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The Tally Newsletter, Issue 64

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The Tally Newsletter, Issue 64

Feburary 14, 2022

monetsupply
Feb 14, 2022
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The Tally Newsletter, Issue 64

newsletter.tally.xyz

Welcome back for issue 64 of the Tally Newsletter, a publication focused on defi and DAO 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:

  • ENS DAO Controversy Over Core Contributor

  • Cosmos Ecosystem Sees Heated Debate on Bridge Integrations

Plus brief updates from the DAO ecosystem!


ENS Response to Controversy Over Core Contributor

TL;DR: This incident points towards potential challenges for protocol governance mechanisms.

In the past several weeks, the crypto community has seen several controversies develop over contributors’ past use of social media. Most recently, ENS core team member Brantly Millegan came under fire and was eventually let go from True Names Ltd (the ENS development company) due to comments about LGBT issues that many considered unacceptable.

Twitter avatar for @nicksdjohnson
nick.eth @nicksdjohnson
True Names Limited (TNL), the nonprofit that funds and organises development on @ensdomains, has terminated the contract of Brantly Millegan effective today.
7:03 AM ∙ Feb 7, 2022
2,672Likes395Retweets

The events leading up to the separation have been well covered by other venues and on crypto twitter, so here we’ll focus on concrete impacts on governance mechanisms and DAO participation.

Delegation

Delegations seem to be very sticky - voters who delegate to someone are unlikely to change their delegation. Due to relatively high transaction costs required for re-delegation, we could also expect that smaller token holders will be even less likely to change their voting support.

Brantly has seen a bit of outflow from his ENS delegate address, but he remains the largest voter by a comfortable margin. While this may partly reflect voter support for his work and track record despite the recent controversy, it also points to frictions in delegation UX.

Source: Tally voter profile

Shortly after these events, the ENS DAO began funding a subsidy to pay gas costs for redelegating votes. But despite this incentive, relatively few token holders have changed their supported delegate.

Twitter avatar for @nicksdjohnson
nick.eth @nicksdjohnson
Fee free redelegation is now available for @ensdomains token holders! If you have at least 100 tokens and want to change your DAO delegate, you can now redelegate one time, without paying transaction fees. Go here to choose your delegate:
claim.ens.domainsENS AirdropENS token claim app
1:56 AM ∙ Feb 9, 2022
247Likes53Retweets

The ENS claims process was widely lauded at the time for encouraging all token holders to delegate voting power and increase participation. But this may also exacerbate issues around token holder apathy and vote stickiness, with coordination required between many more people to reduce a delegate’s voting power. In Brantly’s case, he retains voter support from over 5,000 addresses.

DAOs may be able to combat this with delegation expiry, which has already been adopted by MakerDAO. This type of mechanism would force voters to periodically reconfirm their delegation, which reduces the existing lock-in effect and promotes more fluidity of voting power.

DAOs versus development companies

While the ENS controversy was unfolding, there was widespread confusion about the limits of tokenholder authority. 

Twitter avatar for @DawsonBotsford
daws.eth @DawsonBotsford
👋 I never saw a DAO vote before @ensdomains fired @BrantlyMillegan 🤔 Why are we not mentioning this? The token holders have a say, right? right? * silence *
5:00 PM ∙ Feb 7, 2022
21Likes2Retweets

Brantly’s separation from True Names Ltd was decided internally, without direct token holder participation or voting. This is understandable considering that TNL is a private company and not directly answerable to ENS voters. But this nevertheless raises questions about the limits of DAO authority within a protocol. 

Cosmos Ecosystem Chains Face Conflict Over Bridge Policy

TL;DR: While Osmosis founders want to align around a single bridge for each asset, others including the competing Sifchain team allege this is anticompetitive.

The past week has seen unusual bout of conflict break out between various chains and bridge protocols within the Cosmos ecosystem. While the cohort of chains built on the Cosmos SDK have traditionally operated fairly collaboratively, growing ecosystem adoption and key upcoming integrations are challenging this paradigm.

The first battle among Cosmos projects is being fought over bridges, which are likely to drive significant usage as they enable connection with dominant Ethereum and EVM ecosystems. There are already several bridges live, with newly launched Gravity Bridge Chain joining the existing Sifchain, Axelar, Secret Network, and Injective networks. But so far, none of the bridged tokens have been integrated beyond their respective chain’s home network using Cosmos IBC (inter blockchain communications protocol designed for trustlessly bridging assets and messages). 

