The Yearn Protocol became widely popular in the summer of 2020 and a core part of it’s initial rise to renown was the narrative of scarcity driven by a fixed supply for the YFI token. In fact, one of the earliest community governance proposals was centered around the burning of the YFI token minter to ensure that supply would remain hard-capped at 30k for the foreseeable future.
Now various community members and Yearn contributors have proposed that new YFI tokens be minted in order to compensate contributors and sustainably grow the protocol.
This new proposal looks to better align the incentives between contributing developers and the rest of the ecosystem minting 1000 new YFI tokens into the supply and awarding them to core contributors that were not lucky enough to have farmed YFI during it’s genesis launch.
It seems that the main motivation behind this new proposal is solving for the sustainability of Yearn’s ability to attract top-tier developer talent in the long term. By minting additional YFI tokens, the protocol can easily reward contributors by giving them more skin in the game and upside for their contributions. While this is not the only way to reward contributors, this proposal has attracted significant attention as it’s results may greatly affect the public’s perception of the YFI token.
Retail token holders, developers, and larger Venture Capital token holders have all chimed in on this new proposal on Twitter, each arguing their case for or against the minting of additional YFI tokens.
Opponents of the new proposal argue that the 30k cap on supply is part of an important scarcity narrative that the token needs to hold onto for maximum price appreciation.
They also cite the fact that the minting of new tokens shouldn’t even be in consideration as the community had previously approved a proposal that was meant to burn the YFI minter (pictured below).
On the other hand, some of the best known VCs in the space like Framework Ventures & Parafi Capital have openly announced support for this proposal as they agree that long-term sustainability is more important than retaining the limited supply narrative.
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Business Development and Operations at TrustToken – TUSD. Jack is a startup generalist and DeFi enthusiast. Stay connected with him by following @HHJackSun on Twitter.