YFI proposal to mint 6666 Tokens sparks controversy in the Decentralized Finance economic model.

The Yearn.finance (YFI) community recently proposed a plan to issue additional tokens, which has attracted widespread follow. The proposal suggests issuing 6666 YFI, with one-third allocated to incentivize core contributors, and the remaining portion to be injected into the treasury to support future development.

Since its inception, the YFI protocol has been known for its strong decentralized autonomous organization (DAO) characteristics. The fair and transparent governance mechanism has attracted many insightful proposals, and its token distribution method is considered one of the fairest in the decentralized finance (DeFi) space.

Currently, the total circulation of YFI is 30,000 coins. The proposed increase accounts for about 22% of the existing total, estimated to be worth nearly $200 million at current market prices. Supporters of the proposal believe that other mainstream DeFi protocols, such as certain DEXs and lending platforms, typically reserve 20% to 30% of their tokens for the development team as incentives to maintain talent competitiveness. In contrast, YFI is facing a problem of developer attrition due to a lack of sufficient funding support.

The YFI protocol completed the distribution of all tokens in just two weeks. This rapid allocation model, while attracting a number of influential talents to join the community, has also laid hidden risks for the current issuance proposal. As a distributed system, setting a high or unlimited total supply of tokens and adopting a long-term release strategy has its deeper reasons. This is mainly to continuously expand network consensus, which requires a sustained incentive mechanism.

A fixed token cap or completing distribution in the short term may benefit participants who have joined in the short term, but it is difficult to support the long-term development of the network. The current situation of the YFI community has already confirmed this. For distributed systems, if they cannot continuously attract new participants to provide value, the protocol may become stagnant. In the highly competitive blockchain industry, stagnation in system development is likely to lead to a decline in token prices, which in turn can trigger participant attrition, forming a vicious cycle.

Looking back at the DeFi boom, the YFI protocol, as one of the star projects, captured a large amount of on-chain value in a short period of time. This is mainly due to a group of smart individuals bringing valuable information to the protocol. In fact, every breakthrough in the blockchain industry stems from the introduction of new information, bringing more possibilities. However, it is not enough to provide new information briefly; only by continuously injecting new information into the blockchain world can value be constantly captured and created.

The consensus building cycle of the YFI protocol is too short, leading to a loss of competitiveness and the ability to create value when core participants leave. This proposal for an increase in issuance has sparked in-depth reflection within the entire industry on the economic models of distributed systems, which is worthy of attention and discussion from all parties.