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The Tally Newsletter, Issue 34

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The Tally Newsletter, Issue 34

June 2, 2021

monetsupply
Jun 2, 2021
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The Tally Newsletter, Issue 34

newsletter.tally.xyz

Welcome back for issue 34 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 some blockbuster proposals from Uniswap governance:

  • Community support for launching v3 on the forthcoming Arbitrum rollup

  • Harvard Law Blockchain Initiative’s proposed legal advocacy fund

  • Community initiative seeks to lower proposal submission threshold

Plus brief updates from around the ecosystem.


Uniswap Will Launch v3 on Abritrum

TL;DR: With strong support for a Snapshot proposal to launch on Arbitrum, the Uniswap Labs team has committed to deploying the contracts on behalf of the community.

After a months long period of relative inactivity, Uniswap governance is now beginning to see a burst of activity. This is a welcome change for a protocol that had faced criticism for lack of participation. 

The first proposal to break the seal was submitted by former Maker dev and community member Andy8052. He advocated for launching on the Arbitrum rollup to allow Uniswap to better serve users across various EVM compatible networks. While this might seem like a no brainer, there are a few reasons why this was far from assured.

Some had raised concerns about negatively impacting users through “fractured liquidity”, where the liquidity available on any one venue is insufficient to meet demand. But Uniswap v3’s efficient design helps reduce the impact of fragmentation by offering greater depth for a given amount of capital. Network transaction costs will also be far lower on L2 environments, so liquidity providers should be able to adjust their positions dynamically to meet the needs of the market.

A larger concern in the background was doubt about the Uniswap team’s incentives. VC fund Paradigm is the lead investor in Uniswap, and is also one of Optimism’s largest backers. This led some to worry about pressure to favor Optimism integration at the expense of launching on other L2s. With Arbitrum now expected to go live weeks or months before Optimism, this quickly became untenable.

Twitter avatar for @iamDCinvestor
DCinvΞstor @iamDCinvestor
41.35M $UNI signaling in support of deploying @Uniswap v3 on @arbitrum, 0 UNI against which is 1.35M more than the required threshold to actually pass a live proposal 👀 of course, a greater number of votes could emerge against it in an actual vote, but a very promising signal
Twitter avatar for @iamDCinvestor
DCinvΞstor @iamDCinvestor
i have just voted affirmatively here to signal that i would like Uniswap v3 to be deployed to Arbitrum on behalf of the 5.14m UNI delegated to me ✅🦄 if you also support this proposal, i encourage you to vote in this initial signaling poll https://t.co/tqfVVDGU2g
9:14 PM ∙ May 26, 2021
331Likes26Retweets

The Snapshot vote gained massive support, surpassing Uniswap’s regular 40 million vote quorum threshold within hours. Discussion then turned to implementation, as it wasn’t immediately clear how this would work. Noah Zinsmeister of the Uniswap Labs team offered a concise explanation of the process, relying on Uniswap governance’s control of the v3 license via the uniswap.eth domain.

Twitter avatar for @haydenzadams
Hayden Adams 🦄 @haydenzadams
2/ Assuming the snapshot passes we intend to support the community by deploying the v3 smart contracts to Arbitrum! We have already begun work on interface support and planning the deployment.
10:04 PM ∙ May 26, 2021
514Likes49Retweets

In the end, altering the license won’t be necessary as the Uniswap Labs team has committed to deploying v2 on Arbitrum themselves. While timelines to deployment remain unclear, this episode has shown the value of sentiment voting for aligning contributors and the wider community. 

Voters Consider Funding Legal and Regulatory Advocacy

TL;DR: The proposed 1 million UNI grant would be the largest single non-liquidity incentive expense undertaken by a DAO.

Over the past few months, several university blockchain groups have received delegation in Uniswap governance. Leading the pack is Harvard Law’s Blockchain and Fintech Initiative, currently holding over 10 million votes. But while these organizations have gained considerable voting power, their participation has generally remained limited. 

