Why is the Yield+ incentive program an important part of empowering the development of EOS DeFi?

Author: EOS Network Foundation

On June 23, 2022, at 20:00, the latest episode of the informal "Talk With ENF" series by the EOS Network Foundation was launched. This episode focused on the Yield+ blue paper and its EOS liquidity incentive program, which have garnered significant attention from the ecosystem.

With the release of the Yield+ blue paper and the ongoing progress of other initiatives, the community's desire to further understand the Yield+ incentive program has been steadily increasing. Therefore, in this episode, we are very fortunate to invite Denis Carriere, CTO and co-founder of Pomelo and EOS Nation, Raven, Operating Manager of Defibox, and Guan, the founder of Pizza, to engage in an in-depth discussion on Yield+ and EOS DeFi topics.

This article is a review of the highlights from this AMA event, with some content edited.

Self-Introduction Segment

First, let us welcome all the guests and invite them to introduce themselves.

• Denis Carriere's response:

Thank you very much for the opportunity to participate in this event and meet friends from the Chinese community. I am the CTO of EOS Nation and have been part of the community since the launch of the EOS mainnet, and I have never left. Currently, I am mainly responsible for some incentive mechanism work, including applying for the development of smart contracts. I am also very happy to be a part of the Yield+ working group and hope to help improve the EOS incentive system.

• Raven's response:

Hello everyone, I am Raven from Defibox. Defibox can be considered a leading DeFi project in the EOS ecosystem. We currently have three major protocols: Swap, stablecoin USN, and lending. I am very glad to participate in this Yield+ event today to discuss the future of Yield+ and EOS together with the community.

• Guan's response:

Hello everyone, I am Guan, the founder of Pizza Lending. While I am responsible for the Recover+ working group, I also participate in the Yield+ working group, so I can be considered a familiar face in the EOS community. Recover+ mainly addresses methods for dealing with hacking incidents. I also serve as an advisor for other projects, so I have many opportunities to appear in the community.

Q&A Sharing Segment

Question 1:

We see that today's guests participating in our AMA include both the main author of the Yield+ blue paper and top DeFi projects in the EOS ecosystem. They must have a relatively deep understanding of the EOS liquidity incentive program proposed in the Yield+ blue paper.

Therefore, could each guest briefly introduce the EOS liquidity incentive program in under 200 words? What problems does it aim to solve? How does it operate? What are its advantages?

• Denis Carriere's response:

From a macro perspective, Yield+ aims to bring more on-chain liquidity through incentive measures, encouraging more dApps to deploy assets on-chain, increasing the number of DeFi projects, enhancing project health, and increasing protocol trading, among other things. This will bring more activity to the chain, allowing our entire ecosystem to develop more deeply and healthily, creating a deeper liquidity fund pool and fostering a healthier and more prosperous DeFi ecosystem, enabling all active participants to continuously benefit from the increasing on-chain activities.

• Raven's response:

The Yield+ liquidity incentive program aims to help develop the EOS DeFi ecosystem, increase the total value locked (TVL) in EOS DeFi, and enhance users' opportunities to earn from the EOS ecosystem. Currently, EOS suffers from a severe lack of projects participating in its ecosystem due to a lack of systematic and efficient incentives, leading to low participation from token holders. Yield+ can effectively address these issues; its operation mechanism is based on the amount locked, and its advantage is simplicity and efficiency.

After months of research and discussion by our working group, we found that Yield+ is a very good approach, which has already been successfully validated on other mainstream chains like Fantom. It attracts project parties and DeFi participants, increases the locked amount on-chain, and activates the entire ecosystem. I believe this is a very good opportunity for EOS. Thank you.

• Guan's response:

First, EOS inflation is a relatively limited but effective tool for the EOS Network Foundation, so it is important to utilize it well. We have established various working groups to promote the development of the EOS network.

Yield+ provides a great channel. As EOS holders, everyone can feel that the EOS Network Foundation directs inflation funds to project parties, and then the project parties incentivize token holders after receiving rewards. When token holders benefit from holding EOS, they will increase the locked amount, creating a positive cycle. Therefore, Yield+ is actually a good thing for ordinary token holders.

