The Tally Newsletter, Issue 40

July 14, 2021

Welcome back for issue 40 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: 

  • Uniswap Grants Program’s renewal proposal

  • The Defi Education Fund in the hot seat after token sales

Plus brief ecosystem updates from other projects.


Uniswap Grants Program is up for Renewal

TL;DR: Governance is considering a renewal for 6 more months, using the remaining UNI tokens already in the grants multisig.

When proposal 3 passed in December of last year, it represented a key win for Uniswap governance. The community had been struggling in the aftermath of two failed governance proposals, and there was some doubt that it was even possible to reach the 40 million UNI quorum threshold required to pass a vote. 

Tally

In the following months, the Uniswap Grants Program (UGP) got up and running with an initial $750,000 quarterly budget for project funding. The first quarter’s grants were awarded as a large batch in the spring, with funding for a broad range of projects including Tally’s open source Safeguard multisig tool.

After one quarter of successful operations, governance approved an expanded grants budget of $1.5 million, including $500,000 for Uniswap v3 bug bounties. With no claims against the bounty fund, UGP was able to allocate a total of $1 million across several additional waves of grants in the second quarter. Some key grant funded projects include the fish.vote interface for community proposals and liquidity incentive contracts for Uniswap v3.

In addition to direct funding impact, the UGP has also served as a model for other protocols looking to better utilize their treasuries. 

Compound adopted a largely similar framework for their grants program in the Spring. Others including PoolTogether and Aave followed, helping to funnel resources to alternative uses beyond liquidity mining.

With the original 6 month program term coming to a close, Uniswap governance is now considering a poll vote to renew the grants program for an additional two quarters. Among the changes for the renewed program are an expanded grants funding target and greater participation from committee members, who will now be compensated along with the program lead while taking a more active role in managing applications. 

Unlike most spending related proposals, this likely won’t end up with an on-chain vote as it doesn’t require any new disbursements from the Uniswap treasury. When UGP was first approved the 500,000 UNI provided represented 6 months of funding, but with UNI’s price appreciation the grants multisig currently has over ¾ of the initial amount remaining, worth $8 million.

Snapshot votes don’t have any built in approval or quorum thresholds which makes defining success more subjective. The simplest and most defensible option is to require the same quorum levels needed to pass an on-chain proposal. Assuming the poll receives 40 million votes in support over the next week, UGP will be on track for another two quarters of ecosystem funding.

Uniswap Grapples with Treasury Oversight

TL;DR: The Defi Education Fund’s recent UNI token sales have resurfaced community concern over spending and transparency.

While the UGP renewal has been generally well received, the community is currently grappling with widespread concern over another governance funded committee, the Defi Education Fund. 

The Defi Education Fund was initially proposed to fund political lobbying and policy advocacy in support of decentralized finance. While the overall goals had broad support, there was disagreement within the community over some key points. Concerns centered on limited transparency, lack of direct accountability to governance, and questions of alignment between the committee members and governance. The sheer amount of funds requested also raised eyebrows, with many preferring to allocate smaller amounts over time as the fund built up a record of performance.

The proposers took some steps to address this before moving forward with an on chain proposal, such as agreeing to hold funds primarily in an multisig rather than an off chain entity. But the vote counts for proposal 6 show that these changes were not enough to resolve community concerns.

Tally

In the vote’s aftermath, the prominent role of university student groups also came under the spotlight. 

Student groups have great potential to drive active participation in governance. But with a16z providing support to so many of these voters, it raised questions about delegate independence and undisclosed coordination.

Uniswap Forum

Amid this generally backdrop of skepticism, the fund’s decision to sell half of their allocated UNI for USDC set off a storm of comments and activity.

This culminated in a satirical thread on the Uniswap form, focusing on the shortfalls in the governance process leading up to proposal 6. 

While the tone was mainly joking and light hearted, it brought a lot of community concerns to the fore:

  • Governance theater: Can large holders and funds improve decentralization through supporting many delegates? How can these relationships be more transparent?

  • Purpose of the treasury: The Defi Education Fund seems to have a US focus. Should an initiative like this be run through the treasury, which is meant to serve the entire international Uniswap community? And is it appropriate to fund general ecosystem priorities rather than focusing on Uniswap specifically?

  • Rigor and oversight: Many were surprised when the fund sold half of their allocated UNI, as this wasn’t clearly called out anywhere in the proposal. A proposal of this magnitude should offer more specifics to allow for thorough community analysis. 

While UGP seems to be meeting expectations, the Defi Education Fund has a ways to go to build trust with the wider Uniswap and defi communities they serve.


In Brief:

  • Optimism begins public launch with Uniswap app support:

  • LexPunk DAO begins work on form delegate disclosures and voting policies

  • Maker’s executive vote remains below the approval threshold after more than a week:

  • Gnosis Safe multisig is now available on multiple EVM chains:


Thanks for joining us for issue 40 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