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The Tally Newsletter, Issue 31

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The Tally Newsletter, Issue 31

May 13, 2021

monetsupply
May 13, 2021
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The Tally Newsletter, Issue 31

newsletter.tally.xyz

Welcome back for issue 31 of the Tally Newsletter, a publication focused on all things decentralized governance. We’ll keep you updated on key proposals, procedural changes, newly launched voting systems, shifting power dynamics, and anything else you need to know to be an informed citizen. 

This week we cover: 

  • Rari Capital’s hack and recovery process

  • Vitalik’s meme coin donations kickstarting decentralized treasury management

Plus brief updates from around the ecosystem.


Rari Capital Loses Funds in ETH Pool Hack

TL;DR: The hack has led Rari to accelerate the transition to DAO governance, ensuring the community can make any key decisions over compensation.

Over this past weekend, Rari capital faced an existential crisis as roughly $11 million in Ether was drained from their ETH yield aggregator pool. 

Twitter avatar for @RariCapital
Rari Capital @RariCapital
There has been an exploit in the Rari Capital ETH Pool related to our @AlphaFinanceLab integration. The rebalancer has removed all funds from Alpha in response. We are currently investigating the situation and a full report will be shared once everything is assessed.
3:19 PM ∙ May 8, 2021
517Likes153Retweets

As explained in the team’s post-mortem, the loss stemmed from issues in Rari’s Alpha Finance ibETH pool integration. The attacker was able to manipulate balances through the use of flash loans, allowing them to withdraw more than they deposited. Roughly 60% of the pool’s funds (2,600 ETH) were drained before the attack was stopped.

While Rari has been a community driven organization from the start, with over 80% of RGT tokens distributed to users through liquidity incentives, this attack is accelerating their transition to fully token controlled governance.

Twitter avatar for @jai_bhavnani
Jai Bhavnani @jai_bhavnani
It's been a long couple days. But this is going to be the first step in the path towards making everyone whole again. Let's talk more about what the DAO can do with these new resources in our community call at 5pm PT today (located in our Discord).
medium.comLooking forward at Rari CapitalThe yield aggregator suffered an exploit on May 8th which led to a loss of approximately $10m (2600 ETH). David Lucid, a leading protocol contributor, wrote a post-mortem on everything that happened…
8:43 PM ∙ May 9, 2021
247Likes36Retweets

First and foremost, the Rari team has elected to transfer the 20% of tokens reserved for developer incentives to the Rari DAO controlled by token holders. In addition to providing funding for user compensation, this positions the core Rari team as ordinary DAO contributors like anyone else. In the future, developers including the core team will need to seek grants directly from the DAO.

The community hosted a call in discord to go over potential resolutions to the hack. While full plans haven’t been determined yet, an initial vote is up on the RGT snapshot to determine the targeted percentage for reimbursing ETH pool depositors. Token holders and the core team will then need to make further plans on how to raise the funds required for compensation.

With more powers shifting from the team to RGT token holders, we can also expect to see a move towards on chain governance. Time sensitive controls (like the rebalancing mechanism used to safeguard remaining pool funds during the hack) would likely remain under the control of a multisig, while treasury management could be handled through a more deliberative voting process with smart contract based proposal execution.

Vitalik Donates Airdropped Meme Tokens for Public Goods.

TL;DR: Donation recipients including Crypto Relief and the Gitcoin Grants Multisig face a difficult challenge of prudent treasury management.

Over the past several years, it’s become commonplace for low reputation projects to airdrop tokens to Vitalik Buterin’s wallet as a form of marketing. But while some users and projects expected the airdropped tokens to remain out of circulation, this assumption has proven to be false.

In recent days, the Ethereum network has faced persistently high network fees and utilization due to an explosion in dog themed meme tokens. Most notable is the SHIB token, which catapulted to huge value in the past month as it was listed on a series of centralized exchange platforms. While Vitalik hadn’t taken interest in the meme tokens up to this point, the combination of high valuations and negative effects on the Ethereum network may have changed his calculations. 

Twitter avatar for @FrankResearcher
Igor Igamberdiev @FrankResearcher
LOOOOL, @VitalikButerin removed liquidity from the SHIB pool
Image
Twitter avatar for @FrankResearcher
Igor Igamberdiev @FrankResearcher
2/8 49.5% of the token supply was added to Uniswap after token creation. LP tokens from this pool were sent to @VitalikButerin along with the remaining SHIB. Therefore, Vitalik, instead of selling, can simply withdraw 93% of the pool liquidity without any price impact ($118M). https://t.co/aepGZqDeL6
5:31 PM ∙ May 12, 2021
2,482Likes703Retweets

In all, Vitalik donated tens of millions worth of ETH and various meme tokens to several public goods organizations including Crypto Relief (focused on fighting Covid in India) and Gitcoin. While this will have a huge financial impact on these organizations, it also creates some unique challenges for managing treasuries in a decentralized context.

