Temperature Check - Funding a Political Defense of DeFi

I work in crypto policy in the US and this post is 100 on point. The question is what future for defi we want: do we want to have active governance over protocols that can be changed, upgraded, and secured over time or for Defi to be effectively prohibited (whatever that means in practice, it wouldn’t be good)? Regulatory proposals like the Financial Action Task Force’s draft updated guidance (intended to be finalized next month) for crypto essentially claims that there is always an intermediary where a financial service is offered. The scrutiny of DeFi is intense in jurisdictions all over the world, and it’s only going to get more serious as defi gains adoption. The traditional financial services industry has always leveraged political engagement to secure advantages, and they will use that leverage against defi when it becomes a threat. Re the above comments, policy is always a “tragedy of the commons” situation. If UNI doesn’t make the first leap, then which project will? If anything, UNI moving first will pressure other communities to act with us, and we don’t have time to wait for them rn given the regulatory action we’re facing.

13 Likes

Generally agree with these sentiments. I would like to see:

  • firm commitments from legal and policy experts including a strong executive
  • an initial project roadmap rather than just a promise to allocate funds across other organizations
  • a rationale for pursuing this unilaterally instead of together with a consortium of DeFi protocols, or a proposal for how to avoid the free rider problem.
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I think 1M-1,5M UNI is an exorbitant price for the type of your proposal. Knock a zero off and it would sound more reasonable. Maybe do a USD amount just like the Uniswap Grant Proposal did and it will be more swallowable. Good idea, but Im NOT going to vote for this with the format proposed

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A great starting point. Sooner than later, Defi is going to be in the mainstream in a major way. As indicated, Defi poses more threat to the current global financial system than anything else in crypto. And the global financial system literally intertwines with the global political system.

While it is difficult to attack Defi from a technological perspective, it can easily be done through a political angle. This proposal provides a framework to develop strategies to counter this. It affords the Defi movement to be proactive instead of reactive.

Am pretty sure we would have had bitcoin/crypto ETFs in the US and other parts of the world easily if these kinds of initiatives were taken earlier on.

This is a step forward in the right direction. I look forward to seeing how this develops.

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People should remove their UNI vote delegation from this random Harvard organization. This proposal with this huge price tag is a sign that they are not trying to make an improvement but enrich themselves with a BS Harvard law brand. They should not be trusted with your UNI vote delegation.

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Uniswap needs this for two reasons:

  1. Regulators/Policymakers pose an existential threat to Uniswap. They will turn their attention to DEXs soon, and when they do, we need to make sure they’re educated as to the benefits, so they approach regulation with an open mind. Lobbying government on novel and complex subjects like DEXs and DAOs, particularly subjects tied to all the baggage of crypto, will be very difficult and time consuming. I’m happy to see the community is taking this seriously and I expect other DAOs will follow Uniswap’s lead.

  2. The lack of legal and operational clarity significantly slows Uniswap’s development and we need to address it as soon as possible. DAOs and DEXs are cutting-edge organizational structures and there is very limited precedent to help the community understand how to operate, particularly when it comes to legal compliance. Lawyers don’t have enough direction from policymakers/regulators to provide crypto companies with guidance on how to be absolutely compliant. We need folks working closely with governments around the world to push for clarity that allows Uniswap and its community to continue building without all the legal friction we currently encounter.

The price of not doing anything will be much higher. Think of what happened last week and how much any negative signal from the US or Chinese government can impact progress in crypto.

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5% of what they asked should be fine. They need to prove this initiative can add value to the community not just a way for them to hustle money.

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I would say 5% of what they proposed to show a proof of concept. Too much money at the beginning is never good.

1 Like

I support this proposal. Taxes with uniswap and DEX ecosystem is very confusing and intimidating. We need an group to help regulators create clarity on liquidity pooling, yield farming, cypto to crypto transactions and its associated tax implications. Tax reform for the entire blockchain system will benefit both parties: government, and individual.

I hope in the future this technology will allow a more automated and stress free way of paying taxes for all.

1 Like

Im only voting for this if the goal is no regulation at all. Defi wont need to be regulated for 10 years. If you regulate it now, even a little, youll kill a lot of innovation. In fact, governments stand to lose a lot of tax money by regulating early. Just like the early internet was the wild west, so Defi should be. This proposition looks too broad to me, scope is too wide. Encourage others to vote it down until more details are defined.

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So HarvardLawBFI starts a proposal to fund a pro-DeFi lobbyist group? Hmmm, sound suspicious to me. Who would this money go to? I call conflict of interest on this one, and am AGAINST this move.

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This proposal is dead in the water.

It might have gotten 10.48M UNI voting yes while only 4.77M has voted no (as of writing), but 10.45M of those votes are from @HarvardLawBFI themselves!

There is clearly no real community support in favor of this proposal, and while there’s 2 days left for the vote, I doubt the composition of people voting yes will turn around significantly.

While it might fulfill the requirements to progress to a consensus check, it won’t make it. @HarvardLawBFI is better off going back to the drawing board with the feedback already given.

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I’m a huge fan of the direction of protocols using their resources to benefit their real world defensibility, in addition to their on-chain product competetiveness & growth. This is a direction that I hope Uniswap (and many more DeFi protocols) grow into over time.

However, this proposal lacks crucial details that are necessary to prevent the Uniswap treasury from becomming a slush fund; who, what, where, why, how are all questions that need to be drilled into before committing tens of millions of dollars of resources.

