On gYFI - time weighted voting power distribution
Andre suggested an idea that locking the YFI and minting a new token called gYFI that reflects the locked period of YFI, and the voting power and rewards are distributed based on the gYFI.
Here are my analysis and some suggestions about the specification.
tl;dr
“Remaining lock period” at the time of casting the vote would be good for calculating the weight.
Weighting function is related to product strategy/vision. So hard to find an optimal solution without considering several issues around YFI.
Using a function like
y=log(x)
ory=x^(1/2)
would be good for the weighting function, if there’s no cap for the weight. Linear function without a cap would be dangerous.Transferrable gYFI will make vote buying a lot easier so making it untransferable seems preferable.
1. Why should we give long-term minded decision makers more power?
It seems unarguable. You can skip to the next part if you think so too.
There are a lot of ways to make a short-term profit while harming the long-term profit, especially in governance for a financial system. So, short-term guys can make selfish decisions without thinking about the whole ecosystem when they have power. But pursuing long-term profit would be beneficial for short-term profit too in many cases, though the scale could be different.
2. How can we facilitate long-term minded decisions?
We should make short-term profit making abusing the governance system difficult. Andre’s original idea would be the same.
I interpreted the suggested specification like (A), the voting power is the same within the period YFI is locked.
In (A), the locker can make a short-term profit by making a proposal at the end of the lock period that is profitable for them.
This result came from the unbalance between the “remaining lock period” and the voting power. When the voter’s YFI gets unlocked soon and they have high voting power, they can attack the system.
So, we should use the “remaining lock period” as a weight like (B) (let’s use a linear function for now).
And the voting power should be calculated at the time of the vote is cast. Then the people who stay with YFI longer have higher voting power.
3. Why 365 days? Is it capped for 1?
Deciding the weight function is related to yearn.finance’s product strategy. There are so many things to consider.
Making a cap is easy to understand, and many lockers will be saturated around the cap.
But the longer people stay with the ecosystem, the better decisions will be made (hopefully).
But the long lock period would make UX worse.
But… :(
So we need many suggestions from community and decision makings.
My suggestion is, if we don’t put a cap, using
y=log(x)
ory=x^(1/2)
like function - which gives a bigger coefficient for a shorter period but the coefficient gets smaller as the period extends.Linear weight function may give a potential attack vector, as some holders can lock a certain amount of YFI for a very long period and control the system.
A higher coefficient for a relatively short period motivates people to attend governance more, even though they are not planning to hold YFI for a long time.
This might work like quadratic voting.
Or, we may use an exponential function with a cap. This will make people lock YFI for the cap, and it will sound like “Hold for this period if you want to participate/a reward”.
Just using a linear function with a short cap also seems okay
4. Should gYFI be transferable?
Avoiding taxable events will be better for the participation ratio.
Putting aside the tax part, transferable gYFI will make vote buying a lot easier with DEXs.
Though vote buying can be done even it is non-transferable, but making friction will be necessary.