PASSED - Proposal 5/On-Chain #6 - Proposal Reward Structure

Abstract/Executive Summary:

1% of the Treasury should be reserved to reward the creation/passing of YFL proposals.

Motivation

We think voter/prop apathy will likely become a thing - this was already discussed on the yearn forum, and their solution was to tweak the quorum numbers down to make pass/failing proposals easier. Our solution is a bit different. We think directly incentivizing both voting and proposals will help offset the downside of the governance system (that being, you need to actually vote, lock up coins, invest time reading and considering props, etc) and thusly propose a reward structure.

Specification:

The YFL protocol will set aside 1% of the treasury for proposal incentives. That is currently ~22 YFL in total. We expect the value of YFL to go up over time, and so we think this is a good number to set as an incentive to utilize the gov structure. If we run out of YFL in the treasury for this, chances are it is working as intended and we may need to increase the total set aside for incentives.

Risks - we think we should keep rewards relatively small in order to prevent the YFL reward from being the goal of creating, passing, and voting on proposals. We can always revisit the numbers here if we find it is becoming a problem.

Governance Rewards

Creation - no reward
Voting - no reward (yet)
Passing - If a proposal passes, the creator of the proposal will receive 3% of the funds in the Proposal Rewards allocation.
Supermajority - If a proposal passes by supermajority (66% quorum is achieved), the creator of the proposal will receive 9% of the funds in the Proposal Rewards allocation.

Voting Options

For:

The treasury will set aside 1% of its funds to reward the creators of passing proposals and create the Proposal Rewards allocation.

Against:

No changes to the treasury.

4 Likes

I think this is a great idea, I would love to think through if there are any adverse scenarios that come from this. Does this decrease the quality of proposals, for example

2 Likes

Agreed, generally really like the idea of incentivizing users to create proposals and eventually for voting to increase overall engagement. However I can foresee a scenario where holders create proposals that are little to no value. There’s always a risk that top wallets coordinate passing of proposals to share in profit without really adding value to the protocol or community.

How can we make incentives for quality proposals? Is that even possible?

I’m curious to get my opinions on this before voting ends. It’s a good start and I simply wonder how we can improve it. I will put some thought into it.

Arweave link