Talking to YAM's core developers: We underestimated the hype and formality surrounding YAM's launch

On September 18, in "My Aunt and My Friends EP01", YAM 2 to 3, YAM's core developers Trent Elmore and YAM's designer Dan Elitzer reviewed and explained YAM's previous problems and introduced some of YAM's future design ideas for its scrip economic models.

The host:

Dovey Wan: Founding partner of Primitive Ventures and director of CoinDesk advisory Board.

Guest Guests:

Trent Elmore: YAM core developer, co-founder and CEO of Topo Finance, which is the platform that helps Ethereum achieve the best rates for DeFi cross-platform.

Dan Elitzer: Designer of YAM's Token currency Economic model, investor at IDEO CoLab Ventures, founder of MIT Bitcoin Club.

The excerpts of BlockBeats are summarized below:

Dovey Wan: : Today's two guests are YAM's core developer Trent Elmore and Dan Elitzer, a well-known cryptographic investor and part of YAM's strategy adviser. Please introduce yourself briefly.

Trent Elmore: I also want to introduce Brock Elmore, a member of YAM's original startup team, one of the core developers of Curve and my brother (not here today). I myself have been in the field of encryption since about 2017. Around the second half of 2018 we hope to build a potential project that will get more aggressive. So in 2019 we stumbled upon the fact that DeFi protocols like Compound and dYdX were very attractive and had very high yields. So with that in mind, we built a yield optimizer: Topo Finance, which optimizes your interest rate loans in different agreements. So we started with an Alpha version in late 2019.

It started as a lending service, then added leverage, taking it one step further along the professional trading route. Implement custodian strategies such as clearing and arbitrage throughout the system. We have been handling this Topo Finance  NBSP; NBSP; The platform, until it decided to do an updated exploration with Dan William Clinton, considered a new product.

Dan Elitzer：hi 大家好。我从 2013 年开始进入加密领域，我是麻省理工大学商学院硕士，曾创办 MIT 比特币俱乐部。我和杰里米·鲁宾（Jeremy Rubin， 比特币核心的开发者和贡献者 ）认识，那是他只是一名本科生，现在已经成为了 Bitcoin 的著名开发者了。我们在麻省理工大学一起研究比特币，2014 年秋季，我们给每一个入学的新生都发了 100 枚比特币。

After I graduated the next year, I joined IDEO. We have a blockchaincentric RESEARCH and development studio. So I had the opportunity to work with big companies like Citibank, Nasdaq, Fidelity, and help some startups. At the end of 2017, BPI was founded; IDEO CoLab Ventures, which invests in encryption technology, has invested in about 20 companies in various areas of encryption. I'm more focused on the DeFi domain right now.

Dovey Wan: As for the failure of YAMv1, many audiences may not be so familiar with it or have many misunderstandings. Although it is a sad story, could you tell this story again? Why did you decide to test directly without auditing?

Trent Elmore: Well, I'd like to introduce YAM first and then Dan may add to that. YAM is an elastic cryptocurrency that tries to use this mechanism to expand and reduce supply in an attempt to control the token price by adjusting its target price of around $1.

I think this is a good opportunity to clarify to you exactly what happened. I don't think there was an audit, but I remember that $500,000 was deposited immediately after the product was launched. Like everyone else's mood, I am also very nervous and excited.

So this is really a very decentralized scrip holder group. As for the question of how to proceed, if there is no audit, I think there is a risk. There is also the question of how to do a fair start. At first you don't know if your project will succeed. And you don't know, you know, even if it's successful, if you're the originator and you have an equal opportunity to get someone else to dig, how do you recover the cost of the audit investment? This creates a very real problem. I think what we've seen is that capital like Fair Launch Capital can now help teams solve startup problems when the issue is salient.

So I think we're addressing some of the issues that have been exposed for future teams, and that's really exciting for us. It was an experiment from the start. As you said, within 24 hours, five or six hundred million dollars will be deposited into smart contracts, which is far beyond our imagination. We completely underestimated the hype and formality that followed YAM's listing.

Are we nervous? Of course. Seeing the response from the community and their interest in the concept was immediately exciting, but it was also clear that there was a lot of speculation, and I rushed to deploy the smart contract. So it makes us very nervous. When the bug subsequently appeared, the potential problems caused by the previous lack of preparation became apparent. It was devastating.

These systems are quite complex and they interact with each other, especially when something like a bug happens. There are some emergent properties in the system, and this is a completely new protocol, so there will be some unforeseen interactions. Especially under high pressure and time constraints, this is very difficult to predict. It was a very intense learning experience for us, and I think it was a very intense learning experience for the community as a whole, but I think it kind of sums up some of my general thoughts about the narrative.

Dovey Wan: Yes, it's really frustrating, especially for the Chinese community, I would say because there are so many of them, it's hard for them to access Twitter or to read foreign media. Sometimes they have to find out what's going on in all sorts of ways.

Dan Elitzer: Yes, it was a very exciting learning experience for us, and I think it was a very intense learning experience for the community as a whole, but I think that kind of sums up some of my general thoughts about the whole narrative. And during that time, we were trying to be as careful as we could to acknowledge that whatever we did, we put it out there, and I warned earlier that this was an unaudited contract, only 10 days old, and this was really an experiment. But people don't behave as they understand them to behave.

Then the community began to vote on YAM's future direction, and the whole community acknowledged that and rewarded those who had acted with a mandate, essentially thanking them. We didn't leave when things went wrong. We thought it would be unfair to the community to say, oh, this isn't going to work, this isn't going to work, and then walk away.

Dovey Wan: What do both of you think of the spiral/death spiral generated by the Rebase mechanism? Is There any refinement to YAMv3 or do you think this is a problem?

Trent Elmore: Dan has some good ideas about this as well. But I think first Of all I want to talk about what his core is. YAM is an elastic cryptocurrency that tries to use this mechanism to expand and reduce supply to reach its target price of about $1. Thus, this is similar to AMPL, but in addition to achieving supply and price targets through this adjustment mechanism, it also takes 10% of each forward rebase to buy back tokens and put them into the vault. I think YAM is a highly productive and stable token.

While we were at lunch a few days ago, a few of us were thinking about how to solve the death spiral of mechanisms like AMPL, which of course is a pretty amazing mechanism to work with. But once it begins a death spiral, its market value begins to decline. So weThe idea of a vault was proposed as a way to ease the death spiralAnd establish a floor on the price of the vault, which is the value of the vault. But then we thought we could go further and figure out how we would really build this type of agreement. So we looked at YFI and their fair distribution in the fair process.

At the same time, considering the potential of YFI in governance, we decided to introduce YAM in a fair way in addition to the novel mechanism of flexible supply. Without VC shares, the startup team would not be allocated tokens, and everyone would have an equal opportunity to dig the mine. And it will be completely decentralized. At the moment, if you combine the five team members' holdings, our share is less than 1 per cent. YAM is so widely distributed that no single holder has more than a 4% share.

Dovey: Like you are all "real" people, unlike Sushi, we don't know who is the founder and director.   Sushi, as the currency of the anonymous team, has received a lot of negative comments since its launch, while YAM, as a non-anonymous project, did not. Even if it failed, it still gained support from the community. Anonymity is a double-edged sword. YAM's founding team decided to put its entrepreneurial credibility on the front line at the very beginning, which on the one hand could make people more transparent, but on the other hand could easily lead to a centralized crisis of confidence. What do you think about the fact that if it weren't for the resume of YAM's founding team, you probably wouldn't be as FOMO involved in YAMv1?

Dan Elitzer: Yeah, we've talked about it, and we think it's for the sake of fairness. But we've actually talked to a couple of people who know we're working on a project, and we don't believe the five of us can remain completely anonymous. So we want everyone to take the same stand on this information. So we put it out there. We don't want to be accused afterwards of having just told some of our friends that they started digging so early. We really want everyone to be on an equal playing field. So that's why we did it. Yeah, so I think we really have to respect that, because we all know that life is like this, and if we know who the real identity is behind the team, then I think the information is symmetrical, so it can be solved.

Dovey told: 1. & have spent The mot & have spent How is the Rebase mechanism different from AMPL? Does YAMv3 have any optimizations for this?

Trent Elmore: We have updated the reserve assets to yUSD instead of yCRV, which will have a higher mining yield and more stability. So here are some small updates. We adjust it every 12 hours, not every 24 hours, and there are little changes like this. But the bigger change has actually been the idea of creating "vaults", with 10% of them going to Rebase as vault reserves.

So, this approach may take the project in a completely different direction. AMPL is more of an attempt to become a base currency, a bit like the DOLLAR. It tries to be used as money. In my opinion, it's ok, although I don't necessarily speak for everyone. I think of this whole concept as a game. What happens when you start using positive returns to build a capital base? Aren't you trying to achieve price stability? What you really want to do is use it to measure the demand for the asset, and the value of the asset, the value of the value, boils down to how much revenue the vault generates, how much revenue it generates. The biggest difference is the basic direction of the project. We are behaving more like a business than a stable asset.

Dan Elitzer: What I would say is that what Trent is describing is his perspective on this. Compared to what he described at the beginning, there's nothing in the code that makes it just like AMPL plus the vault. I would say that the core distinction is clear.AMPL is designed to minimize governance. YAM is designed to maximise governance.So, although the initial idea is very similar. You can think of it as a governance maximization version of "plenty of AMPL plus a vault." These two versions open up a world of possibilities for what it might be. YAM could, if its holders hoped it was merely a well-stocked force. But what we see is that people will take governance actions on their own, and it doesn't matter what we think, it doesn't represent what they think.