Source: Tally

In the past week, Harvard Law Blockchain has broken the mold with an ambitious governance proposal that seeks to defend defi’s legal and regulatory standing. This has important implications for decentralized governance, as protocols and contributors currently face unclear but potentially significant risks. To give a few examples:

  • Protocols or genesis teams could fall afoul of securities regulations

  • Delegates may face registration requirements under proxy advisory rules

  • Exchanges and lending platforms could be forced to register as broker dealers

  • Protocols could be considered general partnerships, placing large liability on participants

  • Concern about tax liability makes it difficult to pursue treasury diversification

Twitter avatar for @haydenzadams
Hayden Adams 🦄 @haydenzadams
👀 New Uniswap governance proposal from @HarvardLawBFI "We should create and fund with 1-1.5M UNI a community-overseen organization that would finance existing and new political groups engaged in crypto policy/lobbying" gov.uniswap.org/t/temperature-…
Image
7:07 PM ∙ May 27, 2021
784Likes112Retweets

The initial temperature check vote met a mixed response, largely due to a lack of clarity around use of funds and the large amount of funds requested. Harvard Law responded with a much more thorough explanation of their strategy, as well as a proposed committee of well respected legal experts to oversee the program. 

Twitter avatar for @haydenzadams
Hayden Adams 🦄 @haydenzadams
The UNI gov proposal to fund a political/regulatory committee was updated with much more detail including proposed committee members who have signaled willingness to join (see below image) If the consensus check passes next step is a full on-chain vote gov.uniswap.org/t/consensus-ch…
Image
Twitter avatar for @HarvardLawBFI
Harvard Law Blockchain & FinTech Initiative @HarvardLawBFI
Moving forward with the next step in #Uniswap governance. We incorporated some feedback and outlined more details about our political defense fund proposal in our Consensus Check here: https://t.co/GFTByxPHkZ Vote here: https://t.co/263XZ5Z4gk Looking forward to discussing!
4:21 PM ∙ Jun 1, 2021
173Likes29Retweets

While this has helped allay concerns, there are a few remaining doubts about the process that the community is working through. If Uniswap leads funding for this initiative, there’s a potential for a free rider problem where other defi protocols benefit without bearing a fair share of the costs. The request for a large lump sum distribution also makes it more difficult to assess performance or change strategy later if UNI holders no longer support the initiative. 

Source: Snapshot

A second Snapshot poll is also on track to pass in the coming days. But if a minimum of 40 million yes votes are not reached, this indicates the proposal lacks enough support to pass an on-chain governance vote. Greater oversight powers for governance and participation from additional stakeholders may help build consensus for the proposal.

Uniswap Considers Reducing Proposal Submission Threshold

TL;DR: Reducing the proposal threshold could expand the pool of potential proposers, while maintaining roughly equivalent governance security.

To top off the previous initiatives, Uniswap voters have also given initial support for reducing Uniswap’s proposal submission threshold. To review, this value is coded into the core governance contract, and determines the minimum voting power required to start a proposal. While this helps defend governance against spam and low quality initiatives, a higher quorum threshold must be met before a vote passes, offering a second and more resilient layer of security to the voting process.

Currently, the proposal threshold is set to 1% of total token supply (10 million UNI), amounting to over $200 million in voting power. With the value of UNI rising around 10x from last year’s lows, it’s unclear if this high of a value is still necessary. 

Twitter avatar for @haydenzadams
Hayden Adams 🦄 @haydenzadams
Proposal to lower UNI proposal threshold to 2.5m votes was submitted as an autonomous proposal! If 10m UNI is delegated to 0xA13a5a31b891F3DA7074b740B694769BD0f1bb23 it will move to an on-chain vote! This can be done on app.uniswap.org or fish.vote/proposal/0xA13…
Twitter avatar for @john_c_palmer
John Palmer @john_c_palmer
There is now a crowd proposal up on @fishvote_ to lower the Uniswap proposal threshold from 10M to 2.5M votes. If this receives enough delegate votes, it will become an official proposal that can be executed on-chain. https://t.co/VRtJrd9tyI
7:38 PM ∙ Jun 1, 2021
82Likes3Retweets

With the Snapshot vote resolving favorably, the next step is to solicit support from the 10 million votes required for the current proposal threshold via a community autonomous proposal. While this initiative is likely to pass (having received 46 million votes in the Snapshot poll), it may be a missed opportunity to upgrade Uniswap’s governance from the Alpha to Bravo version. Bravo offers a few key benefits including upgradability of parameters (so future parameter changes like this would not require a contract migration) and the option to add freeform text reasoning to votes.