Twitter avatar for @owocki
ΞndgameWoki @owocki
open to proposals about what to do with the AKITA in the community multisig
gov.gitcoin.coGitcoin GovernanceBuild & Fund the Open Web
8:10 PM ∙ May 12, 2021
45Likes2Retweets

Gitcoin’s Kevin Owoki has started a community discussion on how to use the AKITA tokens received as part of Vitalik’s donation spree. Crypto Relief is also considering similar questions for their SHIB tokens, with a proposal by market maker Wintermute to partner on a long term sales program. While the nominal value is extremely large, lack of liquidity makes it difficult to cash out. 

Twitter avatar for @HelloShreyas
Shreyas @HelloShreyas
Options for Crypto Relief & Gitcoin to deal with large donation: - Work w/ AKITA and SHIB communities on solution - Partial sale via OTC / Gnosis auctions / DEX - Return part of donation - Create lending market for token & borrow DAI - Hold longer to work through legal
4:54 AM ∙ May 13, 2021
15Likes2Retweets

In addition to questions of how to dispose of the meme tokens with minimum market impact, Gitcoin faces an additional question of how to deploy the funds effectively. While some favor holding the received funds as a permanent endowment and spending only from investment income, this needs to be weighed against possible benefits of deploying the funds faster. Gitcoin and Crypto Reliefs’ handling of these token donations will offer an important test case for DAO treasury management and diversification plans.


In Brief:

  • MakerDAO voters are on track to reject staking rewards proposal:

Twitter avatar for @sgmacpherson
Sam MacPherson @sgmacpherson
The vote for MIP49: Staking Rewards is currently very close. I would encourage you to vote in favour of this proposal to help improve the security of the Maker protocol by paying those who have their MKR locked in governance. vote.makerdao.com/polling/QmbqFK…
Image
11:23 AM ∙ May 12, 2021
17Likes7Retweets
  • Balancer v2 exchange protocol is live on Ethereum mainnet:

Twitter avatar for @BalancerLabs
Balancer Labs @BalancerLabs
We are thrilled to announce that Balancer V2 is live 🚀 Everything you need to know about the most flexible and efficient AMM ⬇️ medium.com/balancer-proto…
medium.comThe Most Flexible and Efficient AMM is Live — Meet Balancer V2After more than a year of development, Balancer Labs is thrilled to announce that Balancer V2 is now live and accessible with a new user interface. For those who missed it, Balancer V2 offers a…
1:07 PM ∙ May 11, 2021
760Likes231Retweets
  • PoolTogether passes proposal to fund RabbitHole onboarding incentives despite high gas prices:

Twitter avatar for @Flynnjamm
Brian Flynn 🐇 🕳️ (Hiring link in bio) @Flynnjamm
when you put blood sweat and tears into a proposal but shiba is making it gas-cost prohibitive for quorum to be reached
Elon Musk Snl GIF by Saturday Night Live
5:23 AM ∙ May 11, 2021
  • Vitalik starts Uniswap governance discussion over creating a Schelling coin oracle similar to UMA:

Twitter avatar for @haydenzadams
Hayden Adams 🦄 @haydenzadams
👀 Proposal from @VitalikButerin for @Uniswap governance / UNI to provide oracle services for defi 👂 Curious what people think!!
Twitter avatar for @teo_leibowitz
Matteo Leibowitz @teo_leibowitz
https://t.co/XiZOoDUx13 — @VitalikButerin
3:27 AM ∙ May 12, 2021
909Likes117Retweets
  • Aave reveals work on a private, KYC enabled pool for institutional investors:

Twitter avatar for @StaniKulechov
stani.eth 👻 =(⬤_⬤)= 👻 @StaniKulechov
@CryptoKaijus @Fernjosh1 @AaveAave It's a private pool for institutions that are still practicing before aping into DeFi
1:35 PM ∙ May 12, 2021
1,325Likes265Retweets
  • Tether releases report on reserve composition, but details remain sparse:

Twitter avatar for @Tether_to
Tether @Tether_to
📢Tether releases quarterly information about the composition of its reserves backing issued tether tokens ⬇️ tether.to/tether-release…
12:00 PM ∙ May 13, 2021
285Likes61Retweets
  • xToken faces two exploits and millions in losses for LPs:

Twitter avatar for @xtokenmarket
xToken @xtokenmarket
xSNXa and xBNTa contracts have been exploited. Minting paused on all contracts as we investigate further. Liquidity pools have been drained, however most SNX and BNT remain in xToken contracts. We owe the community an explanation and will be providing another update shortly
2:43 PM ∙ May 12, 2021
224Likes71Retweets

Thanks for joining us for issue 31 of the Tally Newsletter! Be sure to check out the Tally governance app, join us on Discord, and subscribe to our protocol calendar for the latest updates!

Anything we missed? New developments or protocols you’d like to see covered? Drop us a line at newsletter@withtally.com

Best,

Nate, Tally

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