12/15/2023 0 Comments Yfi vaults![]() ![]() This also benefits composability with other protocols and opens Vaults up for more experimentation and integration as a “yield lego”. The vault is providing a valuable service that people are willing to pay for, continuously. Replacing it with a management fee on funds deposited in the system optimizes instead for retaining funds for as long as possible. ![]() More money leaving the project would lead to more fees, when it should be the opposite. The withdrawal fee that was previously in place misaligns incentives as you are only charged for the service when you no longer want to use it. Building a profitable and safe strategy is difficult, the strategist compensation needs to make it worthwhile to do so. We want to attract the brightest minds to collaborate on strategies for us, and to do that we need to provide the best incentives to our contributors. Yearn’s competitive edge lies in innovation. Protocol earnings are used to market buy YFI through the YFI vault, which now becomes the centerpiece treasury vault where all earnings converge. This results in roughly the same total amount of fees charged. The Vault withdrawal fee is removed, and replaced by a 2% management fee. 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. With Vaults v2 around the corner, it is a good time to analyze Yearn’s protocol-wide incentives and ensure they are aligned to produce the best possible outcome. ![]()
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