Question 2:

Currently, the EOS liquidity incentive program proposed in the Yield+ blue paper is still just a plan. What will its future implementation roadmap look like?

• Denis Carriere's response:

At this stage, we are developing various tools, mainly focusing on developing smart contracts and some front-end and back-end components, including oracle development, etc. By around August, we will launch testing, and at the end of August, we will start the smart contract audit. The entire audit process, from the initial audit to re-audit and developer audit, is expected to last about a month.

Currently, the progress is quite smooth, and we expect to meet with everyone by the end of August.

• Raven's response:

Phase 1: Focus on real assets like EOS and USDT as the basis for assessing the locked amount, rewarding 625,000 EOS, with a very sufficient budget. Particularly, the definition of real assets has inadvertently resolved many concerns within the community, making the entire Yield+ launch process simple, efficient, and sufficiently decentralized.

Phase 2: After accumulating enough experience in Phase 1, the working group will consider providing more support through Yield+, including EVM Trust, cross-chain solutions, stablecoins, etc.

Phase 3 is also an acceleration phase: If we succeed in the first two phases, the quarterly rewards in the third phase could reach 2.5 million EOS. If we reach Phase 3, EOS should have overcome its difficulties and regained new life.

This is my general summary; the specific roadmap can be found on page 23 of the Yield+ blue paper.

Question 3:

We notice that the EOS liquidity incentive program uses the TVL (Total Value Locked) of projects as a measurement indicator.

What are your thoughts on this design? Additionally, besides formulating liquidity incentive programs, what other DeFi incentive measures and support plans from other public chain ecosystems can the EOS ecosystem learn from?

• Guan's response:

Incentive programs similar to Yield+ can actually be divided into two types: one, like Fantom, directly uses tokens for incentives, and the other is a cash fund, directly establishing a fund of, say, $1 billion to support developers. The differences between these two incentive methods are quite significant.

For project parties, I feel that Yield+ adds a completely different dimension. The rewards obtained through Yield+ can be better allocated to users, thereby increasing the locked amount and introducing various new gameplay.

The design of Yield+ started around February, and I have been participating in Yield+ discussions for the past few months. I believe that when users receive rewards, the simplest way is to directly buy back the project tokens, allowing the project tokens to perform better.

In this way, we will first attract some users back. As the number of users increases, other new developers will notice the growing user base and gradually return, leading to positive development, which is known as spiral growth.

• Raven's response:

Everyone can first look at pages 9 to 20 of the blue paper regarding the research report on liquidity incentive measures. The content in the blue paper is distilled from the research reports of various groups. In both Fantom and Polygon, a comparison of various data before and after the launch of liquidity incentives shows that in the months following the launch, on-chain data, whether in terms of locked amount, trading volume, user numbers, activity, or token price, has seen significant improvements. Therefore, from an empirical standpoint, this design is also suitable for EOS.

The EOS ecosystem lacks project party construction. We need to attract excellent project parties while avoiding wasting incentives on speculators who only seek to exploit rewards without contributing. The entire mechanism design of Yield+ effectively addresses this issue. Additionally, on page 27 of the blue paper, we conducted relevant data modeling analysis, providing theoretical support and points to note regarding the data.

The locked amount of a public chain determines many things: having locked amounts proves there are participants, which naturally brings along trading volume and activity. These, in turn, can generate revenue for the public chain, such as transaction fees, usage fees, and gas fees. Secondly, an active public chain naturally has more exposure, attracting more newcomers and creating a positive cycle for token price increases.

Currently, other public chains also have various support plans, but the Yield+ model is simple, effective, widely applicable, and decentralized. We also welcome the community to share other models for everyone's reference.

Question 4:

We all know that DeFi is an important part of ecosystem construction, and the EOS Network Foundation places great emphasis on the development of DeFi.

What channels do you know of that have received assistance from the EOS Network Foundation? Have you ever applied for or received help from the EOS Network Foundation? What additional support do you think the EOS Network Foundation should provide for the development of the DeFi ecosystem?

• Denis Carriere's response:

Developers working on EOS hope for more funding and support options. We currently offer many ways, the two main ones being:

One is through applying for crowdfunding from Pomelo. Pomelo opens a funding season every three months. The next funding season will start in July, and any developer providing public goods for EOS can apply for funding support.

