The Tally Newsletter

Share this post

The Tally Newsletter, Issue 42

newsletter.tally.xyz

The Tally Newsletter, Issue 42

August 13, 2021

monetsupply
Aug 13, 2021
1
Share this post

The Tally Newsletter, Issue 42

newsletter.tally.xyz

Welcome back for issue 42 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: 

  • Two contentious Aave governance proposals

  • LeXpunK DAO proposes funding legal advocacy organization to Curve, Lido, and Yearn

Plus brief ecosystem updates from other projects.


Aave Governance Heats Up with Two Contentious Proposals

TL;DR: A proposal to accept BOND tokens as collateral narrowly failed, while Gauntlet’s proposal for risk monitoring passed despite significant opposition.

Aave governance has often seen unanimous or near unanimous outcomes on governance votes. But in the past weeks, two proposals have seen highly contentious outcomes.

In AIP23, the Barnbridge team requested to add the BOND token to Aave. But in contrast to other recent asset additions such as RAI and AMPL, they proposed allowing borrowing against the BOND token as collateral from initial onboarding with up to 35% loan to value ratio. Accepting tokens as collateral can be risky, as each additional asset has the potential to cause losses for other markets if the price drops suddenly. This in turn would impose losses on Aave stakers, who backstop default risk for the protocol.

Twitter avatar for @StaniKulechov
stani.eth 👻 🐻‍❄️🦇🔊 @StaniKulechov
Governance wars on listing BOND as a collateral asset into the Aave Protocol @Barn_Bridge VCs voting YAE @saffronfinance_ VCs voting NAY Discussions governance.aave.com/t/proposal-add…
Image
9:51 PM ∙ Aug 3, 2021
229Likes28Retweets

There was an additional wrinkle to this vote, as the support and opposition among large holders seemed to align with their investments in either Barnbridge or competing risk tranche protocol Saffron Finance. Tyler Ward of Barnbridge specifically called out Arthur of Defiance Capital as an opposing force.

Twitter avatar for @LordTylerWard
Lord of the Ty's 🌉🌌 @LordTylerWard
@cmsholdings @benjaminsimon97 @WarcMeinstein @LINKorBust @MaryGullet @StaniKulechov @Barn_Bridge @saffronfinance_ @AaveAave @dragonfly_cap @multicoincap @coinbase @Melt_Dem @TallyCapital @leokcheng @DeFiGod1 @MapleLeafCap It isn’t @MechanismCap or @cmsholdings going around barring us on CREAM or @AaveAave or trying to to on @Bancor. It’s @Arthur_0x & @DeFianceCapital. No idea why we don’t talk with them. 🤷‍♂️ They aren’t tagged on this thread so the community is calling out the wrong people.
12:39 AM ∙ Aug 4, 2021

But when pressed to explain the reasoning for opposition, Arthur responded with risk related concerns about allowing newer, lower liquidity assets to serve as collateral.

Twitter avatar for @Arthur_0x
Arthur 🦇🔊 @Arthur_0x
@LordTylerWard @cmsholdings @benjaminsimon97 @WarcMeinstein @LINKorBust @MaryGullet @StaniKulechov @Barn_Bridge @saffronfinance_ @AaveAave @dragonfly_cap @multicoincap @coinbase @Melt_Dem @TallyCapital @leokcheng @DeFiGod1 @MapleLeafCap @MechanismCap @Bancor @DeFianceCapital We only support listing $AMPL because it can only be borrowed but not as collateral. Most new assets listed on Aave don't become collateral immediately even for a legit stablecoins like $PAX. We have nothing against Barnbridge and would support listing it as asset to be borrowed
3:21 AM ∙ Aug 4, 2021

While some frustration surely remained on the Barnbridge side after their proposal was rejected, they accepted the vote outcome and have realigned their proposal to accommodate the investors who opposed AIP23. The ongoing Snapshot poll to add BOND to Aave without collateral support has seen near unanimous support, showing that there is a path forward for the listing proposal with more conservative risk parameters.

As the Barnbridge proposal was ending, Gauntlet Network submitted a separate proposal to Aave governance that has also seen significant debate. Gauntlet proposed an engagement with Aave to offer continuous risk monitoring and parameter change recommendations, aiming to both mitigate risk and improve capital efficiency in the main Aave money market.

While these services are clearly valuable, improving usability while mitigating risk of losses born by Aave stakers, the price tag and terms of engagement caused concern among some community members. Notably, Gauntlet requested quarterly payments amounting to roughly $8 million per year, but will retain full confidentiality and control over the models and process underlying their recommendations. Essentially, Aave would be paying for a consulting engagement rather than protocol owned risk infrastructure.

Another potential point of concern was VC cross shareholdings in both Aave and Gauntlet. If investors have a larger proportional stake in service providers than client token networks, they may have a vested interest in passing through proposals even if they are not in the best interest of the protocol. 

