Updated Proposal & Temperature Check
We’ve updated the proposal (below) to incorporate the feedback and thoughts we received on the prior version. Thank you to everyone who helped us make this proposal better. Significant changes:
- Token Smart Contract Streaming: DEF would receive 500k tokens upon passage of this proposal and 500k would be locked up in a streaming contract that would “vest” linearly over 12 months. Governance could vote to stop the streaming of the remaining tokens at any time. We are looking into the best way to implement this idea and will update the forum thread with confirmed details once we have them.
- Community Transparency and Engagement: The DEF team will host monthly community calls that Uniswap community members can join to hear updates on our work, learn about high priority policy and regulatory developers, and have questions answered. We’ll also keep a thread on the Uniswap governance forum up to date with our monthly updates.
GFX has initiated a temperature check on this updated proposal. Thank you all!
Overview
Since its founding via a timely Uniswap Governance governance proposal in 2021, the DeFi Education Fund (DEF) has fought to advance and protect the potential of DeFi in the public policy sphere. The threat that misguided policies and overreaching regulators pose to DeFi has never been clearer. This proposal is to provide DEF with one million UNI tokens in two tranches to support them in fulfilling their mission.
See our CLO Amanda Tuminelli discuss our recent work on Unchained this morning.
DeFi promises to revolutionize how people engage in economic activities. In particular, the openly accessible and decentralized characteristics of DeFi protocols means that anyone with an internet connection and a wallet can participate in the global economy in a way that would not be possible without DeFi. To do so, DeFi upends the structure of traditional financial services and related policy making approaches. That upending has brought with it intense interest, suspicion, and hostility from entrenched interests and regulatory bodies around the world.
DEF has defended DeFi from legislative threats that would require DeFi developers to implement protocol access restrictions or requirements designed for CeFi businesses; regulatory proposals that would mandate centralization if finalized; and in the courts against overzealous regulators. In late March, we sued the SEC over its policy on airdrops and its campaign of regulation by enforcement that is crippling DeFi and crypto development and participation in the United States.
Over the last few years, DeFi’s policy challenges have become more real, more imminent, and more numerous. For example, in the U.S. alone, there are at least half a dozen bills actively under consideration in Congress and two rulemakings pending finalization that would effectively prohibit DeFi development. Luckily, public policy education and advocacy has borne—and can continue to bear—fruit for DeFi.
Without doubt, building a public policy environment welcoming of DeFi and decentralized governance will be a long and arduous struggle, but we know that Uniswap Governance shares our commitment to winning that debate—and it is winnable—so that the benefits of DeFi can be felt and enjoyed by as many people as possible, as quickly as possible.
DEF is eager to continue leading the fight on behalf of DeFi. With additional resources, we can build out our team:
- super charge our impact litigation efforts to reshape the legal landscape to DeFi and DAOs’ benefit;
- expand our outreach to legislators and double down on our educational efforts;
- more vigorously challenge the regulatory onslaught targeting DeFi; and
- enhance our ability to engage in state-level debates and jurisdictions outside of the United States.
If DeFi development and DAOs are to have a future in the United States, we need to double down on our advocacy efforts to protect DeFi from the myriad policy risks it faces while proactively laying the foundation for longterm policy solutions favorable to DeFi and DAOs. We stand ready and able to do so with the community’s backing and appreciate your consideration.
Rationale
DeFi’s policy challenges are immense and interest in DeFi has only grown since the DEF got to work in 2021. Following the collapse of FTX and with the return of the bull market, there is acute interest in DeFi on Capitol Hill and state legislatures, as well as inside federal and state government agencies. Providing meaningful educational outreach about DAOs and DeFi to lawmakers while also assisting in the legal defense of decentralized organizations is a role not played by anyone else in the US.
At this time, DAOs and DeFi protocols face several potentially catastrophic threats: a live IRS proposal would mandate the creation of intermediaries to conduct tax reporting (i.e., ban on disintermediated systems) and a live SEC rulemaking would define anyone loosely related to a DeFi protocol—including the underlying chain’s miners/validators—to be national securities exchanges like the New York Stock Exchange. Moreover, bills written to regulate CeFi often inadvertently capture DeFi protocols and subject them to compliance obligations designed for CeFi businesses.
