Summary: This GIP proposes reducing the percentage of protocol fees allocated to membership vaults from 50% to 10%.
Motivation: One of the key reasons to implement membership vaults (per GIP-13) was to incentivize TVL growth. Because TVL growth has stopped, we should reduce membership rewards in order to maximize USDC reserves available for building V3 (per GIPs 68/69/70/71/72).
Specification & Requirements: Reduce the percentage of protocol fees reallocated to membership vaults from 50% to 10% via snapshot and governance votes.
Benefits:
By mid 2025, the protocol has an extra ~240k USDC to support V3 efforts (calcs)
Because we are not setting member fee allocation to zero or some very low number, we are still achieving the other aims of GIP-13 i.e. we’ll be maintaining clear utility and value for GFI.
Downside: Reduces membership rewards for existing membership vault participants. Only ~88 people are still participating in the program, and 10% rewards is still significant.
Voting:
“Yes” - You agree to reducing member fee allocation from 50% to 10%.
“No” - You disagree and vote that the member fee allocation should remain at 50%.
I am not sure if this makes sense because currently this is the only utility of GFI that remains and if we remove this usage also then GFI purely becomes a governance token and no one will have any incentive to hold the token. Actually reward % reduction might make sense once V3 is implemented and TVL starts growing. Then we can slowly reduce this percentage so that people staking GFI continue doing it as the amount of USDC rewards they get will remain more or less equal as the TVL increases (even though % of rewards decrease).
Just my two cents.
I agree with the opinion of @velvetdoctor.
The lack of TVL growth does not mean that the percentage of protocol fees has no impact on TVL at all. It seems to me that the TVL value in this particular case is influenced by both macroeconomic factors and the situation on the crypto market, as well as Goldfinch’s relatively recent losses due to loan defaults. Goldfinch’s reputation and trust in the protocol still needs to be restored.
In my opinion, a significant reduction in the percentage of protocol fees could negatively affect the value of the GFI. The percentage should be reduced gradually: 50% → 45% → 40% → 35% → …, monitoring the impact of these changes.
I support this proposal. I don’t think membership has shown any strong correlation with GFI, and the usage has generally been declining. So i think it’s very likely that the reduction would have a strong effect, or that it’s currently creating much action. But as a hedge for just in case, this proposal only says to reduce it to 10%. I could be onboard though with a gradual reduction rather than all at once.
I also think that the extra money could be used in better ways. If it turns out there’s some big reaction, we can always increase it.
