YIP 112 - Minting YAM to Pay Contributors and Vesting Implementation

YIP 112 - Minting YAM to Pay Contributors and Vesting Implementation

Summary

The YAM treasury does not have enough YAM to pay contributors fully for this month. This proposal recommends minting YAM to pay contributors monthly as part of the on-chain transactions. Only the amount of YAM owed to contributors would be minted in these transactions, and a new vesting procedure, using Sablier, would be implemented to further align incentives.

Rationale

As discussed in this post and subsequent snapshot vote, 370,000 new YAM was minted to make up for the YAM trapped in the original Vesting Pool contract.

The current balance in the treasury is 100,280, which will not cover this upcoming month’s payroll obligations of ~130,000 YAM. There are a few options to proceed:

  1. Mint as needed to meet payroll on a monthly basis.
  2. mint a large lump sum and try to estimate how much is needed to meet a certain time frame.
  3. Pay entirely from the treasury (either in USDC or another asset, or my trading an existing treasury asset to YAM).

This proposal puts forward option 1 as the preferred choice.

Option 1 negates the need to guess as how much YAM needs to be minted (an impossible task to get right) and constrains the maximum quantity to be a function of the treasury size. It focuses the discussion not on whether minting YAM is good or bad, but whether the contributions of contributors is worthwhile (option 3 also has this trait). It allows token holders fine grained control over how much YAM is created via the grants approval process. Unlike option 3, it limits treasury burn. I wrote more about why this is preferable here.

To limit new tokens reaching the market quickly, and also aligning contributor incentives, I recommend adding a vesting component to the contributor compensation packages using Sablier smart contracts. These are simple vesting contracts that can have any ERC-20 deposited and will vest the tokens linearly for a predetermined period of time. A 6 month vesting period is proposed.

Specification

If this proposal is passed, the following process would be carried out:

  1. Total YAM contributor compensation amounts would be determined monthly by the Gov-Ops Council based on approved grant proposals and grant payment requests, based on the 30 day TWAP for the month in which the work was carried out.
  2. This amount would be minted in the monthly on-chain transaction by calling the mint() function on the YAM token contract for the amount determined in step 1.
  3. The newly minted YAM would be sent to the monthly proposal contract, where it would be deposited into new sablier streams for each contributor. Each contributor would receive only 1 stream, even if they have multiple grants. The function to call on the sablier.sol contract is createStream() passing through the following parameters:
    • Grant recipient address
    • amount to deposit
    • token address (YAM)
    • start time (set at least 7 days after the expected vote proposal call to the governor so that this timestamp happens after the execution of the contract, in unix time)
    • end time (set 6 months after the start time, in unix time)

If this proposal is not passed this month then no YAM will be paid this month. The owed amounts will be recorded on github and backpay will be included in the next month’s on-chain proposal.

Out of Scope

The minting of YAM for any purpose other than contributor compensation is out of scope of this proposal.

Poll to measure sentiment

Mint to Pay Contributors
  • Yes, do it.
  • No, don’t do it.

0 voters

Add Vesting to YAM payments
  • Yes, 6 month vesting
  • Yes, but a different vesting duration (add in comments)
  • No vesting

0 voters

If I recall correctly there was a lot of YAM in the contributor compensation pool, so I am unclear how we got to this point where the bucket is empty and we want to print more. It should have lasted longer. Since we want to continue paying our contributors we do need to pay them one way or another. As a large token holder I dislike the idea of minting more to pay for management mistakes by putting it on the backs of token holders through dilution, but I do like the idea of a 6 month vesting period. All that being said, if we must print more to pay we should do so to the minimal degree necessary not indefinitely. From here on out we need better tracking and management of budgets and forecasting. I will support minting until YIP 111 ends in the beginning of October.

Hi jpgs. Nice to finally e-meet you.

I’ll try to give the 2 min rundown on this.

It is quite hard to find the original mint amount for the contributor vesting pool. I have in my notes that 750k BOU YAM (1,875,000 current YAM) was minted for this purpose but the snapshot vote has disappeared (same with some other early ones). I believe I got this number from looking through old on-chain proposals and should probably do the same again and save that transaction to refer back to.

That amount lasted roughly a year and a half, and because the amount of YAM given out scaled with the price, it went faster as the price dropped. At $3 per yam, this amount of YAM was worth ~$5.625 Million, but today (@ $0.17) would only be worth $318,750. Determining the average price of YAM that was paid out would require a more thorough analysis (but probably one worth doing). The YAM lasted just as long as the system designed to pay it out intended, which is purely a function of the price of YAM.

Long story short, saying that it “should have lasted longer” means that either we should have paid less out, prevented the price from going down, or minted a different amount.

  • Whether we should have minted a different amount is reasonable question to ask going forward, but not something that is worthwhile discussing in reference to past mints.
  • Preventing the price from going down (or maybe better phrased as making the price go up) would help the problem, but not something that we can directly control (unless you want to get sketchy about things, which I have no interest in doing) other than trying to add value. This is what we would hope that paying people will achieve, but it is an indirect process.
  • So we are left with our final lever, which is how much we should pay out. This is a question that we do have direct control over as a community.

The question I ask here is “what is the management mistake?” Is it the amount that was minted or was it the amount that was paid out? I would argue that the “mistake” was the amount that was paid out and the quality of work that was created from it, not the amount that was minted. If the quality of work had lead to a higher token price then there would have been no mistake and there would still be available YAM.

So this is a question of “value for money.” How can the DAO get good value from the YAM that is spent. And this question applies equally to how the treasury is spent. There is a very strong argument that the DAO has not received good value for the money spent on contributor compensation. I won’t argue against that. I agree with it.

This changes the question from “How much YAM should be minted” to “How do we get good value from the YAM that is minted.” The amount doesn’t matter, the per unit value does!

If you agree with me that the issue is one of getting good value from what the DAO spends then the problem becomes less about forecasting and more about quality control and accountability. I don’t believe we have a forecasting problem (other than that it is basically impossible) but I do believe we have a quality control issue.

This is the focus of the YAM Re-Org. To insist on better transparency, accountability, and documentation from contributors so that token holders can determine whether they are getting good value for what they are paying. This is where we need to stop making “management mistakes” and because there is no boss or person in charge, this management is the role of the token holders. Minting YAM is on the backs of token holders because it is their responsibility to manage the value that they are getting from that YAM.

Minting as needed is exactly this. It is the minimum necessary to pay for the work that is approved. If token holders don’t like the work done then they shouldn’t continue to pay for it. If they think too much is being minted and paid out, but they also want things to get done then they need to determine how they do want to pay for those things.

This removes a variable that token holders need to consider. They worry about whether the work being done is valuable and whether it should continue to be funded. They consider whether they want to fund it via the treasury or via dilution (or a combo of both). They don’t try to guess how much needs to be minted to pay for everything indefinitely into the future, both because it is an impossible task and because it makes no difference to the quality of work done by contributors.