The landscape of DeFi tokenomics is quickly changing on Avalanche, with more protocols introducing ve (or voting escrow) versions of their tokens. In exchange for staking tokens, users accrue ve balances which can be used to vote on topics like reward distributions.
Yield Yak has reacted to the changing landscape by launching yyJOE and yyPTP which accrue ve balances in Trader Joe and Platypus, with support for additional ve tokens planned. This leads to the question of how we will cast votes on behalf of our community as voting becomes available on the underlying platforms. This post lays out a simple proposal which we intend to move to a governance vote.
If you’re not already familiar with ve tokens and casting votes by proxy, we recommend this article as background: The Great Curve Wars
Using YAK Today
YAK currently has four utilities:
- Governance: vote on protocol-related matters with vYAK
- Earn Platform Fees: 70% of platform fees go to YAK stakers
- Liquidity provide YAK with AVAX on various decentralised exchanges
- Use as collateral: YAK is accepted as collateral on platforms such as Moremoney where you can take out a stablecoin loan against it.
Expanding YAK to Govern ve Tokens
We propose that YAK adopt an additional utility: governance over voting power from ve tokens.
From a technical standpoint, we consider that using YAK to cast votes in underlying systems is the safest and most future-proof approach. We will determine how to proxy votes and avoid governance manipulation just once for YAK instead of many times for every new ve balance we accumulate.
Expectations for Additional Benefits
Examples from other ve systems have shown that those with large ve balances may also receive additional benefits to voting power:
- Bribes for casting votes in a certain way
- Platform revenue distributions
- Directing reward weights to benefit themselves
We cannot guarantee that things will play out exactly the same way on the new ve platforms on Avalanche, but it may happen.
This proposal aims to provide supplementary benefits from the ve balances to YAK by default, meaning that protocols carrying out economics bribes would be incentivized to look at YAK holders rather than yy token holders.
Ultimately, this proposal extends the utility of YAK, aligning governance of the platform to a single token. We expect that platform fees from specific ve tokens will accrue to staked yyTokens and other benefits will accrue to YAK. These variables can be easily tweaked to ensure a healthy ecosystem and allow us to adapt quickly to the changing landscape.
The Path Forward
We believe it’s important to engage the community with this discussion now as more and more protocols shift to more complex token economies. Yield Yak will continue to adapt to the ecosystem with the consistent goal to bring its users the highest yields possible on Avalanche.
If you would like to provide feedback on this topic, join the Yield Yak Working Group on Telegram, which is a dedicated group of active community members discussing topics like this one.
About Yield Yak
Yield Yak makes numbers go up. Ape into new autocompounder farms with quick releases and high yields. Swap on Yak for the best prices on trades with zero aggregator fees. Sit back and just earn, including big APYs on stablecoin farms.