The Tally Newsletter

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The Tally Newsletter, Issue 50

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The Tally Newsletter, Issue 50

November 3, 2021

monetsupply
Nov 3, 2021
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The Tally Newsletter, Issue 50

newsletter.tally.xyz

Welcome back for issue 50 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 cover:

  • Ethereum Name Service Launching Decentralized Governance

  • MakerDAO Backroom Politics Spill into the Open

Plus quick ecosystem and product updates!


Ethereum Name Service Announces Decentralized Governance

TL;DR: ENS has a large treasury to govern, but also faces some of the most complex challenges of any protocol DAO.

Earlier this week, the Ethereum Name Service announced that they would be decentralizing core governance functions through a DAO. Launching next week on October 8, the structure will feature a token distribution to team members and the community, along with a Cayman Islands foundation to represent the DAO’s legal interests and responsibilities.

Source: ENS Blog

Initial 50% token distribution is split evenly between core contributors and past users, with the remaining half of the token supply allocated to the DAO. In addition to ENS tokens from the genesis supply, governance will also control the ETH earned by the ENS root multisig for name registrations and renewals, which should quickly vault ENS into the top tier of organizations by treasury value.

While ENS has a significant head start in terms of financial positioning, the new ENS DAO will face some of the more difficult challenges among any protocol DAOs. The domain namespace is inherently integrated with non crypto native industries, with issues such as honoring trademarks and evicting squatters still largely unexplored in a decentralized context. Forming a DAO may be an important step to build enough legitimacy to be able to take action on these sorts of issues.

Twitter avatar for @kaiynne
kain.eth @kaiynne
The reason the current ENS team could not do this previously was a question of legitimacy of decision making. The ENS DAO will have far more scope to enact these kinds of changes due to its being seen as A more open and legitimate decision making body imo.
12:30 PM ∙ Nov 2, 2021
16Likes1Retweet

 To help kickstart engagement in DAO governance, ENS is making a call for delegates over the next week. This follows on from the successful Gitcoin token launch, where users were able to select from many public delegates while claiming their tokens, helping drive voter engagement and a diversity of participating delegates.

Twitter avatar for @ensdomains
ens.eth @ensdomains
ENS is decentralizing governance & is now accepting applications for DAO delegates. $ENS governance tokens will be opened for claiming by ENS users (snapshot made yesterday) a week from today, with more details about it then. Blog post or 🧵 for more ens.mirror.xyz/cfvfKRpQSPtZJj… 1/
ens.mirror.xyzENS DAO: Call For Delegates — MirrorENS is decentralizing governance and accepting applications for DAO delegates.
9:18 PM ∙ Nov 1, 2021
4,803Likes1,576Retweets

ENS has enough real world integrations and entanglements that it may be unavoidable to integrate deeply with the traditional legal system. Nevertheless, the formation of a linked foundation has caused some scepticism among community members, in light of the history of offshore foundations as centralized organizations in many crypto projects.

Twitter avatar for @thegostep
0xthegostep ⚡🤖🛡️ @thegostep
A lot of people are praising this, I find it pretty weird that 75% of the tokens go to insiders Always thought ENS was a public good, now I’m not so sure
Twitter avatar for @ensdomains
ens.eth @ensdomains
Yesterday we announced ENS is launching a DAO & $ENS token to govern key components of the ENS protocol. Here’s more info on how the DAO will work & the token allocation. *Token claiming will still not open until Nov 8th.* Blog post or 🧵 for more: https://t.co/N0UhAVQMlH 1/
1:11 PM ∙ Nov 3, 2021
72Likes2Retweets

ENS makes the distinction of giving token governance explicit authority over foundation operations and board membership. This inverts the power dynamic of previous off chain entities and potentially helps avoid some of their pitfalls of poor oversight. If this DAO directed trust structure proves effective, we may see a wave of projects seeking incorporation to benefit from additional clarity on legal and tax issues.

MakerDAO Considers Involuntary Personnel Change

TL;DR: The motion to offboard the real world asset team facilitator ran into controversy, and would be one of the first cases of a DAO firing process.

While Maker is no stranger to backroom politics, it had experienced a period of relative calm in the year since project governance had transitioned to a fully DAO managed framework. But this was recently broken as an internal political conflict broke into the open. 

The latest controversy centers on MakerDAO’s real world asset (RWA) team, which reviews and processes applications for offchain assets to serve as collateral for minting DAI. Rune Christensen, cofounder of Maker and leader at the Maker Foundation, submitted a proposal to replace the existing RWA team lead with a new leader.

Rune’s initial post seemed to indicate a mutually agreed split, but it quickly became clear that the facilitator was being forced out. Rune controls the vast majority of currently delegated and active voting power (roughly 47,000 MKR worth), suggesting he may have the ability to force changes through unless there is significant opposition. 

This action has also stirred controversy among previous Maker employees who were involved in the “purple pill” controversy from several years ago.

Twitter avatar for @ashleighschap
Ash 🦄🌽 @ashleighschap
History is repeating itself. @RuneKek has come back from a long absence and is making big moves to control @MakerDAO. This should be viewed with skepticism from anyone who cares about token governance. I've posted my thoughts on the maker forum:
forum.makerdao.comMIP41c5-SP2: Facilitator Offboarding (RWF-001)Hello MakerDao. I’m Ashleigh, I used to work very closely with Rune, Greg, Equivrel, and many of the parties involved in the current debate. I was one of the earliest non technical employees of Makerdao and was responsible for overseeing the adoption of single collateral Dai. I am re-entering the …
4:37 PM ∙ Nov 2, 2021
220Likes36Retweets

 Ashleigh’s response surfaced a few issues, including the possibility of self dealing contracts for managing Maker’s RWA deals through third party “introducer” companies. Rune later acknowledged potential financial interests in Maker counterparties while claiming they should not represent a conflict of interest. But this case shows that the overall level of disclosure may need to improve as Maker engages in more complicated financing arrangements. 

