Yearn Finance Initiates Comprehensive Governance Restructuring
Yearn Finance, a prominent protocol in the decentralized finance (DeFi) yield aggregation landscape, is embarking on a significant governance restructuring initiative known as YIP-XX. This proposal, put forth by the anonymous contributor 0xPickles on September 28, 2025, aims to align the interests of stakeholders and stimulate growth within the platform. Once a powerhouse in the DeFi space, Yearn Finance has seen its influence wane since its peak, when it boasted nearly $7 billion in deposits in December 2021. The three-part reform is designed not only to refocus profitability but also to enhance accountability and reward loyal token holders who have remained engaged despite a staggering drop in total value locked (TVL), which has plummeted by over 90% from its previous highs.
Yearn Finance Votes on a New Proposal
Among the key elements of the proposed changes, the most significant is the potential allocation of the majority of the protocol’s revenue directly to committed stakeholders. These individuals have maintained their YFI tokens despite the protocol’s performance downturn. “This proposal creates a new deal,” stated 0xPickles. “90% of future revenue goes to stYFI holders, empowering them.” Although Yearn’s monthly revenue was notably low, amounting to less than $200,000 in August according to DefiLlama, the emphasis on profitability and accountability is anticipated to set the stage for sustainable growth and ultimately enhance the value of the YFI token.
The proposal arrives at a time when the DeFi sector is experiencing a surge of new liquidity, driving deposits to unprecedented levels this year. For Yearn Finance, which previously held substantial market share, the influx of liquidity presents an opportunity to recapture past success. However, this optimistic outlook hinges on the successful execution of the proposed reforms, which is uncertain given Yearn’s previous attempts at restructuring. In October 2023, a vote to introduce a new escrow token model—similar to those implemented by other protocols like Curve Finance and Balancer—gained some support among YFI holders but ultimately failed to gain traction, with only 3.8% of the YFI supply being locked, a trend that appears to be declining.
A Streamlined Approach to Governance
The new, more straightforward model proposed by 0xPickles seeks to replace the vote escrow system with a straightforward staking mechanism. Under this arrangement, YFI holders would have the option to lock their tokens through staking, thereby qualifying for a share of the protocol’s revenue. Additionally, another proposal aims to revamp the decentralized autonomous organization (DAO) to prioritize profit generation while instituting on-chain financial reporting to validate budget requests from contributors. The driving forces behind these amendments include organizational misalignment and inefficiencies in coordination.
Finally, a third proposal outlines a strategic plan to distribute 1,700 YFI tokens as incentives for contributors, establish a capped performance bonus system, and create a long-term retention pool for contributors. These three proposals are currently under deliberation on the Yearn governance forum and are being presented as an “all-or-nothing” package. This means that for the initiative to be implemented, it must receive unanimous approval in a DAO vote.