In fact, this is what they do, and we try to be a really minimal manager, just to make the protocol have the desired original function. And the advantage of the initial version of YAM was also clear that we did not retain any administrative control. Thus, from the moment the contract is deployed, it is entirely in the hands of the token. We have no privilege at any time that no one else has. From day one, control is completely decentralized.

Dovey: To achieve this, YAM needs to have an intrinsic value, or fair market value, for an asset itself. But have you reduced the intrinsic value that governance brings to assets because it doesn't make economic sense? Pure governance tokens don't give you any economic benefit, which is the problem with many DEFi tokens. So if governance has no intrinsic value, how can they be sustainable?

Dan Elitzer: I totally disagree with the idea that governance tokens have no intrinsic value. If you look at any startup, when it starts, it issues equity stock or something, you might say there's no intrinsic value, but it's really up to people to make governance decisions, and the founder of a traditional startup is the founder. So, how good are the founders' decisions and actions? Does the team accept their hires? In Defi markets we are talking about organizations.

It's all about the decisions that communities make and the actions that communities take. So I don't think it's any different from a traditional company. It starts from scratch, and any value created is based on good actions and good decisions by empowered people.

Trent Elmore: It's basically a blindfold attempt. And what I was saying was that once these started happening in the vault, the concept of a price floor, as it were, began to have a fundamental intrinsic value, because the YAM token holder could easily say that he had a vote on the vault fund. And they said, "Well, we don't want to. We don't want to work on this agreement anymore, for whatever reason." Ok, so let's distribute the accumulated funds to each token holder.

You can also imagine a function we call rage Quit, in which anyone can redeem their YAM proportionally to get a share of the vault. That way, in this case, the scrip has value, inherits the market value of the project scrip, and you have access to some potential investment strategies. And all of a sudden, you can learn the method of experience, where experience can produce something like a fairly traditional business, which manages money, right? And then there was real economic activity, which was administered by YAM token, which I think was somewhat similar to what Dan was saying, but there was also potentially very real economic activity.

Dan Elitzer: And social responsibility. Yes, I think we will try to make the risks as clear as possible and make it clear that this is not an audited project. So we try to make it very clear. Some people interpret it as a way of doing reverse psychology and marketing, but it's true that we don't know how we can communicate more clearly.

But I can't control what other people do. People will rush in and buy things they don't understand. They do it because they want to make money out of it. They need to realize that they can easily lose money on this. And if you don't know what assets you're buying, you're not investing, you're speculating. So I strongly recommend that people, if they are going to buy any asset, whether it's YAM or any cryptographic asset, or any non-cryptographic asset, as if you are thinking of it as an investment rather than playing a game, then you have to study it carefully.

Trent Elmore: Yes, I agree with Dan 100 percent, and developers in this space do have a responsibility to do everything they can to make sure that experiments that are going on in the world and on the blockchain are as safe as possible. But basically, it's a very new technology and a very complex system. I think almost all DeFi protocols have a vulnerability that the auditors have missed at some point.

So there is no panacea for safety in this area. It is important to recognize that these are venture capital investments, especially since the non-English speaking community does not have adequate access to clear and complete information. So I really want to thank Davey for having us here and hopefully this event will help us spread the word.

Dovey Wan: In the latest token economy design, you removed the initial mining liquidity pool. At startup, the only supported liquidity pool is the incentive Uniswap YAM/yUSD pool. Why is it that you can only mine in a pool that provides liquidity? Do you think this change will solve the equity problem?

Trent Elmore: I think I'm really the pioneer of the multi-asset mining concept in a way, and we're really thinking about how we're going to distribute tokens to communities that want to participate in our projects. And what this ultimately leads to is a very decentralized distribution of token holders, and it also attracts a lot of members of a particular community, which is very decentralized. We think this will all fit nicely with the DeFi project. We have over 7,000 token holders, but the largest holders hold less than 4 per cent.

Therefore, those communities that are truly involved can better understand the agreement and want to see it succeed in the long term. Our initial mobile mining mission is now fully completed, so there is no need to add additional units to get more communities involved or allow these people to earn more tokens. Instead, we concentrated most of the incentives in the YAM YUSD pool.

YAM is unique among other mobile mining projects in that it has been creating. The reason we need this particular pool of capital is because we need vaults as reserve assets. We need the YAM token holders to take out their YAM and give the Treasury to this pool, so that the Treasury has the reserve assets that we need, so that it can hold really high-yielding assets.

Dan Elitzer: And we also need a price cycle, so we need a place to pull prices so that we can do a Rebase. We need this pool of capital to do this.

But the initial pools of money listed in the introduction, those liquidity mines, were supposed to be done in a week, and they certainly were. And then during that week, all of the assets from all of the different liquid mining pools rushed into that pool, and then the final migration took place. So, I think there is a less than ideal distribution. But looking back, I would say that most distributions are fair. Now a lot of projects will replicate what they did before, and you already know the rules of the game. So it's not fair to say that if we're still digging in the first place, everybody already knows how to get involved and prepare for it.

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