The other is the ENF funding framework, where any open-source EOSIO project can apply for specific levels of funding, which will be rewarded at each delivery milestone. We already have many funding options and application channels, and there may be more corresponding channels in the future.

Question 5:

Currently, there is a viewpoint in the community that DeFi is facing a development bottleneck. The future direction of DeFi development has also been a hot topic of discussion in the community.

What do you think will be the next innovation point for DeFi? What DeFi sub-sectors should we pay attention to?

• Raven's response:

DeFi (Decentralized Finance) is a scenario in blockchain that is close to practical applications. It has many differences from traditional finance, which is part of its charm, but it also comes with risks and drawbacks.

DeFi is indeed facing some development bottlenecks, but I believe the story of DeFi is just beginning. Just like the financial industry, which has existed since ancient times, modern capitalism and market economies have brought finance to unprecedented heights. DeFi, as a new phenomenon, is still in its infancy.

I believe the next innovation point for DeFi should be to provide financial services that can serve the hot topics in blockchain, such as the DeFiization of NFTs, integration with Web 3.0, the metaverse, and various forms of DeFi.

• Guan's response:

First, after this round of adjustments, the entire DeFi story is in a cooling period. Discussing breakthroughs in the overall environment at this time is somewhat unrealistic.

Returning to EOS DeFi, I believe there is significant development space for EOS DeFi, which has not been activated for various reasons in the past. After the launch of Yield+ and the introduction of EVM, what new things can we launch with EVM and Yield+? Therefore, the focus should not be on a specific sub-field but rather on whether we can create additional chemical reactions when the overall environment improves.

Question 6:

Currently, the EOS liquidity incentive program, funding framework, Pomelo, and nine core working groups are working together to revitalize the EOS ecosystem. Let's make a light and beautiful assumption:

What will the development landscape of the EOS DeFi ecosystem look like in the next year?

• Denis Carriere's response:

It is actually hard to imagine what our development will look like in the next year, but it can be predicted that there will definitely be very positive and forward-looking developments. We will see more and more smart contracts deployed, more projects, and more transactions. There will also be more DeFi on EOS and EVM. I am very confident about the future, and the community can look forward to it.

Yield+ is open to all protocols, and we welcome everyone to actively apply for the Yield+ incentive program, believing that Yield+ will bring you very tangible benefits.

• Raven's response:

I hope Yield+ can really bring some vitality to the platform. As an ordinary EOS holder, I hope to have various projects to engage with every day, without having to envy other chains or run to other chains to play.

Everyone has persisted in EOS for so long, and the dawn is already here. Yield+ will definitely attract many excellent projects to join us in building the EOS ecosystem.

• Guan's response:

I hope that through this round of incentives, the currently active DeFi projects can increase the overall locked amount. If the current locked amount is 100, I hope it can double or triple.

The EOS Network Foundation has established nine working groups and launched various measures to promote the development of the EOS ecosystem. Although ordinary users may not feel the impact in the short term, especially regarding prices, the entire cryptocurrency market is currently in a downward phase.

But I hope everyone can be more patient. The damage caused by Block.one over the past four years cannot be completely remedied overnight. However, overall, EOS is moving in the right direction. As long as the direction is correct, it is merely a matter of time. I hope everyone can have more confidence or grit their teeth and hold on.

Conclusion

Thank you to the guests for their answers, which have helped us further understand the Yield+ blue paper and its EOS liquidity incentive program. Thus, this episode of the informal "Talk With ENF" comes to a close.

Thanks to the guests for their wonderful speeches, to everyone present for their active participation, and to the cooperating media including Planet Daily, BlockBeats, MarsBit, Chain Catcher, Foresight, Jinse Finance, Deep Chain Finance, DeFi Dao, Carbon Chain Value, WebX Labs, and the cooperating community 7 O'Clock Capital for their strong support of this event.

In the future, the EOS Network Foundation will continue to accelerate its relevant work, and we look forward to the EOS ecosystem opening a new chapter of vigorous development with the help of the EOS Network Foundation.

We look forward to the next informal "Talk With ENF." See you then!