The current conflict stems from the Osmosis team’s preference for integrating a single, canonical version of each bridged token. Stated benefits include better UX and less liquidity fragmentation. But this also means a single bridge operator will have a huge leg up in building network effects within the Cosmos ecosystem (by integrating with Osmosis, the most widely used DEX). 

The choice of token would be enforced via two mechanisms: DAO controlled incentive allocations, and visibility on the team controlled user interface. This raises additional issues of DAO versus team authority, as the Osmosis.zone site remains by far the most prominent way to access the Osmosis protocol and exchange. Currently, the OSMO team seems to be favoring integration with Gravity Bridge chain, which caused competitor Sifchain to cry foul.

Twitter avatar for @sifchain
Sifchain @sifchain
medium.comPeggy in the Cosmos NetworkCosmos Network has recently enjoyed a spirited Twitter discussion about the purpose and suitability of bridges for Cosmos zones. Here, we…
7:47 AM ∙ Feb 7, 2022
138Likes33Retweets

Shortly afterwards, members of the Osmosis core team hit back at Sifchain for questionable marketing and business tactics, including a proposal to carry out wash trading for greater OSMO incentives.

Twitter avatar for @sunnya97
Sunny Aggarwal 🧪 @sunnya97
.@sifchain straight up trying to use its community pool for wash trading to increase its OSMO rewards...
Image
Image
11:13 PM ∙ Feb 5, 2022
239Likes27Retweets

Parallel to this debate, Gravity Bridge has also begun to face criticism of their recent token distribution. Around 9% of supply has been allocated to airdrops for Cosmos ecosystem users (ATOM stakers and the OSMO community pool), compared with over 40% to insiders and investors. 

Twitter avatar for @cryptomuf
Cosmosdegen ⚛️ @cryptomuf
$grav token distribution summary : these guys (in red >40% allocation) can control community pool (50%). that >50% for community just psyops lmao. althea has built their ways with lies. greedy AF. i am hoping @osmosiszone not forcing its users to use grav bridge. $ATOM $OSMO
Image
10:05 AM ∙ Feb 12, 2022
205Likes32Retweets

With the ATOM public sale providing the seed funding for Gravity Bridge, many ATOM holders expected a larger allocation. But beyond this, Cosmos chains’ broad governance powers means that insiders may have defacto custody of bridged assets. In this context, wide token distribution and governance decentralization become a prerequisite for bridge security.

Twitter avatar for @gadikian
Jacob Gadikian @gadikian
A second and much more serious realization about the #badbridge They control the bridged assets, not the community
8:59 AM ∙ Feb 14, 2022
27Likes9Retweets

In Brief: 

Tally News

  • Meet the Tally team at EthDenver from Feb 17 through Feb 20! 

  • Tally updates DAO ordering on the homepage to highlight activity:

Twitter avatar for @voteWithTally
Tally @voteWithTally
👀 Monday Updates! 👀 We've reordered the DAO Leaderboard! 🔥 🥇 DAO's with active proposals 🥈 DAO's sorted by Proposal Count We think this is more fair because: 📌 Communities should be rewarded for activity, not size 📌 Any DAO can get to the top
3:27 PM ∙ Feb 14, 2022
  • Tally’s new chrome extension offers additional context on protocol users:

Twitter avatar for @voteWithTally
Tally @voteWithTally
🚀 Friday Launch Day 🚀 Tally Chrome Extension is live, the best way to peep 👀 your twitter feed Whales, #NFTS, @poapxyz 📌 ANY ADDRESS 📌 ANY @ensdomains 📌 ANY Webpage (Twitter, @opensea, @discord) CHECK THE RECEIPTS! Open Source = ❤️🚀🔥 extension.withtally.com
Image
9:36 PM ∙ Feb 4, 2022
15Likes4Retweets

Ethereum Ecosystem

  • Fei protocol proposes a new modular representative governance mechanism:

Twitter avatar for @feiprotocol
Fei Protocol @feiprotocol
Join us for the next Tribal Gathering to discuss how the Tribe DAO is planning to enhance DAO governance through Liquid Representative Democracy 🤯 Wen: Monday, February 14 at 7pm PT Where: discord.com/invite/2prhYdQ…
discord.comJoin the Fei Protocol Discord Server!Check out the Fei Protocol community on Discord - hang out with 13,786 other members and enjoy free voice and text chat.
8:07 PM ∙ Feb 11, 2022
25Likes8Retweets
  • Gnosis Safe plans to launch token and spin out project from parent Gnosis:

Twitter avatar for @gnosisSafe
Gnosis Safe @gnosisSafe
gm It’s a big day for @gnosisSafe. The Gnosis Safe team has submitted a proposal to establish the safeDAO and launch a SAFE Token. Check out the full spin-off proposal on the GnosisDAO forum or read on for a vision of a safer future 👇 forum.gnosis.io/t/gip-29-spin-…
forum.gnosis.ioGIP-29: Spin-off safeDAO and Launch SAFE TokenGIP-26: Spin-off safeDAO and launch SAFE Token poll GIP: 29 title: Spin-off safeDAO and Launch SAFE Token authors: Lukas Schor, Richard Meissner, Christoph Simmchen, Tobias Schubotz status: phase 2 type: meta created: 2022-02-09 Abstract Spin-off the Gnosis Safe project from Gnosis Ltd, similar t…
10:34 AM ∙ Feb 9, 2022
723Likes214Retweets
  • Element Finance launches voting vaults as new governance primitive:

Twitter avatar for @element_fi
Element Finance @element_fi
1/ Introducing Voting Vaults (VVs), a new Governance primitive from the Council Protocol. Stake Governance tokens in Compound, AAVE, Uniswap, L1s/L2s and still participate in Governance. These Governance Lego Pieces can extend to many use cases. 🧵🪡👇 medium.com/element-financ…
medium.comVoting Vaults: A New DeFi and Governance PrimitiveIntroducing Voting Vaults, a new Governance primitive from the Council Protocol. If a user stakes their governance tokens into Compound or…
6:25 PM ∙ Feb 11, 2022
240Likes72Retweets
  • Build Finance faces governance takeover attack:

Twitter avatar for @finance_build
BuildFinance @finance_build
The Build Finance DAO has been the target of a hostile governance takeover in which a malicious actor has put forward and succeeded with a proposal to take control of the Build token contract. 1/18
1:58 PM ∙ Feb 14, 2022
167Likes61Retweets

Cosmos Ecosystem

  • Celestia announces Ethereum L2s using proprietary data availability system with Ethereum settlement:

Twitter avatar for @CelestiaOrg
Celestia @CelestiaOrg
The Celestia Labs team is excited to introduce Celestiums, which are Ethereum L2 chains that use Celestia for data availability (DA) and Ethereum for settlement and dispute resolution. Read more:
blog.celestia.orgQuantum Gravity Bridge: Secure Off-Chain Data Availability for Ethereum L2s with Celestiatl;dr: This post introduces the Quantum Gravity Bridge project, a Celestia to Ethereum data availability (DA) bridge. From the onset of DeFi Summer in 2020, through the eruption of NFTs in 2021, and now an escalation of DAOs, the demand for blockspace on Ethereum has exploded. The deadly combo
7:17 PM ∙ Feb 8, 2022
593Likes123Retweets
  • Osmosis validators reject deficient proposal after last minute community pushback:

Twitter avatar for @chaosdragon42
Chaos Dragon ⚛️🐉 @chaosdragon42
Thanks to some last minute votes, PROP #144 was rejected with 12.22% Yes votes, 14.09% No votes, and still a whopping 72.41% Abstain. Osmosis governance can mos def do better 🧪 $OSMO
Twitter avatar for @chaosdragon42
Chaos Dragon ⚛️🐉 @chaosdragon42
Seeing that prop #144 is mostly "abstain", I want to make sure ppl are aware that it will still pass with 12.7% "yes" due to abstain votes not being counted. 🧪 $OSMO Yes: 12.7% No: 8.9% No w/ Veto: 1.3% Abstain: 77.10%
7:01 PM ∙ Feb 12, 2022

Solana Ecosystem

  • Solana Monke Business NFT project faces conflict with MonkeDAO (community organization for NFT token holders):

Twitter avatar for @thejpeglord
JPEG Lord @thejpeglord
1. So let me guess... You have no idea what is happening between @SolanaMBS and @MonkeDAO and at this point you're kinda afraid to ask? I got you covered anon... Here is the oversimplified version of the conflict... A thread 🧵👇
Thriller Michael Jackson GIF
6:51 PM ∙ Feb 13, 2022
512Likes127Retweets

Thanks for joining us for Tally Newsletter issue 64. 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 64

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