The Human Greed Tax - The Daily Gwei #67
Harnessing human greed for the greater good.
As all of you probably know by now, there has been a wave of new yield farming projects spun up on Ethereum lately that have attracted large amounts of liquidity and are paying out high yields to those brave enough to take on the risk. Many of these projects (or “Ethereum money games” as I like to call them) are basically zero-sum games in that they eventually “death spiral” when the music stops and everyone tries to find a chair before the price of the token crashes. But what if we could turn these things into positive-sum games? I believe we can.
So far, both the YAM and YFI communities have voted to direct 1% of their treasuries to Gitcoin and just yesterday Justin Leroux proposed that the SushiSwap community should do the same. YAM is a unique case here because what the YAM project aims to do is take the zero-sum game of rebasing and turn it into positive sum by directing some of the rebase to a treasury. Then YAM token holders can vote on where they would like these treasury funds to go.
Many of these other money games aren’t like YAM, YFI or SushiSwap and they are what I like to call “flash farms” - that is, they are usually short-lived and have a very low chance of having any sort of future. Due to this, they don’t really produce much value outside of enriching a few people. What I would love to see is these flash farms spun up with a 1% payout to something like Gitcoin from the very beginning. This means that even if the money game only lasts for 2 weeks, it actively helped the ecosystem by directing funds to public goods.
Another way of thinking about these schemes is that they are basically a tax on human greed. The only reason 99% of people are participating in most of the money games on Ethereum is, you guessed it, to make money! So by implementing a “greed tax”, we can effectively harness human greed for the “greater good”. A real world example of this would be if a casino donated 1% of its profits to a charity. The “greed tax” doesn’t just have to go to public goods funding or charities either - it can be directed to a treasury (like in YFI, YAM and SushiSwap) and then token holders can vote on where they would like the funds to go. An example of this is SUSHI holders voting to pay the developer who built a SushiSwap yield farming dashboard.
Even though the yield farming craze has seemed like it’s reached its peak over the last few weeks, I tend to believe that we’re just getting started. There is just so much more space left to explore here and a basically unlimited amount of ways that these money games can be set up. Not to mention that you can gamify these things much more than just having a dashboard with a yield counter. I look forward to seeing what the Ethereum community comes up with over the coming months!
Have a great weekend everyone,
Anthony Sassano
All information presented above is for educational purposes only and should not be taken as investment advice.
That 1% greed tax is a good idea imo. Not sure if it works. But essentially sounds interesting and helpful.