Funding proposal for Swiss Stake AG, the company building Curve

Proposals
#1

Preamble

Since the inception of the Curve AMM smart contracts at the start of 2020 and the creation of the Curve DAO in August 2020 (together “Curve”), Curve has established itself as a cornerstone of DeFi.

Curve has been able to attract top contributors for every area of its work and has grown into a living community with a diverse ecosystem.

Today numerous projects built on the protocol for the benefit of Curve and a wide distribution of CRV tokens results in a highly decentralized ownership. Curve DAO acts until now as a parametric DAO, for funding it has only been used twice, to fund the grants council.

We are aware that this proposal is a cultural shift and are seeking broad support to underpin its legitimacy.

General Information / Background

This proposal requests a grant for software research and development work as well as related tasks for the benefit of Curve as outlined within this proposal. The grant will be for one year, unused funds will be rolled over to the next year.

Until this point in time, Swiss Stake AG as the initial developer of the Curve software repositories has used the CRV allocation received in August 2020 as the primary funding for further development and research work. As the company wants to retain existing and attract new critical talent & stakeholders, the company seeks funding to ensure, respectively establish long term support for Curve. Currently 25+ persons/entities are directly or indirectly engaged by Swiss Stake AG for development and research work related to Curve.

The company does not have other substantial revenue sources and hence is dependent on the community to vote and ensure that Swiss Stake AG can continue contributions to Curve for years to come. It is the paramount goal of Swiss Stake AG to keep researching, building and further contributing to Curve.

Grant Proposal

3.1 Project Description

To directly or indirectly by engaging third parties (“Project Description”):

  • develop and promote Curve, respectively the Curve technology and software repositories.
  • coordinate with and engage third parties for code quality and integration safety (Audits, Security Research). Based on past experience within the Curve ecosystem, approx. 35% of the overall costs related to the development of new software components for the repositories is being used for such checks while the rest is the actual software development cost.
  • develop and promote software development kits (SDKs) and other software tools to interact with smart contracts for Curve
  • build and support the growth of the Curve ecosystem
  • create educational resources and organize events related to Curve
  • create other resources, software, or other material to support the adoption of the Curve technology / Curve ecosystem

3.2 Grant Amount

Based on past experience with similar development and research tasks within the Curve ecosystem, Swiss Stake AG requests 21’000’000 CRV token vested over one year to the company multisig (“Grant Amount”). We request this from the Community Fund, currently holding 47’545’144 CRV and need the support from Curve DAO token holders.

We did consult with some stakeholders and did our best to integrate the feedback we collected over the last few weeks.

Signing rights of the multisig reflect the signing rights within Swiss Stake AG as displayed in the commercial registry with one additional contingency signer defined by Swiss Stake AG.

3.3 Grant Conditions

  • Swiss Stake AG shall use the Grant Amount received in good faith exclusively for the Project Description. Any other use without the prior consent by the Curve DAO is prohibited. Unused funds will be rolled over to the next year and spent in line with the Project Description. If any part of the Grant Amount cannot be used in accordance with the Project Description, it shall be returned to the Curve DAO.

  • Swiss Stake AG may at its sole discretion decide to stake the CRVs received as part of the Grant Amount in liquid wrappers to generate additional yield. This yield also will be used exclusively for the Project Description.

  • Swiss Stake AG shall release any and all intellectual property consisting of mathematical codes, software programs, routines, and other functions that control the functioning and operation of a computer’s hardware that results from the use of the Grant Amount (“Software”) under an open-source license compatible with the Curve software repositories.

  • The Grant Amount includes Swiss Value Added Tax (“VAT”) (if applicable). The Grant Amount may be used for the payment of income tax, capital tax, VAT and tax at source or withholding tax, and any other taxes of Swiss Stake AG, if such taxes apply and are related to the Grant Amount or the activities mentioned in the Project Description.

  • Swiss Stake AG commits to produce bi-annual reports on the spending of the Grant Amount. It will list expenses in a summarized form and inform about the ongoing initiatives for which the funds are used. The report will be published in written form on the governance forum.

  • Swiss Stake AG shall inform the Curve DAO of any event or change in circumstances that could reasonably affect its ability to perform any of the grant conditions.

  • Swiss Stake AG does not guarantee any success related to its activities under the Project Description and all liabilities except for gross negligence, intent and fraud should be excluded.

  • The grant proposal as well as the subsequent grant shall in all respects be governed by and construed in accordance with substantive laws of Switzerland (to the exclusion of the Vienna Convention on the Contracts of the Sale of Goods). Any dispute arising out of or in connection with the grant proposal as well as the subsequent grant shall exclusively be referred to the courts competent for the city of Zug, Switzerland.

