Consensus Check - UNI should fund a political defense organization for decentralized finance

I appreciate the reply. As for item #4 with other projects getting on board. The proposals do not need to pass all at the same time. It could be Uniswap’s proposal could be passed first but no fund become available unless 3 out of 5 other protocols also pass it (something along those lines). In other words, the proposal is only implemented once other protocols pass and if they don’t then Uniswap’s proposal essentially dies with it. This proposal was broached on the community not long ago. It could just as quickly be brought up with the other major protocols.

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These are really strong points. Thanks for bringing them up @jcp. I can’t speak for the other committee members, but here’s how I think about these points.

Budget // Reassessment and Evaluation
I completely agree with your take about startup funding needing to be milestone-based. The proposal, however, isn’t to form a startup. Rather, it’s to form a non-profit entity that engages in funding research, individuals, and entities that assist in protecting defi from regulatory uncertainty. In short, I don’t think traditional startup wisdom directly applies here.

I don’t have a sense for what the “right” amount of funding for this organization is, but I suspect it will be an amount far larger than what we think it should be. It’s possible I’m overestimating the cost, but on this front, I believe it’s better to be safe than sorry — if the difference between success and failure is funding, then we should go with the conservative number: 1M UNI.

Team Structure and Payment // Team Buy-In
I mostly agree here — people tend to do better work when they’re motivated, and fair, performance-based compensation is a good motivator for most people. That said, I don’t think this group is “most people.”

We’re all intrinsically motivated to make defi work in a compliant and regulatory-friendly way, and many of us share a mutual destiny on that front. Reverie, for example, is a company I formed with @derek to work with DAOs. But doing so hasn’t been easy, mostly for legal and tax reasons. I am extremely motivated to be on this committee — even with no compensation — because it directly benefits the work Reverie and other DAO contributors do.

What I also like is every member on this committee has significant skin in the game, which in my mind, is the best membership qualifier. The inverse would be far worse: a committee of individuals who sit on the committee primarily for compensation, suffering no downside risk and capturing all of the upside!

Finally, I think having a full-time committee member is an excellent idea. My sense is we can probably form the committee without a full-time member and then recruit/find one if the organization needs to ramp beyond the capacity of the existing part-time structure.

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It is good to have a diverse group on the board. From the looks of the professional experience of each member, it looks like there is a broad span of political views: from more conservatives to more liberal. Financial inclusiveness spans all political leaning’s.

Regulation is happening for the Defi space, and it is happening quickly. It is best uniswap has a voice in the room. The group proposed here can speak on different area’s of the Defi space and ethereum, while also creating bridges to the traditional finance space.

In May (just last month) Michael Hsu was appointed by Janet Yellen as acting OCC (office of the comptroller of the currency) and is a former associate director in supervision and regulation at the federal reserve of governors. He has made remarks of fintech and digital currencies reminding him of the pre-2008 financial crises, has created a sprint team to work on regulating digital tokens, and has designated it his appointment focus, while leaving wall street and tradFi alone.

I trust the nominee’s designated out in this proposal to be better advocates and more knowledgeable about the potential of the Ethereum ecosystem, than those “sprinting” to regulate a nascent technology.

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This proposal is a trojan horse and Im highly suspicious of it. Why is a WEF crypto lawyer involved? Furthermore, why is Harvard involved? Research the WEF, and how their plan is how youll own nothing and be happy. Not my words, theirs.

Personally, I think you should leave and never come back. Hopefully voters do the right thing and vote this down HARD.

Again, the only thing we should be pushing for is NO regulation at all for at least 10 years. Defi is still in the early stages and any regulation now will kill some of the growth. Governments shouldnt have a problem with this as long as they get their tax revenue which will be plenty.

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Its pretty simplistic to write off things as conspiracy theories. Thats a rather easy way to dismiss someone isnt it. The WEF literally said their goal is to have people own nothing. Am I a conspiracy theorist for saying that?

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There are a few things I don’t like about this proposal:

  1. It is still very loosely defined for how much money is being requested. There is no check-in with governance to assess progress and request more funds.

  2. This should not JUST be funded by Uniswap governance. This is essentially a public good for DeFi and I believe any DeFi protocol that wants to considered as a leader in this space should be expected to contribute.

What I like about this proposal:

  1. The authors are dreaming big! For months I’ve heard people say “Uniswap has xxx huge treasury, what should they do with it?”, this is 1). big thinking, 2). legitimately needed and 3) backed by the right people.

  2. The amount of UNI being requested is not crazy. The request is for 1 million UNI, let’s remember the initial liquidity mining rewards were 5 million. Typically, DeFi WAY over pays for capital and way underpays for everything else. If we are willing to give 5 million UNI to people farming and selling the token why is 1 million for ensuring the perpetuity of the industry crazy?

  3. The committee is very solid. People who are questioning the integrity or alignment of this group have not been in DeFi very long.

  4. I believe this proposal is needed. I can’t post links or images here but look at Jake Chervinsky comments on it (proposed committee member and Compound Labs GC). Jake said,

“The days of DeFi flying under the radar are over. Policymakers worldwide are paying attention. Now’s the time to allocate resources to education & advocacy, & this is the right way to do it.”

Let’s read between the lines here. It’s safe to assume Jake knows a lot of public and non-public information about the regulatory environment surrounding DeFi. Jake isn’t prone to hyperbole. He isn’t saying “the days are coming to an end” he is saying, “it’s over”. Right now our risk with this proposal is probably that it is too late not too soon.

Also, Uniswap GC is on the committee, do you think they would’ve joined if they felt this wasn’t needed?

Summary:
I’ll vote for the proposal. I’d like to see the proposal adjusted to include:

  1. commitments from the other leading DeFi protocols
  2. some sort of check-in before the full 1 million allocation is disbursed

But even absent those changes I would still support this on the grounds above.

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Very well stated sir.

Completely disagree with you about this, and considering it has NOTHING to do with Uniswap I’d ask you to leave this culture war stuff out of the discussion.

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agreed.
Uniswap taking the reigns, leading this charge makes total sense… but the inclusion of other communities is something that will have to be addressed.
otherwise it’s strictly a uniswap effort which probably starts looking a lot like lobbying for Uniswap.

but if the intended benefits (and affects) of this will reach us all, wouldn’t including other governing boards in the process probably make a lot of sense?

This doesn’t look very decentralised to me. Who the hell is dydx? They only just launched and why do they get a seat at the table, is it because of their big VC backers? It’s all looking very centralised.

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Hey lets not forget to mention the lack of diversity on this board. I can’t get behind a political action committee that isn’t representing the inclusive nature of Uniswap. Seriously, I would want this to be forward looking and approach individuals who represent different nations, cultures, and ethnicities.

I also see a number of people with connections to Harvard Law. I am certain none of the choices were made based off nepotism, and I am sure they are the “best lobbyists.” But why even open ourselves to that criticism? Not even to be cynical, very likely these people are extremely effective at their jobs but it looks to be very clear what is happening.

Winners and losers will be picked from the Wild West that is DeFi. This is simply a bribe to the right people who know how to effectively lubricate the system. No one knows the gears and levers of Washington more than people from the Bush/Cheney Admin (omitted from Biber’s bio). The Whales and VCs who are on the Taxman’s chopping block will obviously support this because they need the clarity. I think the “little guy” will continue to pursue a more pure form of DeFi through alternative means if possible.

Honestly I am seeing more merit to this proposal after it has been fleshed out, but I would want some way for the community to have a voice. Or at least some reporting method where feedback could be gathered so our interests are actually being represented.

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I’m not sure what you mean about having other governing boards in the process? Other protocols should have a similar proposal put to a vote. We could work together and Have a collective voice with all major protocols working on the same effort and that would be more impactful than a single voice. Also, could you imaging if UNI “takes the lead” and allocates funds and then similar proposals are brought to other protocols only to be shot down. There could be some considerable backlash and resentment between UNI and other protocols. Other protocols would essentially be freeloading. As mentioned above, UNI could “take the lead” in a vote and no money allocated until other protocols do the same with a vote.

I’m in full agreement with Leighton here. I’m voting FOR, but question for those voting against, would it be more palatable if there were a milestone set in place where only 25-50% is disbursed by treasury upfront to set up the 501(c)(4) and getting things off the ground?