If DeFi development and DAOs are to have a future in the United States, we need to double down on our advocacy efforts to protect DeFi from these myriad policy risks while laying the foundation for longterm proactive policy solutions favorable to DeFi and DAOs. There is a reason TradFi businesses collectively spend over $1 billion per year on U.S. lobbying and policy efforts: it works, and we’re making it work for DeFi.
DEF focuses specifically on fighting for policy outcomes favorable to decentralized finance developers and users on the ground in Washington, DC. A summary of our past work, which has included defending DAOs in court, as well as providing comment and consultation to regulators to avoid burdensome rules and regulations in the US and around the world, below. This proposal would expand our budget so that we can expand our legislative, regulatory, and legal advocacy and education efforts on behalf of DeFi and DAO developers and users.
If DeFi development and DAOs are to have a future in the United States, we need to double down on our advocacy efforts to protect DeFi from policy risks while proactively laying the foundation for longterm policy solutions favorable to DeFi and DAOs. We stand ready and able to do so with the community’s backing, and we appreciate your consideration.
Team, Social, & Contacts
Conclusion
The DeFi Education Fund is a nonprofit organization with a demonstrated history of being in the trenches fighting for DAOs and decentralized finance. Whether looking to provide legal assistance when DAOs and their members are targeted, providing educational resources, or fighting for policy changes, the DeFi Education Fund is the only major crypto advocate that focuses solely on decentralized web3.
FAQs
Why are you raising money now if you have about two years of runway at your current burn?
We are seeking Uniswap Governance’s further support now for three primary reasons.
First, we need a good sense of our longer term funding in order to expand our efforts and take on the long term projects that our work often requires, which can play out over several years. For example, our legal challenge of the patent covering oracle tech that is being used against DAOs will likely take a total of at least two years from start to finish. Our lawsuit against the SEC will probably last several years. If we did not have a good expectation of being able to operate two years after starting those efforts, we would not have been able to take them on at all. In addition, because we hold tokens long term, we are exposed to crypto market price fluctuations.
Second, unexpected, ad hoc projects that we are well-positioned to take on in defense of DeFi can be extremely expensive. For example, we expect the challenge to the oracle patent to cost nearly $500,000 over its entire course. A legal challenge to proposed rules that would de facto ban DeFi in the United States would cost well over $1m. We have no ability to predict with certainty when and if those expenditures will be necessary, and without a sense of our longer term funding situation, we can’t take on those types of unexpected, but critical, projects while also expanding our day to day efforts and team.
DeFi needs more dedicated advocates working on its behalf. With a larger budget, we can hire more people.
When and how would you plan on selling this proposal’s tokens?
It is important to us that DEF remains aligned with the DeFi community and our supporters over the long term. Upon passage, 500k $UNI tokens would be transferred to DEF’s on-chain Coinbase $UNI wallet, and 500k would be locked up in a streaming contract that would “vest” linearly over 12 months. Governance could vote to stop the streaming of the remaining tokens at any time.
We will hold half of any tokens we receive for at least 12 months from the date we receive them, and we will pre-disclose all sales plans in writing.
How are you going to keep Uniswap Governance up to date on your activities?
The DEF team will host monthly community calls that Uniswap community members can join to hear updates on our work, learn about high priority policy and regulatory developers, and have questions answered. We’ll also keep a thread on the Uniswap governance forum up to date with our monthly updates.
What about the tokens from the 2021 proposal?
We received our initial grant of one million $UNI tokens from the Uniswap Governance in July 2021 and sold half of the tokens shortly thereafter. In February 2024, we began selling portions of the other half of the tokens according to an 18 month written sales plan. We will sell in July 2025 the last of the UNI tokens we received in July 2021.
Why are you asking us for money and not other DAOs?
We are, and we will definitely continue to “pass around the hat”! We seek Uni governance’s continued support as a community that is building for the long term. Uniswap Governance took a massive “leap of faith” in generously funding an organization that did not yet exist to do work that would benefit every DeFi project and DAO. We hope that our track record of work has proven valuable to DeFi projects and users such that Uni governance and other projects’ governance will continue to contribute to our work going forward.