Proposal Voting Process

After feedback and adjustments by the Curve community, Swiss Stake AG will create the on-chain voting proposal with the request for 21’000’000 CRV running for 7 days.

If the quorum of 30% is reached and the majority of the votes is yes, the vote is enacted to vest 21’000’000 CRV over one year to Swiss Stake AG.

Update

What is the grant going to be spent on?

We plan on developing and delivering a series of revolutionary technical features to be added to the Curve project software repositories. This includes:

  • Technology which allows automatically scaling supply sinks for crvUSD such as staked crvUSD. This will also be made portable to other (even non-EVM) chains.

  • Code to enable more collaterals for crvUSD such as LP tokens of Curve pools. Curve benefits from this enhanced capital efficiency, allowing liquidity to be utilized more effectively.

  • Code for two-way lending markets (e.g. markets where one can borrow against collateral which can be borrowed itself).

  • Code for multi-market semi-isolated lending.

  • Enabling cryptoswap algorithm to be well integrated with crvUSD to allow for much more efficient forex pools. That also needs provision of the technical basis for non-USD variants of crvUSD.

  • Enabling DAO cross-chain functionality (starting with boosts for pools deployed on non-Ethereum chains).

  • We are planning on improving and transforming the UI/UX interface and experience, all code will be open source.

  • Reworking governance site (e.g. dao.curve.fi), all code will be open source.

Optimized use of grants

We understand the importance of developing a sustainable business model that minimizes or ideally eliminates the need for future grant requests. Over the next 12 months, we will be actively working on this and will keep the community informed of our progress.

Furthermore, we are dedicated to use and spend the grant in a responsible and sustainable manner. Swiss Stake AG will stake the CRV received as part of the grant (and which are not immediately needed) with major liquid locker projects (such as e.g. Convex, StakeDAO, Yearn).

We acknowledge that continued funding is not guaranteed, and we remain committed to demonstrating our value alongside other organizations working toward similar goals.

Community Updates & Reporting

Swiss Stake AG will allocate the entire grant strictly according to the purposes outlined here. If any funds remain unspent within the next 12 months, these residual amounts will be rolled over into the next period.

We are committed to providing the community with regular updates on the status and progress of all technical features. Additionally, we will track and report the expenditure of funds across the following categories: 1) Security Audits, 2) Front-End Development, 3) Software Development, 4) Infrastructure, 5) Community & Tech Support, and 6) Research & Analytics. These reports will be made available to the community on a quarterly basis through the governance forum.

Vesting to a smart contract

Over one year, CRV tokens will be vested to a smart contract, from which Swiss Stake AG multisig can withdraw the CRV. In a dispute, Curve DAO can disable withdrawal for the multisig, then either re-enable it or send the CRV token back to the community funds.

Smart contract is located here.

6 Likes
#2

In the past, the core team has made significant contributions; it is essential for the ecosystem to maintain, build on and further develop this work. The following is a brief outline of the cornerstones accomplished so far.

Major accomplishments since inception:

  • Invented stable swap
  • Launched curve.fi website with stable swap functionality
  • Developed DAO system (including veCRV)
  • Cross chain expansion of DAO governance and swaps
  • Developed fee distribution mechanics (with 3crv)
  • Invented meta pools
  • Crypto swap combines concentrated and non-concentrated liquidity
  • Invented LLAMMA - soft liquidations mechanism
  • Refactured UI
  • Launched crvUSD with LLAMMA (fees from CRVUSD now account for more than half of the veCRV earnings)
  • Optimized cryptopools using advanced math to use 50% less gas
  • Refactored stableswap pools
  • Launched LLAMAlend (lend.curve.fi) on Ethereum Mainnet and L2
  • Switched CRVUSD for fee distribution
  • Refactored fee distribution
4 Likes
#3

Thanks, but this is half of the community funds. What happens in 2 years if they need more funding ?

#4

We obviously need to work on making everything sustainable. The biggest one is fee generation by the system, which needs to scale crvUSD supply.

This is what makes sense to be working on first!

6 Likes
#5

First of all, a lot of good points, and I think Swiss Stake’s contributions are immeasurable and should continue to be funded, including in this grant. I do want to take a moment to consider Uniswap Fnd + Uniswap Lab’s business model though and compare and contrast here, because I think it would be useful.

Uniswap as it stands imo is pivoting to a dual equity world, where Uniswap v4 is a a protocol designed to service boutique Market Makers, letting them build their own unique version of the protocol to trade on, then through UniswapX these pools can be aggregated into one system, and served to customers via the wallet and UI, both of which Uniswap Labs will take a cut on. In this sense the Uniswap Protocol (v4 and hooks specifically) is way for MMs to sell their liquidity, and UniswapX matches this with the distribution of Uniswap Labs who simply just take a cut for providing orderflow.

