proposal which is why we have proposed the re-vote. The re-vote seemed like the most fair way to approach this, considering the original snapshot was approved (albeit in what I consider to be an underhanded way).

I’m a little disheartened that there is no discussion here, but so-be-it. I will add to what seems a like a monologue with what I wrote on the discord in response to a comment there:

My response:
Hey Narnoo, good to see you. You read correctly and there is a vote to make the treasury redeemable, which is a little different since only what people claim would be removed, but you are directionally correct.

it looks like a closed cabal focused on slowly draining the treasury through contributor payments

This is a view that I am really trying to change. There are only a few of us still working on YAM, but we are working on building things out so that anyone can contribute and it is up to token holders to make the important decisions. I understand that in the past a path to contributing was unclear and I hope that this new model will make it easier to do so. I don’t want to be part of a “cabal” and I don’t want to drain the treasury. I want to work to make the DAO better and get paid to do so. But it should be up to token holders to decide if they think that my (or others’) contributions are worth that pay.

In terms of what has been going on, the most in depth information is on the forum in the form of grant requests (part of this new system that we are rolling out and testing ourselves) and transparency reports. I have spend a lot of time trying to get these reports as detailed as possible (with varying levels of success). You can see them here: Contributor Compensation - Yam Forum.

Finally, projects and reasons to continue:

I won’t try to bullshit anyone and say that the old projects (synths, insurance, mofy, etc) are being worked on currently. They aren’t. We are down to 1 and a 1/2 (I’m the half) developers so the focus has been limited. Those projects are on hold and I am hopeful that once the new organizational system is in place, they will get picked up again.

The reality is that the old way that we were working was broken. There was far too little accountability or transparency. You can see that in the lack of progress made on most of these projects. I promise you that as frustrating as it was from the outside, it was far more frustrating from the inside. It is why Designer, Chilly, and I have been so focused on developing this new model.

This new grants based model turns these dynamics on their head. It really will empower token holders to make decisions (if they want to) and provides a framework for anyone to propose a project. Although if they want it built they have to either do it themselves or convince others to help, get approval for the funding, and show progress to get paid.

I am trying to rebuild the foundations of the DAO to be solid and healthy so that projects that are started get finished, the community knows what is going on, and wants to contribute. The beauty is that with this new system you wont need to worry about a cabal draining the treasury because if you don’t like what the contributors are doing you simply stop funding them.

YAM doesn’t need to be disbanded, it needs to be reformed. It is open infrastructure and a treasury that anyone can contribute to according to the will of the token holders. I want to focus on that and let the projects come when they come.

article series on the new re-org (these should be officially published very soon):
#1: Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.
#2: Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.
#3: Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.
#4: Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.
Full Docs that the above articles are based on: YAM Replanted: A Fresh Start | YAM Governance Repository

The snapshot vote for this proposal has been created based on voting power from the block number from the original proposal (15,078,195).

The vote is here: Snapshot

It will run for a week, until July 27th, 2020 at 00:00 UTC.

The snapshot vote has ended with the "NO"s winning.

The final tally was 1.4M BoU against and 611K BoU for.

This was the highest turnout for a vote that we have had in a long time with ~2.1M BoU YAM (5.25M YAM) voting. This is approximately 35.7% of the total YAM supply (5.88 BoU / 14.7M scaled).

Thank you to everyone who voted.