In the end, the Gauntlet risk management proposal passed by a comfortable majority. But given the relatively high level of dissent, they may need to work hard to maintain and build community trust and confidence in their offering. The service contract will be reviewed quarterly, allowing for frequent reassessments of their performance and value proposition.

Crypto Law Collective LeXpunK DAO Proposes Alternative Legal Advocacy Group

TL;DR: The collective has requested initial funding from Yearn, Curve, and Lido to pursue a “builder first” approach to defi legal advocacy.

When Uniswap approved funding for the Defi Education Fund, there was widespread concern that the organization would not align evenly with the broader goals of the defi community. Among potential issues, most of the experts and lawyers on the committee were involved with protocols that had taken a two tier approach to launching their protocols, with a DAO operating alongside a private development company. 

Having a two tier ownership structure could present some risks for DAOs, as the development company may have non public obligations to their VCs and private investors that give them preference over token holders. Some feared that the 10 million UNI in funding approved by Uniswap governance could be used to protect VCs from legal risk, rather than benefiting the wider community or DAO members.

LeXpunK DAO formed to address this perceived gap with a more open, community focused approach to legal advocacy. To date, they have reached out to three DAOs for initial funding that in their view take a more decentralized approach to development and are less constrained by potential VC side deals: Curve FInance, LidoDAO, and Yearn.

Yearn’s proposal has already passed a governance vote with unanimous support, with voting for Curve and Lido still to come. As this initiative progresses, there are a few points of interest to keep an eye on. First, what DAOs will be considered sufficiently decentralized and community run to be invited to participate? Second, will the legal strategies employed by LeXpunK DAO and the Defi Education Fund come into conflict? Finally, how will protocols respond to the practice of airdropping tokens to only those voters who support a particular vote (as LeXpunK DAO has suggested with the three proposals above)? Regardless of how the above questions resolve, LeXpunK DAO is likely to have a significant impact on defi’s regulatory standing over the coming months.


In Brief:

  • Andre Cronje releases permissionless bribe app for Curve gauge voting, allowing protocols to influence which pools receive rewards:

Twitter avatar for @AndreCronjeTech
Andre Cronje @AndreCronjeTech
bribe.crv.finance v1.0.0 released Bribe veCRV @CurveFinance holders to vote for your gauge / DAO vote. Add reward -> Choose Gauge -> Add rewards Claim reward -> Search for reward and claim if you voted for the Gauge / DAO vote in the previous week Happy bribing
Image
Image
Image
Image
10:59 AM ∙ Aug 11, 2021
419Likes68Retweets
  • Polygon merges with Hermez network in $250 million, token based deal:

Twitter avatar for @fintechfrank
Frank Chaparro @fintechfrank
Polygon acquires Hermez in $250 million deal that includes first-ever token 'merger'
theblockcrypto.comPolygon acquires Hermez; the projects are merging their tokensEthereum scaling project Polygon has acquired Hermez Network for $250 million. The two projects are also merging their native tokens.
2:31 PM ∙ Aug 13, 2021
46Likes6Retweets
  • Curve Finance approaches first inflation reduction:

Twitter avatar for @charlie_eth
Charlie Watkins @charlie_eth
$CRV inflation going down for the first time in about 9 hours, will also mark the end of pre-launch LP rewards. That's a big drop in emissions (close to 30%). Onwards!
epochconverter.comCountdown to Unix Time 1,628,893,048
1:19 PM ∙ Aug 13, 2021
316Likes66Retweets
  • PolyNetwork suffers largest ever defi hack with $600 million taken and then returned by hacker:

Twitter avatar for @sniko_
harry.eth @sniko_
Why have most of us never heard of a protocol that has $600M TVL until it gets hacked? What is this space?!
3:01 PM ∙ Aug 10, 2021
695Likes89Retweets
  • Rarible releases decentralized protocol to simplify NFT projects:

Twitter avatar for @rariblecom
Rarible @rariblecom
Introducing the Rarible Protocol: a set of tools to simplify the go-to-market process for NFT projects and ideas. 📖 Open-source 🏓 Cross-chain 💛 Community-governed No more building from scratch. Focus on what you’re really good at instead – link.medium.com/YpblzPOcFib Thread 👇
3:23 PM ∙ Aug 12, 2021
416Likes109Retweets
  • Dydx launches DAO and governance token, controversially excluding past users with links to US based IP addresses:

Twitter avatar for @dydxfoundation
dYdX Foundation @dydxfoundation
Introducing DYDX, the governance token for the dYdX protocol. Now live on Ethereum 🎉 Learn more at dydx.foundation/blog. Get started today with governance & staking at dydx.community.
Image
5:01 PM ∙ Aug 3, 2021
291Likes82Retweets

Opportunities: 

  • Tally is still hiring! Check out our job postings here.

  • Defi Grants site aggregates DAO grant programs, simplifying the funding process for potential applicants: https://www.defigrants.org/


Thanks for joining us for issue 42 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

Share this post

The Tally Newsletter, Issue 42

newsletter.tally.xyz
TopNewCommunity

No posts

Ready for more?

© 2023 Tally
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing