The Tally Newsletter, Issue 43

August 25, 2021

Welcome back for issue 43 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’s community enabled analytics vote

  • Controversy over EGL’s gas limit token voting mechanism

Plus brief ecosystem updates from the governance ecosystem.

Uniswap Analytics Proposal Stirs Controversy

TL;DR: Proposal 7 saw considerable opposition at the last minute due to concern over spending oversight.

Proposal 7 continues Uniswap’s history of contentious governance votes. Driven by analytics provider Flipside Crypto, the Community Enabled Analytics proposal sought up to $25 million worth of UNI tokens to bootstrap a new analyst focused grants program. Instead of directly using the tokens for grants, Flipside proposed to invest the tokens into a Uniswap v3 liquidity position to generate yield for continuous funding. 50% of the yield generated would be withheld to cover Flipside’s program management and operating costs.

The proposal initially met little resistance, sailing through two consecutive Snapshotpolls with over 99% of participating tokens voting in favor. And the initial phases of the on chain governance vote proceeded similarly, with early voters offering nearly unanimous support.

Uniswap Proposal 7

However, once the proposal reached the minimum 40 million UNI votes in favor to pass quorum, the level of engagement on the “against” side picked up considerably. This was partly catalyzed by a call to action from another prominent data platform, Dune Analytics.

Opposition focused on a few areas. First, some considered the operating expenses going to Flipside to be excessive, representing 50% of the generated revenue (estimated to be around $90,000 per month). Dune objected to the analytics grant program focusing solely on Flipside and excluding other providers. While Flipside had mentioned grantees would be free to use other data platforms, the proposal didn’t allocate any funding for this. And there was also some concern about the sheer size of the grant and management frameworks. While spending from yield was intended to lower the long term cost of the program (through less token dilution), this involved significant investment risk from providing Uniswap liquidity as well as trust requirements for the 3 member multisig committee managing funds.

Following Dune’s widely shared objections, the “against” side took the lead. The proposal was then disrupted somewhat by a technical issue impacting the Tally voting interface, causing some “against” votes to be erroneously submitted to the governor contract as “for” votes. 

The issue was quickly resolved, and didn’t impact the vote outcome as the proposer had dropped below the required 2.5 million UNI threshold during the voting period, allowing the proposal to be cancelled. 

With the proposal shelved for the time being, Flipside is now considering their next move. Some potential changes to the proposal include a more independent oversight committee, removing yield generation and asset management from the scope, and potentially even adopting a consortium approach to data platform participation.

It’s unclear if this proposal has a path forward, but the community continues to discuss options in the Uniswap forum.

Ethereum Gas Limit Project Stokes Disagreement Among Core Developers

TL;DR: EGL voting and incentives challenge the “rough consensus” process used for Ethereum base layer governance.

Historically, changes to the Ethereum protocol have been managed via the Ethereum Improvement Proposal (EIP) process. This relies on “rough consensus” being reached among Ethereum core developers, including network researchers and client teams. 

Changes to the network’s gas limit (determining the maximum amount of transactions that can be processed) has been handled slightly differently. Miners have been empowered to vote on changes to the gas limit with their hashpower, which gives greater flexibility to respond to spam or denial of service attacks. But they have historically followed core devs’ recommendations on safe maximum gas limits. 

This paradigm is now being challenged by the Ethereum Gas Limit (EGL) project. Depending on perspective, the project is variously considered a way to empower the community or a bribery mechanism that undermines Ethereum governance. 

It works by creating an on chain, token based voting mechanism for users to signal their preferred gas limit. Miners who vote for the gas limit proposed by token holders receive a share of EGL inflation, which they can then sell into the market to improve their profitability. 

In the short period since EGL launched, it has already gained significant traction with over 21% of mining hash power collecting EGL token rewards. There may be some risk of incentive misalignment though, as miners will be made obsolete when Ethereum switches to proof of stake consensus (expected in 2022) while the expanded state size from larger blocks imposes a long term cost on network participants beyond this time. 

As discussions progressed, it became clear that support for EGL was largely determined by participants’ technical positioning. For example, several members of the Erigon client team (which excels at managing growth in state size) expressed their support, and suggested the existing governance process is dysfunctional and fails to accommodate technical advances.

The development team behind EGL, bloXroute, also has a vested interest in increasing the block size, as their primary product for improving block and transaction propagation across nodes is currently not necessary due to relatively low gas limits.

Discussion continues on the relative benefits and risks of tokenizing aspects of Ethereum’s base layer governance. But on a more general level, this represents an important example of extrinsic incentives being overlaid on existing governance frameworks. Other mechanisms for vote renting or trustless bribery are also beginning to emerge for DAOs and application layer protocols, which can challenge some of the game theoretical assumptions underlying governance security. As these mechanisms progress, projects may need to reevaluate their voting systems to respond to adverse incentives.

In Brief:

  • Andre Cronje releases trustless Curve voting bribery mechanism:

Twitter avatar for @AndreCronjeTechAndre Cronje @AndreCronjeTech 1.1.0 released; - Add bribes for DAO votes Anyone can deploy a curve gauge via the gauge factory, get the vote_id, and add bribes. Bribes only rewarded if vote passes and for voters who voted for/yes

Anton Nell @AntonNellCrypto version 1.1.0 Added support for DAO voting bribes
  • Aave adopts broader liquidity incentive scheme:

  • Centre switching USDC back to all cash reserve policy by end of September:

  • Polychain shares perspective on improving Compound governance through more focus and organization:

  • Gitcoin and Bankless release DAO worker survey to better understand contributor experience:

Thanks for joining us for issue 43 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


Nate, Tally