For getting other DeFi treasuries onboard, while I think this is a super important precedent to set, I don’t want to downplay how difficult this type of coordination across decentralized communities is. This could be a prereq for future disbursement (eg. remaining 50-75%) but we should be acutely aware of the coordination costs (eg. time and effort) as well as judgement/curation (eg. who decides who gets to belong?).

This has been great discourse so far, but let’s be careful not to devolve into namecalling and non sequiturs to detract from the overall goals of this proposal.

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Love to see the honest discussion here, but keep in mind that ad hominems regarding morality will be moderated. Keep the discussion on the proposal and the idea, not on the character of the individuals involved. If you have concerns regarding an individual’s good faith, voice it, but take care to keep it scoped to matters pertaining explicitly to Uniswap governance.

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I’m not against the idea of funding a political defense of DeFi, or even spending a large amount of money to do so. But I’m worried that the supporters and commenters above are rallying support for the general idea rather than this specific implementation. Most of my pushback here is around how this will be executed if passed, and I don’t think the points I posted above have been adequately addressed.

On the funding side, it’s true that funding a non-profit is not the same as funding a startup or even a grant. However, the idea of accountability and assessment applies to any kind of organization. It’s very possible for us to approve a budget and fund it one year at a time while getting progress updates on the work being done by this committee. I think anyone planning on starting an effective non-profit would be comfortable with that process.

My biggest concern here is actually coordination, and I think the risk here is being underestimated. I’ve seen many multi-sig wallets and committees fall victim to sluggish movement and lack of attention by their members, even when those members were prominent DeFi founders and employees. There’s always an initial excitement to get funding and become a signer, but several weeks later, it becomes burdensome even just to gather signatures for a single transaction. The reality is that busy people will experience an attention deficit when forced to do multiple demanding jobs at once, and that’s my main concern here.

One remedy is to appoint a full-time member of this committee whose job it is to manage the overhead of evaluating funding applications, documenting decisions, and coordinating consensus with other members. Another safeguard would be to get a commitment from each member of this committee that they will not join any other similar committees over the next 4 years to ensure that they have enough attention for this work.

The red flag for me is that over 24 hours into this proposal and after much discussion, no one on this committee besides Larry and Marc has posted their thoughts or participated in this discussion. I actually wonder if some members of the committee have read the comments here. This is a practical concern.

If you can’t make the effort to participate in proposal discussion when you stand to gain $40M of funding, will you make the effort 2 years into this committee, when the workload of evaluating grants has increased tenfold? Or when there’s a multi-year bear market that makes other opportunities look more exciting?

I agree with all the supporters above that generally, it’s a great idea to use treasury funds to defend the DeFi industry. It’s worth spending a lot of money to do so, and we should keep proposing things here until something like this happens. But my primary concern is making sure that if we do this, we all but guarantee that the funds we allocate are used effectively. I think it makes sense to build that into the structure of this committee.

I stand by my recommendations above and am voting against this proposal unless several of these changes are made.

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no one on this committee besides Larry and Marc has posted their thoughts

Jake Chervinsky also voiced his support
https://twitter.com/jchervinsky/status/1399756101541842954

And Rebecca Rettig signaled agreement with Marcs post
https://twitter.com/RebeccaRettig1/status/1400074451069378560

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Good call out and thanks for posting, I missed Rebecca’s tweet. I had seen Jake’s but wish more thoughts were being posted in this actual discussion.

Perhaps it would be helpful to gather all relevant tweets and have them somewhere in this thread to provide this kind of context.

That all being said, I’m happy to adjust / clarify the wording in my post to reflect that members have tweeted.

As I’ve stated previously, this proposal is a direction that I hope Uniswap (and more DeFi protocols) grow into.

While the intentions of the proposal and all parties involved is positive, I am against this consensus check, for the following reasons:

  • The temperature check was extremely contentious, with support dominated by a few large stakeholders; many voters, and the forums, were populated with many (justifiable) questions, which I don’t feel have been properly answered prior to building or asking for consensus. In fact, the consensus check was created with little time for discussion or debate.
  • The primary argument against the proposal was that the sum requested, ~$30m, was outlandish. This has not been addressed, justified, or budgeted for IMO.
  • Allocating ~$30m based on this process, to date, signals that there are no safeguards to the Uniswap treasury, and that it can be spent on a short notice, with little discussion and few details; setting a precedent that weakens Uniswap long-term.

