A weekly roundup of interesting stuff in the fabulous and mysterious world of DAOs
A weekly roundup of interesting stuff in the fabulous and mysterious world of DAOs
Subscribe to (anon)
Subscribe to (anon)
Share Dialog
Share Dialog
<100 subscribers
<100 subscribers
Welcome to (anon), the weekly DAO-centric word vomit serving you a full-course meal of spicy takes.
The Commodity Futures Trading Commission, which regulates derivatives trading in the U.S., recently settled a case against bZeroX (a “decentralized” protocol for lending and margin trading) for, “illegally offering leveraged and margined retail commodity transactions in digital assets.” You couldn’t pay me to care about some shady founders getting hit with a $250,000 fee (not even enough to buy a mega yacht), but the CFTC fuckery is just beginning.
https://twitter.com/jchervinsky/status/1573082859358851073?s=20&t=qrzOvNr3pNltJmCUfIZJog
In addition to going after the founders, the CFTC is also filing charges against OokiDAO (the DAO that was created to govern BZX) and its contributors.
The protocol was started by a centralized team, but they tried this nifty little trick called progressive decentralization. You probably know that progressive decentralization has been touted as a way for companies to avoid certain legal liabilities that their lesser and more regulated counterparts fall prey to. For example, if you create a product with a token, and then launch a DAO to “govern” the tokens, and if regulators later decide that you sold unregistered securities…
https://twitter.com/punk6529/status/1573075429191290881?s=20&t=pxwlHTdnvDRNtKnMdQ2bRw
Well, you can just blame the DAO.
That’s the beauty of progressive decentralization. A single entity might be the moving force behind starting a DAO, but if it slowly turns over the governance to the community and the community makes the decisions, well, whose throat are you going to choke when shit goes bad? It’s easy to sue a person or a company, but who in their right mind would try and sue every person that’s ever contributed to a DAO?
The CF-fucking-TC that’s who.
If this case is settled in favor of the CFTC, it will set TERRIBLE precedents for the crypto industry. Remember when Tornado Cash was sanctioned and all of a sudden developers started deleting their GitHubs? This case will do the same for DAO contributors; crypto is cool and all but no one wants to be Bernie Madoff’s cellie. I mean, if he were alive. Which he isn’t, having died IN JAIL.
The sanctity of FRAX’s funds has recently come into question after MonetSupply pointed out some concerning aspects of their governance process.
https://twitter.com/MonetSupply/status/1561122916569296896
Basically, FRAX has entrusted its copious amount of shmeckles to a couple of multisigs that require only 2 of 4 signers to execute a transaction. Multisigs are wallets that have multiple owners or “signers,” it’s sort of like a shared bank account with extra steps. When creating a multisig, you decide how many of the owners need to approve a transaction for it to go through—in the case of FRAX, only 2 of the 4 authorized countersigners are needed.
The reason this is concerning is—and this may be shocking to some of our half dozen readers—but entrusting a group of 4 anons with complete control over funds sounds like something that would make Satoshi puke.
You might be thinking, “Well FRAX deployed a ‘Governor Alpha’ so they can automate governance—maybe the funds are controlled by the governor?”
Yeah—no. Our trusted sleuth MonetSupply wasn’t buying that idea.
https://twitter.com/MonetSupply/status/1567001503524847618
Turns out, not only has the governor never been used, it hasn’t even been set up properly. So when a proposal passes, it’s still up to a small group of mysterious insiders to actually execute it.
Look, maybe we give FRAX the benefit of the doubt and assume it is still in the process of setting up its governor. But that doesn’t change the fact that one of the largest and most successful DeFi protocols in existence gives complete power to a committee of four people via its multisig.
While most DAOs love to talk about how they’re governed by their contributors, in execution, that’s not really the case. Yes, the community may vote on a proposal on Snapshot, but it’s ultimately up to the signers on the multisig whether or not the funds needed for that proposal are ever sent. The proposal isn’t “onchain,” the governance process is not decentralized.
Many communities are becoming far too comfortable with just using snapshot / multisig and trusting their leaders to do the right thing - MonetSupply
Speaking of multisigs, everyone’s favorite multisig provider, Safe (previously known as Gnosis Safe), just released its governance token via an airdrop. Users who have used Safe in the past are eligible to claim tokens, a bear market stimulus check for DAO builders.
A quick aside, despite my berating FRAX for using a multisig in the previous section, multisigs are indeed a critical part of DeFi infrastructure. All DAOs start somewhere, and using a multisig is almost always a part of a decentralized communities journey.
The token ($SAFE) comes alongside the launch of SafeDAO, an organization tasked with stewarding the Safe protocol to Valhalla. Or, more specifically:
SafeDAO will govern Safe protocol, interfaces (web and mobile) and Safe Token supply.
SafeDAO will be governed by Safe Core Contributors and the 43,000 users eligible for the airdrop. As well as a handpicked group referred to as the “Safe Guardians” who will earn $SAFE over time by contributing to the DAO.
I’m genuinely curious to see how this approach to governance works. Sure it may feel a little more centralized when they curate contributors through their Safe Guardians program, but half the battle when starting a DAO is weeding out the good contributors from the ones who will quickly lose interest. Curating contributors through an application process might take away some of those initial growing pains.
