# **Amendment proposal ALPHA**
Dear youves community,

Since its launch on July 22, 2021, youves continuously grew, and it is fantastic to see that over 500 vaults were created, more than 5m tez are locked in those vaults, and over 8m uUSD were minted. The quality of the community discussions prove that the platform documentation, its open-source notion and its participatory approach empower us all in building a new and exciting ecosystem for asset creation and management. 

We are excited to propose our first amendment to youves. This amendment proposes the ability for users to create a new synthetic asset uDEFI that is collateralised with uUSD, allocating YOU for liquidity incentives, an introduction of a 6-week lock-up period for uUSD in saving accounts, optional minter conversions and changes to the interest rate feature for uDEFI.
## **Voting mechanism**
Changes to youves are governed with a four out of seven multisig setup as stated on youves’ landing page. In order to allow token holders to vote, a voting mechanism was established on youves governance page. Supported by Beacon, users can vote with the weight of YOUs in your wallet, staking pool or YOUs on Quipuswap and Plenty. 

Voting is open until October 19, 2021, EOD UTC. The implementation of the amendment will take place until October 31, 2021. The ALPHA proposal consists of five amendment proposals (A-E). Users cast a single ‘yes’ or ‘no’ vote for all five proposals combined. In case of a ‘no’, ubinetic will implement uDEFI without any changes to the current setup by October 31, 2021.
## A - uDEFI collateral
You have voted for a new template on youves to create a synthetic asset that tracks prominent uDEFI protocols. The implementation of uDEFI is far progressed, the required changes to the platform (multi-assets) and to the oracles (generic oracles) are currently being tested on Granadanet. In order to introduce new use cases for uUSD and following our roadmap to introduce multi-asset vaults, we suggest changing the required collateral for uDEFI from tez to uUSD.

*We propose to change the required collateral from tez to uUSD and suggest testing the changes to the synthetic asset on Granadanet prior to launching on mainnet.*
## B - YOU distribution
As of today, more than 500’000 YOU were successfully allocated to minters and to ubinetic, who kickstarted the platform. We believe that YOU are an important incentive instrument to ensure sustainable growth. To incentivise users that foster liquidity of youves assets, we propose the creation of a dedicated liquidity category receiving YOU.

*We propose to split the YOU distribution into three categories, the new allocation would result in the following weekly YOU distribution during year one (that started on July 22, 2021). Subsequently, the amounts would decrease in line with the YOU distribution halving:*
* *30’000 YOU shall be allocated to minters (67%)*
* *10’000 YOU shall be allocated to foster liquidity (22%)*
* *5’000 YOU allocated to ubinetic (11%)*
## C - Savings lock-up period
Balancing a novel product requires careful settings of incentives. The performance of the stable token template on youves exceeded many expectations. However, the advantages of being a saver of uUSD have proven to be too dominant compared to providing uUSD liquidity on a DEX. Introducing a lock-up period for saving assets of six weeks in combination with the YOU incentive for uUSD liquidity providers (see above) would incentivise uUSD holders to shift funds from uUSD savings accounts to liquidity initiatives.

*We propose to introduce a lock-up period of six weeks for savers after locking the uUSD.* 
## D - Interest rate response
The impression is that the response function of uUSD is both too small in size with respect to the deviations from the target price and too infrequent with the updates. Currently on uUSD the updates are weekly and the maximum response requires 25% deviation from the target price.

*We propose changing the interest rate response function for uDEFI. The function is linear and has the maximum response of +/-0.4% annualised already at a deviation of 10% from the target price. It will update every 12 hours. The maximum annualised change per week would remain at a similar level as before at +/-5.6%.*
## E - Minter conversion
There are two conversion types that can be used to manage the risks of minters and savers. Whilst the conversion right for the saver is currently mandatory for the minter, the minter conversion is only affecting those that lock their uUSD in the savings pool. We believe that both parties should have the possibility to opt-out. Because the effects of such a change require testing, we suggest applying the amendment to uDEFI only for the time being.

*We propose an additional parameter for uDEFI minters to accept conversion. Those minters that accept the conversion will receive YOU tokens, whereas those that do not accept conversion will not receive any YOU tokens. In each vault this decision can only be made once at inception. This new suggestion would allow minters to short a reference asset without conversion risk and allow others that accept conversion to receive a higher amount of YOU.*