Should Uniswap Provide Voltz with v3 Additional Use Grant

Hey @eek637 sorry didn’t mean for your first message to not get replied to! Great to see your support and appreciate the detail on your understanding of the license!

On the governance mechanism for VoltzDAO - this hasn’t been finalised yet, but what we do end up implementing will clearly be in the best interest of the community (which, if this proposal is approved, Uniswap governance would then be a part of). It’s worth adding that we take a research-first approach to everything we do. So, until we complete the research, I can’t confirm the exact mechanism we’ll use.

It is worth adding that Voltz transition to a DAO will be incremental, meaning Voltz protocol will go through the process of progressive decentralisation. We’ll likely make our research on the governance mechanics open source at the point we start transitioning Voltz to a DAO to ensure we collect sufficient feedback from our community.

Appreciate you may have a few Q off the back of this answer?

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Hey @tobyshorin. Great to see your support for the proposal :smiley:

Will be awesome to host a discussion on the Uniswap Discord community call. Let us know the best way to set this up / intro us to Boris!

On the governance point - I’ve just replied to Erin above on how we’ll go about deciding which mechanism we use. However, the delegation point sounds sensible and we’d be more than happy to allow Uniswap Governance to do this should you wish to.

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Thanks for this @simonj. The process of decentralization is tricky, and I definitely support a thoughtful, methodical transition. I was going to say that Kain from Synthetix has written extensively about this, but I see he’s a backer so that’s great news.

That said, it makes measuring the potential upside of this token grant to the treasury a little more hand-wavy so as predicted, I do have a couple more questions that might help the community understand what we’d be getting. Apologies in advance if this info is out there, and feel free to answer these at whatever level of detail you feel comfortable:

  1. What’s current state? E.g. who owns the Voltz contracts and to whom would this Additional Use Grant be issued?

  2. What’s the intended order of operations once the grant is issued? Interested in hearing about both the product side and the governance side, and how those two might overlap

  3. With the understanding that it’s subject to change based on the way the Voltz governance discussion progresses, what does the high-level token distribution look like? (I’m thinking messari-style pie chart here)

My opinion hasn’t changed on this proposal btw, I think it’s a great use case for the grant. I just think it makes sense, since it’d be a precedent, to get into the nitty-gritty details.

@BOR4 Boris I’m connecting you to @simonj from the Voltz team — when is the next community call? Let’s take this opportunity to get more discussion on the proposal at that time.

@simonj let’s move this to Discord. Send me a DM to BOR4#8524

Shoot an update here when there’s action on this!

hey @BOR4 just DM’d you. Thanks for the intro @tobyshorin! Will post a message in here when there’s an update :smiley:

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I think this proposal is really interesting!

A few thoughts:

  • Is 1% share of token supply appropriate compensation for use of the v3 codebase?

This is a completely new sort of deal, so there’s not a lot of precedent to base the allocation from. It might be helpful for the Uniswap community to have some details about Voltz recent funding round(s) to get an idea of what 1% of token supply cost to your investors, as this would allow Uniswap to put a tentative dollar value on the license grant. This should help UNI holders make an informed opinion on whether 1% of supply is sufficient.

  • Do you envision any restrictions on further use of the v3 codebase outside of the described rate swap AMM mechanism?

What I’m getting at here is, this deal will only work from Uniswap’s perspective if we can be assured that you won’t launch a competing general purpose concentrated liquidity AMM. Maybe this question should be directed at Uniswap Labs legal team - is it possible to grant a limited purpose exception to the license (just for IRS AMM) without opening up the risk of a full fork of Uniswap v3?

Appreciate any color you can give here! Both of the above concerns feel like they should be solvable, and I look forward to seeing how this proposal develops!

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Yeah I was interested in token allocations to investors too, waiting on an answer above.

Re the 1% number, in chatting this through with @tobyshorin and bryan from Otherinternet last week, I sort of settled on thinking of the grant in similar terms as what you would pay to non-founding technical employee number 1 at a startup. In my experience and from my research, 0.50% / 3.00% is probably the range so 1% is defensible.

I’m not sure if that’s right, but honestly I don’t know that it matters all that much. In my view, the point of the license isn’t to run a seed fund where Uniswap trades permission for token allocations. It’s a forcing function to make sure that the code is used to better the defi ecosystem without diluting the value of Uniswap itself. To that end, your question about further restrictions is definitely important and it would be great to have someone from Labs weigh in about that issue in particular but also this proposal more generally.

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Hey @eek637 @monet-supply, sorry for the delayed reply here and great to see your support of the proposal too @monet-supply! These questions probably make sense to respond to together, though will use your question structure @eek637.

