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Yearn Community Will Vote for a New Proposal About Fees and Incentives

A new proposal is posted on the government forum of yearn.finance. The members will vote for a restructured fee and incentive system in this vote. Proposers believe the new structure will help Yearn to attract more users in vaults. The new changes will only affect Vaults v2.

Long Term Incentivizing

Each blockchain project, especially DeFi products, need incentives to improve participation and attract new users. They have to show the logic and emotions of using the product. The DeFi platform should show that using innovative solutions has considerable rewards, next to ease of use and improved security.

Coting for changes in protocols is common among DeFi services like Yearn. They propose a change in the governing community, and members decide about that. According to the new thread in yearn.finance forum:

“This proposal reforms Yearn’s fee structure to keep it roughly at the same level, but charged differently, and distributed in a way meant to keep YFI stakers, strategists, and contributors better incentivized over the long term.”

The abstract details about the new proposal focus on fee percentages. If the new proposal receives enough votes, the Vault withdrawal fee will be removed, and a 2% management fee will replace it. The other proposed change is raising the performance fee to 20%.

Proposers believe the withdrawal fee isn’t aligned with the central incentives of yearn.finance. They say Yearn should not receive a payment from the user who wants to leave the platform. Because of the current fee guidelines, more money leaving the vaults will mean more fees. But the system should be the opposite, and the overall platform should earn more only when new money comes in.

The new proposal about management fees is more aligned with the overall mission of Yearn and its offerings. The proposers continue:

“Replacing it [the withdrawal fee] with a management fee on funds deposited in the system optimizes instead for retaining funds for as long as possible. The vault is providing a valuable service that people are willing to pay for, continuously. This also benefits composability with other protocols and opens Vaults up for more experimentation and integration as a ‘yield lego.'”

If the new proposal receives enough votes, there will be some changes in Yearn’s operations budget, too. Like any other proposal for change in communities, Yearn’s recent one may need to improve over time. Proposers suggest some mechanisms about treasury management, too. But those changes will not be decided in the new proposal.

Regardless of the voting result, proposing changes in the DeFi protocol signifies a healthy community and participation. It shows the members are always looking for improving the protocol because of the continued effect on their earnings and operations.

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