If real-world operating experience is required to answer those questions, a pilot program (50k UNI?) might be more reasonable.

While I plan to signal against this temperature check on Snapshot, I believe the philosophy of this proposal is strong, and hope to see it mature.

26 Likes

This is honestly a dangerous proposal tapping into the insecurity of DeFi users in some countries about potential regulations –which are often necessary, and sometimes good, sometimes bad.

Ignoring for a second the arbitrary (and very high) amount of $ proposed in the poll, the fact that the funds of lobbying organisation would be traced back directly to our protocol is alarming to say the least. We are basically shouting as loud as we can to get regulators attention that way, and at the same time attracting political researchers and civil society groups that tend to raise flags about money used to nudge the democratic process. A nudging often driven by financial interests and a disregard for fundamental rights or issues affecting a small number of users.

Let’s also not forget that lobbying efforts are often seen under a bad light by the general public. Google is the biggest lobbying fund in DC with ~$22m in 2018. Followed by other big tech. Same in the European Union. And as someone who lives in the EU I can tell you how much these companies are hated by people for trying to influence Brussels.

But let me constructive. What I would fund instead:

  1. Educational content on regulations around the globe. Map out countries’ regulatory landscape for users to be able to get summarised knowledge about their own jurisdictions’ laws on crypto/DeFi, or lack thereof

  2. Content on tax obligations.

  3. Content on the implications of the decentralisation measures in place for Uniswap. E.g resistance to different levels of state or corporate censorship, if the happen.

  4. ^^ All that is helpful political education for DeFi users.

And I believe it is much more needed than trying to shove narratives down the throat of regulators.

Wanna raise money? Go to Gictoin, show what you’ve done and what you’ve built already for crypto. Here you need stuff about Uniswap. It can be non-technical; political and educational.

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Agree with all that much more detail needs to be spelled out before resources are committed. There needs to be accountability over any funds allocated. I hear you @Momonosukke re lobbying… it doesn’t have the best rep but it’s how industries’ concerns and positions are conveyed to government. I don’t think we risk bringing any additional scrutiny on the protocol that doesn’t already exist. Regulators and policymakers definitely know about uniswap; we’re not “flying under the radar” anymore. The “final boss” is gearing up to fight us, and sitting back (while tradfi likely lobbies against defi) isn’t going to be effective. I think we want to avoid thinking about “resistance to different levels of state or corporate censorship” in the first place. To your point on google’s spending (and @Buckerino @jonsnow), this is precisely why we need to go big… tradfi contributed $1.9 billion to us politicians last cycle (https://www.opensecrets.org/industries/) and $542 million on lobbyists last year alone (https://www.opensecrets.org/federal-lobbying/ranked-sectors?cycle=2020).

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Agreed with everything that’s already been said above - this is philosophically the right direction for where protocols like UNI should be heading. We should be leveraging these resources to help ensure the activate participation in DeFi DAOs and dgov members are protected irl, so I’m happy to signal support on snapshot.

However, this proposal in it’s current state lacks any sort of implementation details and it’s unclear who & how these funds will be used. Until this happens, I will not support the proposal moving forward.

Relatedly, but not a priority, while the treasury is significant, DeFi protection would probably be better served as a coalition of treasuries supporting a superstar legal roster rather than just UNI footing the bill to still amorphous org.

My hope is that once the snapshot passes, we will get more information but in the future, I hope this sets the precedent that more implementation details are provided upfront so we can have functional discourse before heading into a snapshot, then work out the more granular details later heading into a formal proposal.

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I agree that the proposal lacks critical detail, but plan to signal “Yes” for the Snapshot vote, as I am directionally aligned with the initiative and stated goals of the proposal. Eager to see it mature, with critical details filled in, before supporting a formal governance vote.

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Thank you, this is the reaction we were hoping for. Looking forward to working out critical details, would love for your input.

Thanks for your feedback. Here is what we can say at this point in time:

  • Our plan is to send the grant to a 501(c)(4) with an independent, well-informed board who will make ultimate financial decisions. We have received some level of interest/commitment from several qualified individuals who will be made public if this passes the snapshot.
  • A project roadmap is important to us as well, but instead of organizing all the details ourselves we wanted to first incorporate more input from the community. That is what this snapshot period was meant to foster, and we have been taking careful note of common concerns and suggestions. The roadmap will be better defined in the next governance step.
  • Ultimately we anticipate other DeFi protocols will join our efforts. However there is a significant first-mover advantage if Uniswap doesn’t wait–it would establish Uniswap as a thought leader and the most forward-thinking DeFi platform in an otherwise very competitive space.
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Look, I do think the idea itself is a great one and I also do agree that the idea of going big has its merit, but we are just not there yet. Allocating such a huge sum of UNI could have far reaching consequences. The market for UNI is relatively still illiquid and throwing such huge sums at it would have a profound impact on the price. All of a sudden, we could find ourselves seeing that the “lobby allocation” would cost far more than we had anticipated. What good is it to plow through 30M worth of tokens to devalue the rest of them by a huge magnitude? Then, the impact would be truly more than 30M, it would be counted in billions and I do not think the token is ready to handle such things…not at the current market valuation at least. The opportunity cost is too huge to consider. If UNI has a market cap 10x the current size and is more liquid, we can talk about allocating 1M-1,5M of UNI for lobbying. Until then, a significantly smaller amount will have to do. Sorry

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