Yearn Finance token holders voted for the protocol to mint 6,666 new tokens, prioritizing the implementation of a funding model for contributors over keeping a hard cap.
Holders of 1.66k YFI (83.4%) voted “yes,” compared with 330.5 YFI (16.6%) voting “no,” on the off-chain governance tool Snapshot.
In a recent proposal, Yearn Finance laid out its intention to mint 6,666 new YFI (a 22% increase over the current total supply of 30k). One-third of the new YFI would be allocated to key contributors as vesting retention packages, while the other two-thirds would be allocated to the Yearn Treasury to be used for contributor incentives, staking rewards, talent acquisition, and anything else that may better Yearn’s future prospects.
While minting more of a limited governance token typically goes against crypto’s “hard money” roots, the proposal explains that creating more YFI may be a necessary step to ensure the company’s longevity.
According to Yearn’s proposal, the community-lauded fair launch, wherein lead developer Andre Cronje distributed 100% of the YFI without keeping any for himself (a decision he seems to regret in retrospect), has left the company at a competitive disadvantage.
“Yearn’s launch was exceptional at creating a decentralized and engaged community, but it did not provide adequate incentives to retain existing and future contributors on an ongoing basis, nor did it provide the protocol with a war chest to fund future activities,” Cronje’s post says.
With a current operational treasury size of $500,000 and 0% token allocation to the team, Yearn explains that they have trouble retaining talent in a competitive market, especially when other projects like Uniswap, Aave, and Synthetix “hold anywhere from $300 million-$2.13 billion in tokens aside for [contributors], with the average being between $500-600 million.”