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The Tally Newsletter, Issue 9
December 8, 2020
Welcome to issue 9 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:
The return of airdrop season with BadgerDAO and Mirror
Bancor’s skin-in-the-game governance
Snapshot integrates 3Box ID solution
Uniswap’s community funding proposal
Zcash grants program opens for applications
Badger and Mirror Launch with Targeted Airdrops
TL;DR: The Badger and Mirror airdrops directly recognized and rewarded involvement in other leading protocols, representing a new dimension of token distributions.
In the past week, new protocols Mirror and BadgerDAO have launched targeted airdrops to build awareness and adoption. While most previous “fair launch” projects have distributed tokens via liquidity mining, Mirror and Badger have focused on active participation as a more sustainable metric for community building. Their experience may call into question the fairness and efficacy of proof of capital distribution mechanisms.
BadgerDAO, a protocol focused on Bitcoin yield opportunities, created an intricate scavenger hunt of qualifications. From voting in certain defi protocols, to using existing defi Bitcoin products, the token distribution event recognized a broad set of actions that could be beneficial to a Bitcoin focused defi organization.
Mirror, a synthetic asset protocol based in the Terra ecosystem, pursued wider adoption by bridging to the Ethereum blockchain and bootstrapping liquidity on the ubiquitous Uniswap decentralized exchange. As part of their initial token generation event, Mirror granted tokens to anyone holding at least 100 UNI in their wallet. This was an interesting choice, as it implicitly benefited those who retained UNI tokens for the previous Uniswap token distribution.
As time goes on, expect more protocols to pursue a focused, community based distribution mechanism.
Bancor Governance Takes on IL Insurance Risk
TL;DR: Bancor v2.1 implements platform insurance for LPs’ divergence losses, giving BNT governance a key role in curating coverage.
Bancor’s recent v2.1 upgrade brought about some significant changes to the protocol. While BNT had previously served as a utility token bridging liquidity between different Bancor pools, the revised token economics use BNT issuance as a backstop for insuring long term LPs against divergence loss.
Bancor limits risk concentration of providing insurance by requiring each asset to have an equal value of BNT staked against it, but this creates a chicken or egg scenario that slows liquidity growth. To solve this, Bancor governance has taken on the key role of token curator, deciding which tokens will receive investment of the platform’s own BNT tokens and liquidity incentives.
Governance is currently considering BIP-8, a proposal to institute protocol level admin fees to compensate for the divergence loss insurance provided to LPs. By providing reciprocal value to LPs in exchange for the protocol’s rent extraction, Bancor may stand a better chance of weathering the relentless competition in the AMM space.
Snapshot Integrates 3Box
TL;DR: The 3Box identity framework helps voters build reputation within autonomous organizations.
Small UX changes can make a world of difference. Arguably, Snapshot helped unlock the current growth of governance participation by allowing for scalable, gasless token voting. A new integration between Snapshot and 3Box’s identity system helps give this key voting tool deeper utility.
In most interfaces, voters are displayed based solely on their address. While it is sometimes possible to identify vote participants (with ENS names, linked wallets, or other means), current voting systems lack transparency.
With 3Box now integrated into Snapshot, voters have the opportunity to identify themselves. This opt in mechanism allows for continued anonymity for those who prefer, while giving identified voters an opportunity to build their reputation as a consistent participant.
Uniswap Community Considers Grants Funding
TL;DR: The proposed grants program would allocate $1.5 million worth of UNI tokens to an elected grants committee, to be disbursed to community projects over 6 months.
While a recent liquidity mining proposal has drawn away some of the community’s attention, Uniswap governance is currently considering one of the most ambitious grants programs within the decentralized ecosystem. The proposed program would allocate $750,000 in funding per quarter to grant recipients in the Uniswap and wider defi ecosystems.
With a UNI treasury amounting to hundreds of millions of dollars in value, this represents a fairly small sum to existing UNI holders. For reference, the previous 2 month liquidity mining program distributed over $50 million in total UNI rewards. But this funding has the potential to advance several goals for the wider ecosystem.
While the Uniswap genesis team has continued working on the protocol since the launch of the UNI token, they are hemmed in by decentralization concerns and can’t lead community development. This grants program offers the community a chance to fund their priorities, such as a front end interface with improved order routing and migration of SOCKS liquidity from Uniswap v1 to v2.
An initial Snapshot vote for the grants program is currently live through Friday. Supporters are narrowly leading opposition, but total vote participation is falling far short of the required 25,000 UNI quorum threshold to pass a temperature check poll.
Zcash Begins Funding Independent Development
TL;DR: The Zcash cryptocurrency’s 20% founders share of block rewards are now being partly distributed to a community grants organization.
Zcash has faced consistent controversy since launch due to its non-traditional block reward distribution. For the first 4 years of Zcash’s existence, 20% of block rewards have been allocated to the Electric Coin Company (a for profit development entity), the Zcash foundation, and a small group of founders and early investors. This runs the risk of concentrating supply in the hands of insiders and limiting protocol decentralization.
With the block reward diversion planned to expire 4 years after launch, in early 2019 the Zcash community began planning for future development funding. After a long discussion process, the community eventually reached consensus around a revised 20% developers’ share of block rewards.
While the ECC and ZF will continue to receive 7% and 5% of block rewards respectively, a new community elected grants organization would receive the single biggest allocation of 8%. This organization, Zcash Open Major Grants, has just begun receiving funding.
In addition to direct benefits from grant-funded projects, the ZOMG program is intended to help broaden the Zcash community and reduce reliance on founders for maintenance and development work. This represents a key step in bolstering Zcash’s decentralization and long term sustainability.
That’s all for this weeks’ updates. Thanks for joining us, and we look forward to having you back next week!
Anything we missed? New developments or protocols you’d like to see covered? Drop us a line at firstname.lastname@example.org