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# System prepended metadata

title: Analysis of Pending Proposals

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# Analysis of Pending Proposals

It's important that we start passing YIPs again. There are a number of proposals to consider, but here are the two that seem most important right now:

[Ryan's Proposal](https://gov.yearn.finance/t/proposal-rethinking-capital-allocation/7304?u=tracheopteryx) to redirect all fees to invest in yearn's growth.

[Banteg's Proposal](https://gov.yearn.finance/t/restructure-fees-and-align-incentives/7548) to restructure fees to better incentivize contributors.

## Executive Summary
With a small modification to Ryan's, both proposals passing would give us a very flexible system that properly incentivizes contributors, buys YFI, and gives the multisig the flexibility to utilize system fees however they like—including by distributing them to stakers (that is not prohibited by Ryan's proposal, just no longer required).

## Ryan's Proposal
https://gov.yearn.finance/t/proposal-rethinking-capital-allocation

### Spec
*Buy back and accumulate YFI in the Yearn treasury. The community can decide on how that YFI is distributed in future votes.*

### Comments
It is not clear in the proposal how YFI would be distributed other than by the community "Once implemented the community can then decide how to distribute this accumulated YFI to different contributors in the Yearn ecosystem."

This is frankly a terrible idea as we haven't passed a YIP in over a month and the thought of YFI piling up in the treasury with arguments over what to do with it is frightening. 

### Modification
Let's suggest a modification to this proposal such that the entire treasury is under the control of the multisig with the mandate to create a single-purpose council or DAO as soon as possible to do one job: spend YFI on yearn's growth and *give the rest back to stakers*.

**This proposal does not prohibit staking rewards, it just no longer requires them.**

## Banteg's Proposal
https://gov.yearn.finance/t/restructure-fees-and-align-incentives

### Spec Summary
New fee model increases strategist rewards such that working for yearn is a compelling option vs starting their own, competing protocol.

Also converts earnings to YFI for use in future contributor compensation packages.

### Comments
This proposal is, IMO, clearly necessary for Yearn though there are some concerns:

1. Reduced staking rewards in the short term (should be more long term) scares some people
2. Nitpicky arguments around exact numbers
3. How do we know this fee revision provides enough capital to cover operational expenses?
4. Unknown treasury management, eg how to get yUSD to pay grants
5. Arguments to split this into two proposals

## The Two Proposals Together
If we look at these two together, assuming both pass with my modification to Ryan's, we have a pretty amazing and flexible system.

We get all the benefits of Banteg's proposal and eliminate concerns 3 and 4 above.

### Combined benefits
- All the benefits of Banteg's proposal
- Much greater budget flexibility to grow yearn and reward contributors
- Further progress towards decentralizing and getting rid of the multisig through the clear mandate to create a treasury council

## Questions

**Assuming these both pass, how will voting and governance work?**

It's not clear now but I don't think these proposals change anything. We still have to solve this.

**If Ryan's proposal passes, what incentive is there for stakers to govern?**

With the modified proposal we would still give staking rewards, so the incentive is the same. Those rewards may vary but it is in yearn's interest to ensure stakers are happy and continue governing so the multisig (and later treasury council) has incentive to keep this working.

