Launching with a tiny token float has a high potential for short term euphoria at the cost of long term pain
1/ Why do so many projects launch w/ low float?
(a) Early venture investors & team have lockups & vesting to ensure long term alignment
2017/2018 era saw little lockups/vesting and funds would be quick to flip & dump projects on TGE so this is a good change
2/ (b) $YFI fair launch meme worked out alright
But this is more so the exception than the rule - all of the inflation hit within first week of launch which is materially different from inflation over multiple years
1/ New update for @fraxfinance will have the protocol yield farm with reserves
This is a pretty major positive change that increases the resiliency of the system and can see other reserve-based algo stablecoins adopting this mechanism as well
2/ The issue with all algo stablecoins is that the supply of the stablecoins are too interconnected with the price of the share token
The reflexivity works in both directions - both up and down
Higher price🔄 More Supply
Lower price🔄 Less Supply
3/ This reflexivity exists for as long as share tokens are used to reward those that hold the stablecoin (usually for LPs)
But using yield farming to *safely* yield farm can help to prevent death spirals as the yield can be used to build reserves, making users less likely to run
People talk about Thorchain in the context of connecting other L1s, but most L2s are separate blockchains themselves that can just as well connect to Thorchain
The YFI minting decision can be distilled down to the following:
Will the value created by minting outweigh the cost of minting (i.e. dilution) for token holders
The answer is clearly yes
Productivity of development is key to protocol growth. A 3x increase in development productivity and output will translate to token price which obviously all of us care about
Love the 30k meme, but retaining + growing contributor/dev talent is more important
YFI is meant to be a productive cash flow producing asset, not digital gold