I strongly believe that a smaller proposal ($1-2m?) should establish the political defense organization, build a team, pilot its activities, and demonstrate success, before requesting additional resources.

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I believe it is important that everyone recognizes the significance of this proposal.

If you’re here in this forum, you most likely agree with the following:

  • DeFi holds great promise to reshape finance for the better.
  • DAOs represent a new form of social organization that has the potential to improve upon the shortcomings of previous ones, i.e. corporations and nation state governments.

Despite recent success (technological breakthroughs, financial gain, and social adoption), both of the concepts mentioned above face an existential threat in the form of bad regulation driven by misinformed or corrupted governments.

As DeFi DAO participants, UNI holders are being called on to spend a large amount of UNI from its treasury to mount a defense against this threat. Indeed, the significance of that in itself should not be ignored: I don’t think it is melodramatic to suggest that, should this proposal pass, this is an event that could one day be marked down as a pivotal event in the history of DAOs.

I agree with @Leighton that this is the type of “big idea” that this community should be willing to pay for and I join him and others in support of this proposal. Personally, I believe some of the concerns that others have expressed and that I mentioned in my post in the Temperature Check discussion (I made a new account as to make it clear that I’m speaking on my personal behalf and it won’t let me link…) have been adequately addressed:

  • Accountability and Transparency: DAOs value accountability and transparency, as is reflected in the structure of the several Community Grants committees that have sprouted up recently across DeFi. Yet, the nature of what is being proposed here does not lend itself as easily to such a funding structure. As Marc Boiron aptly points out, the feedback loops with political and legal advocacy play out over longer time periods than software development. Moreover, in the case of lobbying, for example, sometimes confidentiality is needed. We shouldn’t ignore the structural accountability and transparency afforded by 501(c)4s, despite it not looking and feeling cryptonative. In addition, this Consensus Check proposal commits the committee to “provide plain language summaries of [the] disclosures” required by 501(c)4’s. I encourage the proposed committee to commit to semi-regular community calls, regular engagement in forums like these regarding actions that have been taken, and quarterly reports of some kind - all of which should be expected from an organization dedicated to championing DAOs to policymakers.
  • Buy-In from Other DAOs: Though I would have preferred simultaneous governance proposals across the other leading DeFi DAOs, the makeup of the committee and the proposers’ comments in this forum (“this Uniswap board can and will condition the release of these funds on matching contributions from other platforms”) indicate that other DAOs will be engaged. This is promising.

I encourage others to vote to allocate the requested funds so that we can rise to the occasion and dedicate the resources needed to defend the very idea of DeFi and DAOs.

It would be hard be to draft a better committee than the one proposed here. I hope they take some of these objections made by others, such as @JCP and Robert Leshner, to heart and try to implement solutions to assuage the underlying concerns in both the final crafting of this proposal and the administration of the organization that comes out of it.

With regard to administration of the organization, I encourage the Committee to strive to experiment with cryptonative tools and traditions as much as possible; if only for the reason that an organization advocating for crypto should want to showcase its potential. Some ideas:

  • Though certain aspects of the DeFi Defense Fund are not easily fit into a Grants Committee-like structure, others might. For example, why not experiment with direct community feedback about funding thought leadership or other smaller dollar projects that may contribute to the cause? It would be relatively straightforward to enable UNI holders (or the broader community) to vote on ideas like these. The rules for which can be customized as to maximize efficiency and not slow down the broader effort.
  • Related, maybe the Fund could seed crowdfunded campaigns on Mirror for thought leadership.
  • Grassroots advocacy in particular can lend itself well to this type of experimentation. For example, those who contact their representatives could be rewarded with NFTs to show their participation and “power users” can develop reputation scores as advocates.

I’m excited by this proposal and hope that the DeFi Defense Fund is able to both rise to the challenge we face and live up to its potential as a bridge between policymakers and the DeFi community. Thank you to all those who have engaged constructively in the debate here, it’s been fun to watch unfold.

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@rleshner @haydenadams I am posting here a modified version of what I posted in the Temperature Check group because I believe it is critical for us to advocate for DeFi – but the proposal has some enormous drawbacks.