-Tiny Schmancer
Welcome to (anon), the weekly DAO-centric word vomit serving you a full-course meal of spicy takes.
The Commodity Futures Trading Commission, which regulates derivatives trading in the U.S., recently settled a case against bZeroX (a “decentralized” protocol for lending and margin trading) for, “illegally offering leveraged and margined retail commodity transactions in digital assets.” You couldn’t pay me to care about some shady founders getting hit with a $250,000 fee (not even enough to buy a mega yacht), but the CFTC fuckery is just beginning.
https://twitter.com/jchervinsky/status/1573082859358851073?s=20&t=qrzOvNr3pNltJmCUfIZJog
In addition to going after the founders, the CFTC is also filing charges against OokiDAO (the DAO that was created to govern BZX) and its contributors.
The protocol was started by a centralized team, but they tried this nifty little trick called progressive decentralization. You probably know that progressive decentralization has been touted as a way for companies to avoid certain legal liabilities that their lesser and more regulated counterparts fall prey to. For example, if you create a product with a token, and then launch a DAO to “govern” the tokens, and if regulators later decide that you sold unregistered securities…
https://twitter.com/punk6529/status/1573075429191290881?s=20&t=pxwlHTdnvDRNtKnMdQ2bRw
Well, you can just blame the DAO.
That’s the beauty of progressive decentralization. A single entity might be the moving force behind starting a DAO, but if it slowly turns over the governance to the community and the community makes the decisions, well, whose throat are you going to choke when shit goes bad? It’s easy to sue a person or a company, but who in their right mind would try and sue every person that’s ever contributed to a DAO?
The CF-fucking-TC that’s who.
If this case is settled in favor of the CFTC, it will set TERRIBLE precedents for the crypto industry. Remember when Tornado Cash was sanctioned and all of a sudden developers started deleting their GitHubs? This case will do the same for DAO contributors; crypto is cool and all but no one wants to be Bernie Madoff’s cellie. I mean, if he were alive. Which he isn’t, having died IN JAIL.
The sanctity of FRAX’s funds has recently come into question after MonetSupply pointed out some concerning aspects of their governance process.
https://twitter.com/MonetSupply/status/1561122916569296896
Basically, FRAX has entrusted its copious amount of shmeckles to a couple of multisigs that require only 2 of 4 signers to execute a transaction. Multisigs are wallets that have multiple owners or “signers,” it’s sort of like a shared bank account with extra steps. When creating a multisig, you decide how many of the owners need to approve a transaction for it to go through—in the case of FRAX, only 2 of the 4 authorized countersigners are needed.
The reason this is concerning is—and this may be shocking to some of our half dozen readers—but entrusting a group of 4 anons with complete control over funds sounds like something that would make Satoshi puke.
You might be thinking, “Well FRAX deployed a ‘Governor Alpha’ so they can automate governance—maybe the funds are controlled by the governor?”
Yeah—no. Our trusted sleuth MonetSupply wasn’t buying that idea.
https://twitter.com/MonetSupply/status/1567001503524847618
Turns out, not only has the governor never been used, it hasn’t even been set up properly. So when a proposal passes, it’s still up to a small group of mysterious insiders to actually execute it.
Look, maybe we give FRAX the benefit of the doubt and assume it is still in the process of setting up its governor. But that doesn’t change the fact that one of the largest and most successful DeFi protocols in existence gives complete power to a committee of four people via its multisig.
While most DAOs love to talk about how they’re governed by their contributors, in execution, that’s not really the case. Yes, the community may vote on a proposal on Snapshot, but it’s ultimately up to the signers on the multisig whether or not the funds needed for that proposal are ever sent. The proposal isn’t “onchain,” the governance process is not decentralized.
Many communities are becoming far too comfortable with just using snapshot / multisig and trusting their leaders to do the right thing - MonetSupply
Speaking of multisigs, everyone’s favorite multisig provider, Safe (previously known as Gnosis Safe), just released its governance token via an airdrop. Users who have used Safe in the past are eligible to claim tokens, a bear market stimulus check for DAO builders.
A quick aside, despite my berating FRAX for using a multisig in the previous section, multisigs are indeed a critical part of DeFi infrastructure. All DAOs start somewhere, and using a multisig is almost always a part of a decentralized communities journey.
The token ($SAFE) comes alongside the launch of SafeDAO, an organization tasked with stewarding the Safe protocol to Valhalla. Or, more specifically:
SafeDAO will govern Safe protocol, interfaces (web and mobile) and Safe Token supply.
SafeDAO will be governed by Safe Core Contributors and the 43,000 users eligible for the airdrop. As well as a handpicked group referred to as the “Safe Guardians” who will earn $SAFE over time by contributing to the DAO.
I’m genuinely curious to see how this approach to governance works. Sure it may feel a little more centralized when they curate contributors through their Safe Guardians program, but half the battle when starting a DAO is weeding out the good contributors from the ones who will quickly lose interest. Curating contributors through an application process might take away some of those initial growing pains.
-Tiny Schmancer
No activity yet