  1. Our understanding is that to ‘action’ the Additional Use Grant, Voltz use case needs to be “listed and defined at v3-core-license-grants.uniswap.eth” [reference]. We believe this could clearly state that the license is being awarded to the VoltzDAO, but whilst the VoltzDAO is being established it will be held on a temporary basis by Voltz Labs. Within this, we also believe it could clearly state that the grant is only being provided to enable the creation of an Interest Rate Swap AMM that does not compete with Uniswap. Happy to agree this language, including ensuring it addresses your concern @monet-supply. However, we’d also appreciate input from the Uniswap Labs team to make sure our interpretation is correct first.
  2. Voltz Labs will decentralize the protocol over a period of time. We have a number of tentative initiatives on the product roadmap (e.g. perpetuals, L2 scaling, etc.), along with the launch of governance, which is likely to happen at some point through 2022. Audits of our contracts are already underway and we plan on being on testnet later this quarter, subject to a successful Uniswap Governance vote and successful completion of the audit process.
  3. Our current thinking is that token distributions will be broadly equivalent to that of Uniswap’s. This means we’d have c.60% for the community (o/w c.5% may be for a corporate treasury), c.20% for investors and c.20% for the Voltz Labs team. Worth highlighting that this may be subject to change as thinking and requirements develop. For completeness, we were counting the 1% distribution to Uniswap Governance as part of the community allocation.

Finally on your point about valuation @monet-supply. I’d need to check if we can disclose that publicly, but what I can say is that it was high for a seed round (!). This was primarily driven off the fact that interest rate swaps are a core pillar of functioning financial systems (there’s c.$1,000tn of notional exchanged each year in TradFi IRS). So if we’re successful in building out an interest rate swap AMM and helping DeFi displace TradFi, then the Voltz “slice” of that new system has the potential to be one of the largest and most important of all the defi protocols. Or in simpler terms, a good outcome for Voltz could easily be a valuation of c.$100bn. At this point the 1% is really meaningful, before including the non-financial benefits.

Let me know if you have additional questions! We’re also going to be on the Uniswap discord community call this Wednesday at 16:00 EST, so can answer follow-up questions there too if you’re able to join!

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Following up on the last conversation, this is Other Internet and Avantgarde Finance’s proposal for how a future Uniswap-Voltz relationship might work.

Authors: Toby Shorin (tobyshorin), Bryan Lehrer (bryanlehrer), Erin Koen (eek637)

What we’re solving for

We’re overall in support of Voltz’s proposal to license Uniswap V3 codebase. However, should the proposal pass, we want to ensure there are proper governance structures in place to ensure the success of the relationship between these two communities.

In proposing such a framework, our goal is to ensure that the governance rights that come along with the token grant are 1) in fact used and 2) that their use does not come at a cost to Uniswap’s own governance.

Instances of the first concern are obvious and widespread. Voter fatigue and lack of governance participation on important issues is a common criticism of tokenholder voting. When those issues are related to a different protocol altogether, it’s reasonable to expect participation to drop even further, and we’ve seen instances such as Index Coop’s metagovernance where this is the case. They have taken similar steps to what we are proposing here, and have empowered a small group to vote on issues when token holders do not reach a quorum.

The second concern is a bit less common but potentially more destructive. We have found that when a significant amount of Project A token and voting power is granted from to Project B, it is costly to use regular tokenholder voting to determine actions taken with those tokens. For example, in May 2021, a significant portion of the AKITA token supply was donated to the brand new GitcoinDAO treasury by Vitalik. Without a plan for how to handle this, the entire Gitcoin steward community got embroiled in discussion over how to handle the tokens, hijacking the governance process and leading to steward churn.

We suggest that Voltz and Uniswap will have a more successful relationship if Voltz voting power is delegated to a small committee of Uniswap community members.

Proposed delegation committee

  • Three individuals from the Unsiwap community are selected to represent Uniswap’s interests in Voltz governance votes. Let’s call this the Uniswap Voltz Committee.
  • Committee members are selected through a process that includes 1) an open nomination process, 2) a brief interview to prevent sybil attacks, and 2) a snapshot to elect the three committee members.
  • The total amount of voting power in Voltz governance is delegated equally to each individual. In this format each individual has 1/3 of voting power. (We are opting not to use a multisig for flexibility).
  • The Uniswap Voltz Committee is a paid position, compensated with $1,200 per person, per quarter, denominated in equal parts UNI and Voltz tokens. Members of the committee will hold one-year terms that must be renewed by Uniswap governance annually, beginning on the date of delegation.
  • Full responsibility for voting is delegated from the community to the Committee. To facilitate transparency in representation, a new thread on the Uniswap governance form should be created for the Committee to post updates when it conducts a vote. It may also solicit feedback from the community using that thread at its own discretion.