What direction do you see Curve taking for monetization? Do you see a world where CRV fee share is a sustainable source of funding, or do you eventually think dual equity / monetization schemes will be necessary like Uniswap? And at current supply and holdings of CRV, do you think it will ever be reasonable given APRs for Stake Swiss to be fully funded by CRV staking rewards or similar?

2 Likes
#6

I totally understand the need, and the Swiss Stake AG deserves it!

However, it would be amazing if you could share a product/strategy roadmap + cost breakdown like Aave does. More transparency is always appreciated!

arfc-aave-funding-update/15194

3 Likes
#7

I think, the first step could be to stake CRV at one or several wrappers (like cvxCRV) to earn fees. We need to make crvUSD autoscale (now it doesn’t) by having staked crvUSD, for example, and sharing the sweet borrow rate with people who want to earn it. That’d make the system scale and make crvUSD producing much more fees.

Would be nice to take it to the level where fees earned would be enough to operate forever. Not UI fees, but some of protocol fees which can get accessed by those same CRV.

3 Likes
#8

Without seeing a clear enough roadmap and detailed fund expenditure, I will use 30 million+ CRV to vote against it.

22 million CRV is needed per year, which is a huge amount of money. With 25 employees, the average annual salary of one employee is about 300,000 US dollars, which is unimaginable.

Curve is currently a stable protocol. If there is no new roadmap, I think 2 million CRV expenditure/year is good.

1 Like
#9

There is a lot to develop. Having the protocol static would be deadly.

What needs to be done is:

  • Scaling crvUSD;
  • Foreign exchange markets much (few developents to take their efficiency on the next level);
  • Leverage products based on crvUSD.

These are all excellent things which can be made (and/or in progress).

As for 300k US / month - you are totally ignoring security audits which eat probably no less than devs!

2 Likes
#10

I will not be voting for this proposal, as currently written.

I believe that the core team makes valuable contributions to Curve, and that funding of further development is a valid use of the community fund; however, there needs to be control and accountability on how these funds are spent.

As written, this proposal hands over 21mil CRV (vested over one year) to an ambiguous individual or group of people, with no control on how it is spent - just an obligation to produce summarized bi-annual reports after the fact. This is unacceptable, and disrespectful to veCRV holders.

I will vote “yes” to a modified proposal that clearly defines the roadmap for the spending of these community fund tokens, and a progressive release of the tokens upon completion of goals.

Being honest, as written, this proposal really disappoints me. No suprise how it’s currently being recieved by the community.

4 Likes
#11

As much as I wanted to write it as a plan, laywers gave a big pushback on describing any future plans in the proposal. That being said, I would ask them if this can formulated differently so that the proposal includes what the funds could go for.

As for accountability, DAO does have a control over whether to pause the vesting or not, if the vote is created pausable.

3 Likes
#12

Reviewing the AAVE proposal cited in an earlier comment, they don’t seem to have the same convenient “lawyers said we can’t do it” excuse for the appropriate level of transparent in their funding proposal.

Read the first comment in that AAVE proposal:

“This is what treasury management is about. This ARFC is transparent with all costs, holdings and actions need to be done to pay for everything and still be solvent and have a great runway for the DAO.”

That encapsulates everything that this proposal is lacking.

2 Likes
#13

I will definitely try to convince lawyers to make it possible to say more than what is in the description. Because to me personally it doesn’t make sense to not write in a grant proposal what it is going for

2 Likes
#14

Happy to hear you say that. Would have been better to see this diligence take place before the proposal was released. As written, i consider this to be a “bad look” to the rest of the market.

Thanks for your replies, and this is all i will comment on the proposal as currently written.

#15

Dear @michwill
Thanks for your work and your commitment for Curve, you have done such great job !!
Without your work, Curve won’t be a such sucessfull project.

However if you want to establish Curve as a DAO, you should
1 propose a roadmap, milestones and cost associated with it
2 propose a Curve DAO governance process

1 Curve is evolving because you ask for funding.
Dev must be paid, however a clear vision of the cost and of the usage of funds should be provided.

2 I think that the startup DAO should evolve in a more decentralized DAO.

For Governance process, I think that Curve should insprire from Aave

Actually there is a dev roadmap, which is unknown from the DAO member.

There are several improvement proposal, that are not studied or answered.

Moreover some decision from the team might affect the DAO, and this decisions should be submited to the DAO (if people want that strategic decision taken by the DAO and voted)

e.g. friendly fork such has

which fork CurvecrvUSD on L2

Bitodrome on Bitcoin L2, prevent the launch of Curve on Bitcoin L2

This "friendly " fork remove fees from Curve DAO, with no business or token distrubition to veCRV holder.