Here are the key ones:

1. The budget is 10x more than any other crypto player has needed to deal with similar threats. Where will all this money go?

2. The proposal lacks a clear goal, measurable interim objectives and clear criteria for success.. When coupled with a budget that is 10x what other companies have found necessary, where do we actually believe the money will go?

3. The board is not composed of the sort of people we can expect to best advocate for us. It needs to be expanded to include more gray suits and fewer Twitter KOLs.. The problem here is credibility with the government, and the unfortunate aversion to PR and conflicts of interest we will likely encounter when we engage the government.

My Background

Before unpacking what I wrote, I wanted to share a little bit of my background without outing myself.

In short, I have helped several overseas crypto, fintech and tradfi businesses navigate the halls of DC. In most cases, the situation was far more dire than what Uniswap faces. For example, a company may have been facing enforcement for sanctions violations or money laundering issues.

In each of these cases, the company resolved the matters and began a regulatory engagement effort.

The Big Picture

Taking affirmative action like HLSBFI proposes is critically important so that Uniswap and other members of the DeFi industry can avoid the sorts of issues I’ve seen companies face, and instead build a base of advocates with shared interests. This takes time - and, yes, it takes money, too.

Thinking carefully about how to do this is important - and it does require big brains and big connections.

Unfortunately there are at least 3 key issues with the proposal in its current form. They make me a hard no, and I believe they ought to make you a hard no, too.

1. Budget Size is 10x too large.

I believe the budget size is about 10x too large because I’ve personally interviewed and hired lobbyists and law firms in DC to attack similar issues with a budget of less than $500k.

This was easily achievable because almost every lobbying shop or law firm will offer a package deal for under $100k per year. These “low” rates are possible because the lawyers and lobbyists are already doing most of the work for other clients. In fact, most large Wall Street and DC shops will offer package deals as low as $25k per year.

To right size, I believe Coin Center’s entire operating budget was historically about $1m per year. It’s lobbying budget was smaller.

So, what would be done with $5-10m per year?

Which brings me to the next issue…

2. Lack of Concrete Goals, Measurable Milestones and Definition of Success

When budgeting money for a project, it usually makes sense to set clear overarching goals, create measurable objectives and to define criteria for success. That is especially important when the budget is so large ($30m is more than it took build Uniswap, plus Sushiswap, plus Compound … )
To use an example framework (OKRs):

Objective: Advance awareness of DeFi in DC and begin to identify shared interests

Key Result 1: Drive awareness of Defi by scheduling meetings with the offices of 10 senators and 15 congressman. Budget: 0

Key Result 2: Identify shared interested between the industry and the offices of 10 politicians who appear open to collaboration during initial reachouts. Budget: $5k

Key Result 3: Identify 5 most promising targets from follow-ups to seek further collaboration. Begin discussing ways to work together on shared interests. Budget: $5k

Key Result 4: Engage K Street shop to help guide dialogues with targets. Budget: $10k

Definition of Success: All key results completed and group has decided on draft engagement proposals for the next quarter

Unfortunately, the proposal provides none of this colour right now, so it effectively implies that the money can go anywhere.

In addition, this lack of discipline is what allows the request to be so large! What would the budget look like if we started at zero - and built up each key goal line by line?

3. Board Composition

The board’s composition is self-defeating because it mostly comprises Crypto Twitter KOLs. Although I imagine they are well intentioned, they just don’t give the right optics to most regulators.

To see this, just imagine that you are a regulator who is charged with enforcing a US sanctions program or runs a group in homeland security. How would you perceive

  • a Crypto Twitter lawyer
  • who is proclaiming how you should be doing your job
  • what the law should be,
  • is consistently PRing himself
  • is advocating for the creation of a $30m lobbying fund that he directs …

while you, the hardworking regulator, are given an impossible mandate, a tiny budget, and are afraid to even accept a free lunch?

The standard way to solve this is to stack your organization with revolving door operators who understand how the beast works, and have reputational skin in the game and maintain a relatively low, and conflict-free profile.

For us, I’d recommend adjusting the composition of the board to include at most 2 Crypto Twitter lawyers and otherwise grey suits. This will dramatically increase our credibility.

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