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The Tally Newsletter, Issue 66

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The Tally Newsletter, Issue 66

March 11, 2022

monetsupply
Mar 11, 2022
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The Tally Newsletter, Issue 66

newsletter.tally.xyz

Welcome back for issue 66 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 Cosmos based Juno Network voting on a historic proposal to confiscate funds from an address, mirroring the response to Ethereum’s DAO hack.

Plus brief updates from the DAO ecosystem!


Juno Chain Votes on Historic Proposal to Confiscate Funds

TL;DR: After the initial airdrop distribution was gamed by a single party to evade per address limits, the Juno community is considering removing most of their funds retroactively.

The Cosmos SDK based Juno Network is currently voting on a historic and high stakes proposal that could have lasting impact on their chain and community. We dig into the details of what could amount to Cosmos’ “The DAO” incident below.

First, some background. Cosmos chains offer programmability and enable complex coordination mechanisms similar to Ethereum. Juno Network in particular leads the way here, being the first chain to enable CosmWasm smart contracts which can be used to implement anything from tokens to decentralized exchanges to DAOs. We’ve already seen a growing wave of Juno based DAOs, primarily launched on the upstart DAODAO platform (not to be confused with the recently launched “DAO, DAO” fundraising scheme launching on the controversial DeSo blockchain).

But unlike Ethereum and most other smart contract chains to date, Cosmos SDK chains are themselves a DAO of sorts. On-chain governance gives token stakers wide ranging powers over the platform, including the ability to alter arbitrary balances or make other extra-protocol changes. Where Ethereum needed to coordinate via rough consensus and off chain governance to rectify the DAO hack incident, in Juno’s case this could be solved through a routine governance proposal.

This is exactly what we’re seeing now, with Proposal 16 attempting to remove funds from a large holder who seems to have sybil attacked the initial JUNO airdrop. While Juno’s airdrop included a 50,000 ATOM maximum cap to help improve network decentralization, shortly after genesis the offending user consolidated proceeds from 52 wallets into a single account - indicating a single entity had split funds among many different wallets. This now presents serious risks to the project, with the 3 million JUNO tokens (worth $120 million at time of writing) able to drain existing liquidity pools and also over 50% of the voting power required to meet quorum for governance proposals.

Crypto pseudonymity makes attribution difficult, but on-chain records seem to indicate a connection with an old Cosmos based MLM scheme (which could help explain the high number of wallets involved), as well as relations with a particular validator.

Twitter avatar for @sunnya97
Sunny Aggarwal 🦎 @sunnya97
@MonetSupply @cryptinewt Rumor I've heard is that it's a Japanese pyramid scheme that would custody your wallet but show you a mintscan link with your balance. That's why they had so many accounts. It's also somehow related with the GAME validator on the Cosmos Hub
7:10 AM ∙ Mar 11, 2022
118Likes19Retweets
Twitter avatar for @wolfcontract
Wølfcontract @wolfcontract
🧵 The "gamer" is Game Validator aka CNN aka Debo. Yes the Japanese Ponzi. These are facts not speculation. They gamed Osmosis, Juno and a few others. Willingly or unwilligly is irrelavant.
Image
8:13 PM ∙ Mar 11, 2022
235Likes70Retweets

At present, the vote seems to be falling in favor of confiscating the majority of funds and sending them back to the community pool, reducing the wallets balance back to the intended limit. But not everyone is happy with this outcome, as it contradicts widely held views that transactions and balances should be largely self sovereign and immutable. It also remains possible (although unlikely) that this was not a sybil attack but represents pooled balances from multiple users or even OTC trading activity. 

This also brings up interesting questions about “double jeopardy”, as a similar proposal for confiscation was rejected shortly after the chain’s genesis (proposal 4). Nothing in Cosmos code can prevent resubmitted proposals, funds confiscation, or other controversial governance measures. This indicates social consensus on ground rules and legitimate scope of chain governance - among both token holders and validators - will play an important role in the Cosmos ecosystem going forward. 
And the likely outcome of removing funds also opens the way to potential fork based governance. The Juno whale owner and other disaffected parties can respond by launching a new chain that restores the revoked balances from the Juno chain, while also potentially burning balances of those voting for funds removal. This creates interesting dynamics where the dominant strategy for voters is abstention or voting against, unless there is a strong and pressing need to move forward with the action on the original chain; this could serve as a critical counterweight to governance overreach on Cosmos chains.

Twitter avatar for @larry0x
larry - $LUNA $OSMO validator @larry0x
airdrop = distribute tokens based on how much assets users owned *before* the protocol launch lockdrop = distribute tokens based on how much value users will providing *after* the protocol launch value adding is not sybillable
Twitter avatar for @sunnya97
Sunny Aggarwal 🦎 @sunnya97
Don't want people to sybil your airdrop? Don't make sybillable airdrops.
4:06 PM ∙ Mar 11, 2022
26Likes3Retweets

This episode could also force future projects away from the popular Cosmos ecosystem trend of “fairdrops” that are partially weighted per wallet, rather than strictly linear based on proof of capital. And even the concept of airdrops may face challenges, as they provide limited utility for the underlying network.

Additional information about the entity is still being unearthed, which may also sway the results before voting closes on March 15.