We believe this proposal will ensure the Uniswap community’s interests in Voltz are represented, while also de-risking the token allocation from Voltz’s perspective to ensure that there is a party responsible for the significant amount of voting power it is offering to Uniswap. Furthermore we believe that this framework can be reused for similar types of partnerships in the future where a licensing deal is struck in exchange for a percentage of the licensee’s governance tokens.

Next steps

We’d like to get feedback on this proposal in the thread below.

Voltz governance is not live yet, so we intend to put together a proper temperature check for this proposal closer to the date of Voltz’s token launch that will incorporate any feedback collected here.

Provided we sense support for this proposal, we’ll put forward a new comment or post with self-nomination guidelines for being part of the committee, and start a search process for members. People who are knowledgeable about tokenomics, have a broad understanding of the DeFi landscape and tokenized financial products, and prior governance experience (especially in Uniswap!) will be very well qualified. This will be a first-of-its kind committee, so it will be a great opportunity to gain governance experience and participate in a meaningful community partnership.

Looking forward to feedback on this.

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I am in favor of having a framework like the one you have proposed to get the full scope of how this allocation will function beyond just approving it to the treasury, and also making sure that the license is used appropriately.

A few questions of clarity on your proposal:

  • The total amount of voting power in Voltz governance is delegated equally to each individual. In this format each individual has 1/3 of voting power. (We are opting not to use a multisig for flexibility).

Can you expand a bit more on technicals of how this would work? The Voltz tokens would be in the Uniswap treasury; so would the tokens have to be split into three address within the treasury in order for the community to set each delegate to each committee member? The Voltz allocation would not be leaving the treasury to any committee member controlled address correct?

  • The Uniswap Voltz Committee is a paid position, compensated with $1,200 per person, per quarter, denominated in equal parts UNI and Voltz tokens. Members of the committee will hold one-year terms that must be renewed by Uniswap governance annually, beginning on the date of delegation.

Are the Voltz coming out of the 1% allocated to Uniswap treasury or is this payed by Voltz treasury to the comittee members? Since Uniswap is paying the committee from its treasury, should Voltz also pay this fee outside of the 1% allocation?

Voltz governance is not live yet, so we intend to put together a proper temperature check for this proposal closer to the date of Voltz’s token launch that will incorporate any feedback collected here.

Is this a Proposal Merge? Would this new temperature check be a combination of the “Other Internet and Avantgarde” proposal outline which sets a precident for future license grants and Voltz (i.e. Other Internet/Avantgarde: Voltz V3 Additional Use Grant Proposal)? A merger of two proposals into one to then be put up for an eventual vote?

Glad to hear you’re in favor! And happy to clarify, though everything is up for discussion:

  • Presuming that Voltz governance is similar to those systems we’ve seen so far, the tokens would never leave the Uniswap treasury and instead their voting power would be delegated in equal portions to each delegate’s wallet. There’s a lot of precedent for this type of governance delegation (e.g. the University blockchain clubs)
  • Re compensation, tokens would come out of Uniswap treasury, not Voltz
  • No, this is not a proposal merge. Based on the Community Call yesterday, I think the Voltz proposal to license the code will move to a snapshot at some point next week. We’ve posted the above in this thread to provide context, and to help form an answer to a question we were having ourselves.
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Hi @eek637 @tobyshorin, we really like the suggestions here! From a Voltz perspective we’d be supportive of this proposal - we’d be keen to ensure the Uni-Voltz relationship is successful and the Uniswap community has an effective mechanism to vote in Voltz governance decisions. Though we appreciate the mechanism used is ultimately a Uniswap governance decision. We’d also be supportive of this taking place in the build up to the Voltz Token Generation Event - though again appreciate this is a decision for the Uni community.

To respond to your comment about the Temperature Check snapshot on our Additional Use Grant proposal. It was great to talk to the Uniswap community on Wednesday - off the back of that conversation we’ll be looking to start the Temperature Check next week.

We’ve also reached out to the Uniswap Labs team to clarify their interpretation of the language that will need to be used at v3-core-license-grants.uniswap.eth. In the event there is a successful Temperature Check vote, we (Voltz) will suggest this language to Uniswap governance in advance of the Consensus Check.

Any comments or thoughts in the meantime, we’d look forward to responding to. Otherwise, we’re excited to make this happen!

:zap::unicorn:

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We have now kicked off the Temperature Check on Snapshot. We’re excited to see how the community votes. And we’re exciting about the prospect of making this happen & setting a precedent for DeFi!

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It’s definitely a good proposal

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