Please don’t take it to personnally but as a proposal to improve the DAO, if you want full support from your community, you liquidity provider, your users.

Regards

3 Likes
#16

It is hard to accept that millions of dollars are needed for code audits. Can’t you control costs in this area? With a team of more than 20 people and millions of dollars in code audits per year, it is necessary to tell the community what new features Curve will have and how much revenue and expectations it can bring.

1 Like
#17

I don’t accept this either. I will be voting NO. We need a clear roadmap, we need to know how much it goes where and why. Also, I strongly disagree with staking on other protocols. It’ll just take rewards away from the people who stake.

Another point is the community found itself. Is Swiss Stake going to pay with it’s own founds and aid users if there’s going to be another hack? Those founds are there with a reason. To aid the community! That’s why it’s called Community Found and not Development Found.

Last but not least, like @Cryptoinvest mentioned, I don’t understand the crvUSD fork on L2. That should be generating fees for veCRV holders not for a different project. I also disliked fraxlend as collateral from the start without a vote (To this day I believe that’s what ruined crvUSD opening). I know that “deals” like these probably provided founds for the developers (on the background) and we must know if this grant will stop that in the future.

Also, I haven’t seen development like it was promised and that’s also going to be an issues. No UI to create new markets on Lammalend, no LP tokens as collateral to mint new crvUSD, etc.

2 Likes
#18

Audits do cost millions of dollars, yes! I personally paid for some audits for Vyper, too, so in total it does come to those numbers (e.g. few hundred K per audit, multiple audits per year). And they are critically needed with anything new

3 Likes
#19

Deployments of new projects are not something which DAO does. They are given to the DAO, and after that DAO does whatever it wants with it.

DAO controls only what is on-chain. This includes CRV funds.

However, I think that maybe not roadmap, but at least things which grant goes on do make sense. Trying to convince lawyers: it’s ridiculous when grant proposal cannot list those

5 Likes
#20

Hi Curve Team,

Thank you for the considerable contribution to DeFi. The protocol is a core pillar of the ecosystem, and needless to say, we are big fans.

I’m one of the members of the CVX5 team, and we’ve donated time to helping protocols onboard (like PYUSD), as well help generate a light onboarding manual to navigate the complexities of Curve. In short, we are committed to the success of Curve and its ecosystem.

Summary:

  • 1 year funding for Swiss Stake AG, company building Curve
  • Request: 21,000,000 CRV [at market rate today of $.30, this $6,300,000 annual burn]

Metrics: (Token Terminal)

  • Annualized Revenue: ~$40M
    • Trading Fees
    • crvUSD Fees
  • Burn / Revenue = 15.75%
    • An avg SaaS company’s operating expense may be about 60% of revenue

Funding for:

  • Support ongoing development and operational costs associated with building and maintaining the Curve platform.
  • Software development, infrastructure costs, and other operational expenses necessary for the platform’s growth and maintenance.
  • Audits

Arguments against the proposal:

  1. Lack of Specificity
  2. Undefined Use of Funds
  3. Missing Performance Metrics
  4. Duration is Unclear

As this is a proposal, it would be beneficial to provide guidance and clarity on what’s missing

  • *Detailed Financial Breakdown: A comprehensive financial breakdown of the requested funds, including exact amounts in both CRV tokens and USD, would provide clarity and help assess the proposal’s feasibility.

  • *Specific Allocation of Funds: Detailed information on how the funds will be allocated across different operational areas would improve transparency and accountability.

  • *Clear Performance Metrics: Establishing specific performance metrics or milestones would allow investors to track progress and evaluate the success of the funded initiatives. Ie; what are growth opportunities and initiatives? How does Curve generate more fees? How does it get there?

  • *Defined Timeline: A clear timeline for the use of funds and expected outcomes would help investors understand the proposal’s long-term viability and impact.

Sustainability

The request for funding requests roughly ~50% of the community fund. This is an extreme concern around sustainability for the ecosystem and growth initiatives overall.

There isn’t a clear answer on what targets for fee generation for crvUSD, what growth metrics are and a path for sustainability.

Conclusion

Curve Finance is a core pillar of the ecosystem, and the market has finally concluded significant chapter in FUD. Without operational clarity on many of the items listed above, kicking the can down the road doesn’t seem plausible.

I hope the Curve team, specifically the Operational Leads, iterates on the funding request. One beneficial change would be the following:

  • Break the request into quarterly vs annual, and attach deliverables
  • Price in crvUSD (stable) vs. CRV (volatile asset) - as market conditions improve, the funding would be for less CRV which may positively impact the community fund level overall. Obviously, the opposite is true in negative conditions.

Bonus: If it’s useful, we would love to contribute and help with clarity on drafting the funding request.

4 Likes