Yearn Finance, a leading DeFi yield aggregator protocol, is in the early stages of a major governance overhaul proposal, YIP-XX. The proposal was introduced by pseudonymous contributor 0xPickles on September 28, 2025, in a bid to align stakeholders and encourage growth.
YFI does not enjoy the same clout it used back in its heyday when it was one of the biggest DeFi protocols with an all-time high of just under $7 billion in deposits as of December 2021.
However, this three-part initiative is expected to help the protocol find its way back to that greatness. It is touted not just as a way to make profitability a priority but also to promote accountability, and directly reward token holders who have stayed through declining participation and a TVL that’s down more than 90% from its all-time high.
Yearn Finance votes on a new proposal
Among the proposed changes, the most notable change is that a majority of all the revenue the protocol generates could soon go directly to those with skin in the game, as they have kept their YFI tokens locked despite the dwindling performance.
“This proposal creates a new deal,” 0xPickles wrote. “90% of future revenue goes to stYFI holders, empowering them.”
That is not a huge amount of money right now, considering Yearn’s monthly revenue from August turned in under $200,000 in profit, per DefiLlama data.
Still, the focus on profitability and increasing accountability is expected to put the protocol on a sustainable growth path that will, over time, increase revenues and make the YFI token more valuable.
The proposal comes as DeFi is enjoying a wave of new liquidity, which has pushed deposits to record heights this year.
For Yearn, which was once one of the biggest DeFi protocols with an all-time high of just under $7 billion in deposits in December 2021, the liquidity provides an opportunity to reclaim the success of the past.
Of course, this is assuming things unfold in the best-case scenario, but that is not certain because it is not the first time Yearn has attempted an overhaul in recent years.
In October 2023, a new vote introduced an escrow token model, like those used by protocols such as Curve Finance, Balancer, and Velodrome, however, even though there was support from YFI token holders, the new model wasn’t widely adopted.
“Only 3.8% of the YFI supply is locked, a figure that is in decline,” 0xPickles pointed out. “This demonstrates a fundamental lack of interest in the model.”
The new simpler model suggested by 0xPickles
0xPickles’ proposal will scrap the vote escrow model in favour of a simpler staking model.
Under the new model, YFI holders will be able to lock up their tokens via staking, which would qualify them to receive a portion of the protocol’s revenue.
Another proposal suggests restructuring the DAO to make it more profit-oriented while mandating on-chain financial reporting to justify budget requests from contributors.
As for what is prompting these changes, the proposal’s author cited organizational misalignment and coordination inefficiency as two cogent reasons.
There is also a final proposal to formalize a plan to distribute 1,700 YFI tokens through strategic contributor incentives, establish a capped performance bonus program, and create a long-term contributor retention pool.
The three proposals are currently being discussed on the Yearn governance forum ahead of a vote. It is being touted as an “all-or-nothing” package because the proposals form a single initiative, which means that for it to take effect, it has to pass in full via a DAO vote.
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