In Brief:

  • Frax Finance makes Curve governance whitelisting proposal to allow deeper integration, including a commitment to buy and lock $1 million of CRV:

Twitter avatar for @WormholeOracle
W⬡rmholeOracle @WormholeOracle
@fraxfinance has a proposal up to whitelist their Curve AMO contract so it can squeeze the juice out of its automated liquidity strategy and participate in Curve governance
gov.curve.fiWhitelist the Frax Curve AMO ContractSummary: This proposal is to whitelist the Frax Curve AMO contract in Curve’s “SmartWalletWhitelist” contract allowing Frax’s Curve AMO to participate in Curve governance, lock CRV and provide a boost on the Frax Curve AMO contract. The Frax Curve AMO will always lock any earned CRV for 4 years a…
11:36 PM ∙ Jun 1, 2021
22Likes8Retweets
  • Sushiswap considers proposal to retain earnings in treasury by lowering xSUSHI payouts:

Twitter avatar for @yuan_han_li
Yuan Han Li @yuan_han_li
@_alekslarsen and I are proposing a way for the @SushiSwap protocol to cover all OpEx and further diversify the treasury/offer bear market protection without having to sell any 🍣 $SUSHI Please comment on the forums with your thoughts/feedback! forum.sushi.com/t/kanpai-bear-…
forum.sushi.comKanpai: Bear Market Protection with Treasury RevenueTL;DR Introduce a governance-controlled ‘payout ratio’ parameter (initially set to 90%). This will divert a portion of trading fees (100% - payout ratio) from xSUSHI stakers to the Treasury as revenue denominated in a reserve asset, e.g. ETH or DAI. At a payout ratio of 90%, xSUSHI holders are paid …
11:02 PM ∙ Jun 1, 2021
126Likes20Retweets
  • MakerDAO lowers interest rates to try to reduce growing USDC exposure:

Twitter avatar for @MonetSupply
monetsupply.eth @MonetSupply
.@MakerDAO's parameter proposal group just made our monthly rates change proposal Read more in the forum here: forum.makerdao.com/t/parameter-ch… And check out the thread below for the TL;DR
Image
8:41 PM ∙ Jun 1, 2021
40Likes8Retweets

Opportunities: 

  • PoolTogether grants opens applications:

Twitter avatar for @PoolGrants
PoolGrants.eth @PoolGrants
Introducing PoolGrants! A new $500,000 fund to improve and expand the PoolTogether Ecosystem. PoolGrants was voted on and approved by POOL token holders. More:
medium.comIntroducing PoolGrantsPOOL tokens holders have approved the creation of a Grants Committee initially funded with $500,000! This proposal was voted on and passed in proposal 12. There are many ways to engage the…
8:47 AM ∙ Jun 2, 2021
36Likes4Retweets
  • PieDAO makes open call for community fund managers:

Twitter avatar for @PieDAO_DeFi
PieDAO @PieDAO_DeFi
Interested in taking ownership of a pie, from rebalancing to marketing? 👀 We're exploring Pie Task Forces, small groups incentivized to take PieDAO products further! 🚀 KPI options up to $600k $DOUGH are available. 🔥 Get involved today: forum.piedao.org/t/pie-working-…
forum.piedao.orgPie Working GroupsAbstract: Task small groups with the management, maintenance, and growth of an individual pie. Use KPI options to incentivize and reward successful growth. Background: Recently there have been a number of exciting new pie proposals that have yet to be implemented, and some existing pies such as USD…
3:47 PM ∙ May 28, 2021
19Likes5Retweets
  • Defi grants aggregator shows funding available from top protocols:

Twitter avatar for @defigrants
DeFi Grants @defigrants
Launching DeFi Grants Aggregator! Developers can fund their ideas and join DeFi communities. You can apply for multiple grants and get funded quickly.
defigrants.orgDeFi Grants | Get Funded.Apply for a DeFi grant. Get funding and build. You can submit your grants from the website and find a grant suited to you offered by over 30 protocols and companies.
4:38 PM ∙ May 27, 2021
97Likes31Retweets
  • Flipside Crypto’s Bounty Brief newsletter collates funding for defi data analysis 


Thanks for joining us for issue 34 of the Tally Newsletter. Be sure to check out the Tally governance app and join us on Discord 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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The Tally Newsletter, Issue 34

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