Do your eyes glaze over at the word ‘governance’? Do you feel a sudden urge to open a new tab to YouTube and disappear down a QAnon rabbit hole, rather than go through that new proposal on expedited voting procedures? Do you just want to know “When Binance?” so you can finally unload your YFL at break-even and fomo into Bitcoin?
I get it. Governance of decentralized autonomous organizations (DAO’s) like YFL is not as exciting as throwing fresh ETH at the next rug pull. I wasn’t into it either, I’d rather be with Rick running for my life from angry Gazorpians on planet Gazorpazorp than get into the nitty-gritty details of DeFi bureaucracy.
But I had a chat with @Originality, YFL-senator extraordinaire, who’s been pushing governance since the very early days of the project. Our chat made me realise: governance is where it’s at baby. At least, it’s where it should be at, because the possibilities are endless.
Here’s our conversation, edited for brevity and clarity, for your pleasure.
First off, let’s just get down to basics here. Why should anyone holding YFL get involved with governance?
You protect your investment by voting. That’s the whole idea. This is an investment that you hold and you use your voting power to make sure that things that bring positive value to the project happen.
I see you have a new proposal up on proposal rewards, can you elaborate on it?
I’ve been really pushing for incentivizing proposals, to get people more involved with governance. So we first had a percentage of the treasury go to creators of successfully passed proposals, but that lead to diminishing incentives over time as the proposal treasury is depleted. This current proposal is meant to address that. If this proposal passes, then creators of successfully passed proposals will be rewarded a flat fee of 1 or 2 YFL depending on the majority.
Nice, so contributing to governance will get you more waffles!
Yes, as long as you have an interesting idea supported by the community, and the vote passes. But in a broader sense, you can in fact ask for funds from the treasury for your idea, that’s how Linkswap was funded. We want our treasury to be a Gitcoin kinda thing, where teams with good ideas get grants to do projects. And the community does a community-based risk assessment on the project and votes on it.
Do you actually have a background in DeFi governance?
Oh no, not at all, this stuff just really interests me.
So why did you decide to get into governance at YFL?
I was involved as a mod for the Discord early on, and was looking at governance and started thinking: what should a solid framework for governance in this community look like? What are the principles I’d like to follow? And then I just started.
What are those principles?
So, this is just my philosophy, you can talk to other people and they will have different takes. And I’m thinking long-term as well, because as we get bigger we’ll be glad we have these structures in place. That being said, my whole philosophy is two things.
First, you want to protect the project by making it difficult for people to abuse the governance system. This is why I’ve put up proposals like having to post to the forums for three days for a notice and comment period. Also, proposals have to be accessible to a wide audience, not just a bunch of super technical stuff only 1 percent of your community is going to understand.
The other part of it is making it so anybody can do this. We want to make sure that the security is there, but the process should be fairly simplistic. So if somebody from outside of the community looks at the project and says “I have a really good idea that would work well in the ecosystem, but I need some funding”, we want that person to be able to easily put up their idea for a vote. Regardless of how much YFL they hold, we really don’t care if you’re a whale.
What are some other issues you want to see addressed through governance?
Well, if you’re a relatively smaller holder of YFL, there are some things that make it less attractive to vote. There’s a three day lock-up, and with the Ethereum network gas fees, I understand there’s not much incentive to vote right now. So we’re looking at ways to take voting off-chain, with Snapshot for example. Another way is vote delegation. But things will be a little different after Linkswap, so we’re holding off on that for a bit.
So, what will governance look like when Linkswap launches?
We now have a system where YFL treasurers honor the outcome of the vote, but for Linkswap we’ll have voting that has actual binding on-chain consequences on the parameters of Linkswap. So YFL holders will be able to vote on things like listing fees, staking revenues, treasury revenues, what pairs will be added, and other protocol parameters. If a proposal passes on these parameters, it will have direct on-chain consequences and will be implemented immediately.
This really gives power to the community!
Correct, which is why my approach to proposals now is being really clear with what you mean and what the consequences are of the vote, because in the end a smart contract can’t be argued with. The smart contract is like “Dude, I just read the code, I don’t care what you thought you were doing, I’m executing it.”
How do you write a good proposal and how does voting work?
We actually wrote a comprehensive how-to on the governance forum, you can find it here. But if anyone has an idea for a proposal and needs help, they can just contact me on Discord. Happy to help. Don’t hesitate, if you have good ideas, our community would like to hear about them and we would like to fund you.
I’m @Morty297, and when I’m not off roaming the multiverse with Rick, I get waaay in over my head in the crazy world of DeFi.
DISCLAIMER: This article does not reflect a shared vision of YFL team members, developers, or moderators. It’s an informal conversation between community members about the YFL project.
Cover image by @FrogYflink