Wintermute Trading, one of the biggest market makers in crypto, has hit some governance roadblocks as it hunts for yield across decentralized finance (DeFi) – an ecosystem it helps prop up.

The proprietary trading firm, which supports the DeFi industry by supplying liquidity, is trying and failing to convince supporters of Yearn Finance to loan it 350 YFI tokens – worth over $2 million – in exchange for Wintermute supporting markets for Yearn’s yCRV token. Yearn voters are roundly rejecting the advances as extremely unfair.

The complex situation highlights how Wintermute has grown ever more bold in the ways it seeks to extract value from crypto projects. Gaevoy called the proposal a creative "win-win" deal for Wintermute and Yearn on X, formerly Twitter. But on Discord, where Yearn community members lurk, he ran into strong opposition on what many framed as a one-sided offer.

Securing YFI tokens from Yearn can help Wintermute earn more yield in its token dealmaking. It’s trying to get those tokens by leveraging its own stash of CRV tokens at minimal cost to itself and, in the view of Yearn believers, with minimal upside for Yearn.

"The whole idea of the deal is antithetical to yearn’s ethos: decentralization to its core," said the influential Yearn voter and community member who goes by the pseudonym 0x7d54. "Then a potential agreement with an off chain player to loan out its governance token? That would throw some of that out the window."

Wintermute first envisioned paying Yearn 0.10% interest on a 12-month loan from its treasury. Instead of pledging crypto collateral – table stakes for most DeFi loans – Gaevoy offered his monster firm’s credibility. Wintermute is among the most active names in DeFi lending, trading and governance; just this month, it helped bail out Curve Finance.

The YFI loan “would be rather stupid for us not to return,” he wrote in forum posts. But Yearn’s voters questioned the logic of trusting self-declared “reputable” companies after blowups of FTX, Alameda, Celsius and other failed whales. As a concession, Wintermute agreed to post CRV tokens as collateral in a wallet partially controlled by them and by Yearn.

Wintermute is newly flush with CRV tokens. Earlier this month, it acquired 25 million CRV at highly favorable rates during the industry-wide bailout of Curve Finance founder Michael Egorov. It was a move that helped Curve – and with it, possibly much of DeFi, including Yearn – avoid the domino effects of a potentially catastrophic lending blowout.

Yearn is among a handful of DeFi protocols that vie for deposits of CRV tokens by offering big interest rates to those who lock their assets up in its vault, yCRV. If Wintermute were truly interested in giving Yearn a good deal, it might offer to mint new yCRV tokens, one voter told CoinDesk. Doing so could pay long-term dividends for the DAO.

But Wintermute has only promised to help Yearn’s yCRV markets by providing liquidity to keep its “exit ramp” investors on solid footing. That’s important, one voter told CoinDesk, but nowhere near as advantageous to Yearn as creating a new yCRV.

Indeed, Gaevoy told Yearn voters in the project Discord that Wintermute has no interest in minting yCRV. It’s already locked 6 million CRV tokens with competitor Convex Finance. Gaevoy told them his firm is prepared to do more business with Convex if Yearn doesn’t come around.

Gaevoy and another Wintermute official did not respond to a request for comment.

At press time, the vote, dubbed YIP-74, was slouching toward failure, with 94% of votes against. It closes on Aug. 30.

Wintermute's shellacking appears to have emboldened DWF Labs, another market making firm. Late last week DWF pitched Yearn more favorable terms (1% interest payments every four weeks, as opposed to 0.1% at the end of 12 months – but no collateral) for the same 350 YFI. That proposal hasn't yet gone to vote.

For Yearn and Wintermute both sides are taking optics into consideration. At one point, Gaevoy told the Discord that he shows up in sometimes spicy governance chats – at one point, a user called Wintermute a handout-taking “vulture” – to get a “temp check at how we are perceived.”

The influential Yearn voter who goes by the pseudonym 0x7d54 was just as perceptive, pointing out in the Discord that there are benefits to be had from a big name like Wintermute participating in Yearn’s markets.

“This benefit would be completely obliterated, though, by negative sentiment if Yearn accepts an unbalanced agreement – which in my view is still the case with the modified proposal (even if it is one step better than the original).”

CORRECTION (Aug. 29, 10:40 UTC): Corrects spelling of Gaevoy throughout.

UPDATE (Aug. 30, 19:06 UTC): Reframes Gaevoy's characterization of the deal proposal.