Twitter avatar for @lex_node
_gabrielShapir0 @lex_node
Whoah: a wild thread with a MakerDAO governance mud-slinging dispute breaking out. I am not a MKR holder but FWIW I strongly agree with @RuneKek 's criticisms about how MakerDAO has handled legal engineering for RWA collateral.
forum.makerdao.comMIP41c5-SP2: Facilitator Offboarding (RWF-001)MIP41c5-SP2: Facilitator Offboarding (RWF-001) Preamble MIP41c5-SP#: 2 Author(s): Rune Christensen Contributors: Tags: personnel-xboarding Status: RFC Date Applied: 2021-30-10 Date Ratified: Forum URL: https://forum.makerdao.com/t/mip41c5-sp1-facilitator-offboarding-rwf-001/11306 Sentence Summary…
9:57 PM ∙ Nov 2, 2021
42Likes4Retweets

While there has been some public backlash against the proposed personnel change, some commenters have voice support for the underlying reasoning. Rune argued the proposals were necessary due to the existing RWA team lead having privileged positions in various Maker related contracts. Giving individuals excessive power within DAO agreements could create risk of organizational capture, even if this was done for expediency rather than any ill intent. 

Rune also noted potential issues with the Centrifuge asset origination model. Maker has relatively little protection against borrowers unilaterally changing terms, and the ability to make legal claims for recovery is also unclear. So part of the debate centers on the DAOs risk appetite.

The reassignment proposals will likely go up for a vote within the next month, representing possibly the first case of involuntary personnel change at a DAO. But this could also be an important test of wills and voting power between various Maker constituencies.


Tally Product Update: 

Tally now supports POAPs (Proof of Attendance Protocol NFTs) within voter profile pages! Check out the video below for a demo:

We’re focused on bringing the best experience to the DAO community, and POAP offers an additional layer of depth to help users better understand their delegation options. Let us know if there’s any other features or integrations you’d like to see on withtally.com!

In Brief: 

  • Uniswap Proposal 9 is submitted to offer extra low trading fee tier:

Twitter avatar for @getty_hill
getty.gfxlabs.eth @getty_hill
Uniswap proposal 9: @Uniswap should add a 1bp fee tier with 1 tick spacing. This change is straightforward from a technical perspective and would help Uniswap compete in stablecoin <> stablecoin pairs gov.uniswap.org/t/proposal-add…
withtally.comProposal 9 for Uniswap governanceSee the votes on Uniswap proposal 9
8:09 PM ∙ Nov 2, 2021
24Likes4Retweets
  • MakerDAO activates the direct deposit module, injecting funds into the Aave money market in an innovative cross DAO partnership:

Twitter avatar for @statelayer
state @statelayer
Maker is about to mint DAI and lend it on @AaveAave instead of using their usual CDP model, pretty big deal
Twitter avatar for @MakerGrowth
MakerDAO Growth @MakerGrowth
🚿 The @AaveAave Dai Direct Deposit Module (D3M) is ready to be onboarded on the Maker Protocol 🚿 This is a key milestone for @MakerDAO growth leaded by an alternative source of liquidity to secondary Dai venues We'll explain how it works and why it's important 🧵 1/17 https://t.co/ZzCEfo3iia
6:31 AM ∙ Nov 2, 2021
137Likes22Retweets
  • Aave governance votes through fix for vulnerability similar to CREAM’s recent hack:

Twitter avatar for @StaniKulechov
stani.eth (👻,🐻‍❄️) 👘 🪰🔺 @StaniKulechov
AIP-44 executed, xSUSHI borrow disabled and Aave Protocol is safu now big thanks to @flashfish0x @nipun_pit @gauntletnetwork @The3D_ @HerskindLasse and others app.aave.com/#/governance/4… 👻🙌
app.aave.comAave - Open Source Liquidity ProtocolAave is an Open Source Protocol to create Non-Custodial Liquidity Markets to earn interest on deposits and borrow assets with a variable or stable interest rate. The protocol is designed for easy integration into your products and services.
11:39 PM ∙ Nov 1, 2021
220Likes25Retweets
  • A pool on Rari Capital’s Fuse suffers oracle manipulation attack, showing added user responsibilities and risks of permissionless lending markets:

Twitter avatar for @RariCapital
Rari Capital DAO @RariCapital
1/ This morning there was an isolated incident of oracle manipulation on Fuse Pool #23. The attacker manipulated the price of VUSD (one of the assets) on Uniswap V3. Once the attacker adjusted the price of VUSD, the pool was drained.
4:17 PM ∙ Nov 2, 2021
331Likes69Retweets

NFT DAOs: 

  • Tally hosting NFT DAO event today as part of NFT NYC:

Twitter avatar for @voteWithTally
Tally @voteWithTally
We're excited for the event today!! Should be a fun day talking about NFTs, Communities, and DAOs!! If you're attending, check the Eventbrite for updated details and agenda! @facesOfEth @dberenzon @tarrenceva @_kinjalbshah @AlexMasmej @benhuh @flakoubay @ jawndiego
Twitter avatar for @voteWithTally
Tally @voteWithTally
During NFTxNYC week, we’ll be hosting a technical workshop on how to deploy fully on-chain governance for NFT DAOs Workshop will be followed by an amazing panel (lineup soon) & HH In person only. Will host a virtual event at a later date! https://t.co/i3KY4UV44G
2:25 PM ∙ Nov 3, 2021
14Likes6Retweets

Thanks for joining us for Tally Newsletter issue 50. 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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