Twitter avatar for @gadikian
Jacob Gadikian @gadikian
@GoldenStaking They’re the same entity. Source of funds includes seed phrase farming and scammy behavior. Cosmos hub has active sibyl. (Game/Debo) Gov slashing now Should talk to members of the tendermint team concerning the seed farming.
7:25 PM ∙ Mar 11, 2022
11Likes2Retweets

In brief:

Ethereum Ecosystem:

  • Coinlist to support Snapshot voting from their exchange accounts:

Twitter avatar for @CoinList
CoinList @CoinList
🗳️ Introducing CoinList Governance 🗳️ Starting today, $BTRST holders will be able to vote on new proposals directly via CoinList, contributing to the growth & decentralization of @usebraintrust. Voting for more @SnapshotLabs-based protocols coming soon! blog.coinlist.co/introducing-co…
blog.coinlist.coIntroducing CoinList Governance: Blockchain Voting, SimplifiedStarting today, BTRST holders will be able to vote on new proposals directly via CoinList, contributing to the growth and decentralization of Braintrust.
11:23 PM ∙ Mar 3, 2022
139Likes33Retweets
  • Ethereum Gas Limit (EGL) project closed over concerns about negative Ethereum governance impacts:

Twitter avatar for @ETH_EGL
the 🦅EGL🦅 project @ETH_EGL
After a long consideration we decided to sunset the EGL project Here's why 👇 (Genesis participants will receive the ETH they staked) eglvote.medium.com/sunsetting-the…
eglvote.medium.comSunsetting the EGL ProjectAfter 2 years building a governance token for ETH, we decided to sunset the EGL Project. Here’s why
7:46 PM ∙ Mar 8, 2022
20Likes6Retweets
  • Polygon recovers from unscheduled downtime:

Twitter avatar for @0xPolygonDevs
Polygon Developers 💜 @0xPolygonDevs
🔼 UPDATE Polygon PoS has resumed operation as the team has deployed a temporary hotfix to address the issue. All user funds are safe. We're working on a long-term solution and will continue to update the official forum and other channels. bit.ly/37nHgab
Twitter avatar for @0xPolygonDevs
Polygon Developers 💜 @0xPolygonDevs
🚧Network update Due to issues with the Tendermint implementation used by the Polygon PoS chain, users can expect downtime starting at 5:50 PM UTC. We appreciate your patience. More details are in the forum and we’ll share updates when possible. 👇 https://t.co/O1MFUrKuAr
1:49 AM ∙ Mar 11, 2022
466Likes138Retweets
  • Convex Finance sees mass token unlock due to bug in rewards distribution mechanism:

Twitter avatar for @ConvexFinance
Convex Finance @ConvexFinance
Important update for vote-locked $CVX holders: the vote-locking contract has been re-deployed, and users will need to re-lock their $CVX tokens. Full details in our latest medium post:
convexfinance.medium.comVote-Locked CVX Contract MigrationToday, the contract for vote-locked CVX (vlCVX) has been re-deployed. Convex Finance was recently made aware of a potential bug in the…
2:53 PM ∙ Mar 4, 2022
198Likes63Retweets

Cosmos Ecosystem:

  • Osmosis sees a significant share of empty (0 transaction) blocks due to lack of coordination between wallets and validators:

Twitter avatar for @larry0x
larry - $LUNA $OSMO validator @larry0x
i found that certain @osmosiszone validators always propose blocks with zero or very few txs, while normally blocks almost always contain >10 txs pic 1 is one such validator. pic 2 is my validator for comparison is this normal?
Image
Image
5:23 PM ∙ Mar 4, 2022
41Likes2Retweets
Twitter avatar for @joaosilvestr
paletas.ust 🌖🐸 @joaosilvestr
@larry0x @osmosiszone Wasn't this discussed a while back? Some validators don't accept 0 fees transactions so end up proposing empty blocks most of the time
5:24 PM ∙ Mar 4, 2022
  • Arca and Polychain face criticism over Anchor proposal for deposit limits (which could be circumvented by splitting wallets), with additional concern over suspicious trading activity by the proposer wallet:

Twitter avatar for @0xSisyphus
Sisyphus @0xSisyphus
polychain and arca proposing to reduce anchor deposit rates below 20% above specific wallet sizes vote ends in a week app.anchorprotocol.com/poll/18
Image
5:50 PM ∙ Mar 10, 2022
145Likes10Retweets
Twitter avatar for @NexusShimmy
Shimmy Nexus @NexusShimmy
This wallet acquired slightly more than 4M #ANC with 8.55M UST between 13th Feb ~ 23rd Feb (avg #ANC @ 2.099 UST)
2:43 AM ∙ Mar 11, 2022
22Likes1Retweet
Twitter avatar for @NexusShimmy
Shimmy Nexus @NexusShimmy
They manage to cash out 3.4M #ANC into 12.5M UST between 27th Feb ~ 7th Mar (avg #ANC @ 3.66UST) 442K #ANC withdrawal to their binance account is a little cherry on top
finder.extraterrestrial.moneyETExtraterrestrial (ET) Terra Blockchain Explorer and Analytics
2:43 AM ∙ Mar 11, 2022

Other Ecosystems:

  • New project (DAO,DAO) draws skepticism from the wider DAO community:

Twitter avatar for @nadertheory
Nader Al-Naji (D,D) @nadertheory
Today I'm excited to announce a new platform called (DAO,DAO) Starting a DAO should be as easy as creating an Instagram account Investing should be as easy as sending an email DAOs should be social Governance should be on-chain Welcome to daodao.io (D,D) 🧵
daodao.ioThe Next DAO Platform (DAO, DAO)By the people, for the people
12:53 AM ∙ Mar 9, 2022
330Likes105Retweets

Thanks for joining us for Tally Newsletter issue 66. 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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