Funding proposal for Swiss Stake AG, the company building Curve

Proposals
#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
#21

We, too, pay for a lot of audits and can second that audits do indeed cost quite a bit. Can easily be in millions for amount of code Swiss Stake AG is getting audited regularly.

1 Like
#22

I think, the first step could be to stake CRV at one or several wrappers (like cvxCRV) to earn fees

personally don’t think this makes the most sense here.

I recognize the usefulness of a wrapper in order to perform second order operations, but ~14.5% of CRV incentives are being used to support the price of Liquid Ve Tokens, and not sure if increasing those costs as a second order effect is helpful.

Perhaps directly selling CRV into these Bribes could be useful.
This would enable a period where other pools are able to capture more incentives, though “inflation” hits market the grant funds are already exposed to hitting market.

The captured bribes could be rolled into price support pools such as TriCRV at first, but maybe with the CRV component replaced by a pool of “restaked” Liquid veCRV wrappers that can capture staked revenue to empower the pool while adding CRV price support and generating revenue.

It also enables Swiss Stake AG to be less dependent on CRV price to support operations going forward.

#23

If this was all locked as veCRV or an autocompounding liquid locker what sort of fees or APY would be needed to sustainably fund development into the future?

#24

The list of innovations and novel mechanisms from the Swiss Stake cohort quite literally shaped defi as we know it.

It is necessary to support such important work.

Although, during this time, there have also been many spectacular failures of business decisions, an inability to work with large shareholders, and capital and reputational destruction from the liquidation event inflicted on every team and protocol that calls Curve home.

Many of these moments were wholly avoidable and self-inflicted.

When a version of this proposal passes, we hope that a more well-rounded entity is formed that is able to give Mich and his team the space to focus, innovate and iterate and continue to push defi forward (out of the tidal pool and into the ocean) — while, at the same time, letting a cohort of business-minded people grow the protocol, the talent pool, onboard new users and use-cases, and collaborate with major stakeholders.

3 Likes
#25

It’s a good draft (cf. @boz_m) of what’s missing in your proposal @michwill.

I would stress on how important the “Performance Metrics” are. This should be mandatory to any proposal requiring funding. It levels up the proposal in many ways :

  1. it gives an objective framework for Curve to evaluate the work done
  2. it provides a clear playground for the community to digest the metrics & data. This usually fosters information (graphs, dashboard etc) that would capture the state of Curve business wise. These pictures are critical to get as the time goes by
  3. It makes possible to draw conclusion once the work is done. Once we get the understanding of what happened, it is easier to adjust and to iterate.
  4. it sets a track record for future proposal. The proposer gets credit but the proposal gets history too. This prevents making the same proposition at different time.
1 Like
#26

Two things to this and @boz_m:

Not sure as I understand your revenue section, or the implication, as you know curve quite well.

  • The annualized revenue flows to veCRV holders, not to swiss stake. While I don’t have financial overview, to my knowledge, swiss stake has not veCRV and not other CRV wrapper either. So swiss stake has no revenue from this. This is a flaw in the CRV tokenomics or token distribution. (At the creation this all has been new, curve invented ve tokenomics) No startup pays 100% revenue/dividend to stakeholders, most pay zero dividend and use all for growth.

  • The internal calculation for the annual burn rate, which a lower token price, it has a cushion. Nobody knows the future price, we want to avoid a situation where we have to ask again. If the price goes higher, swiss stake can lock up part of this over wrapper and create some cashflow income.

4 Likes
#27

I did calculate this:

If you assume 1 veCRV token has 0.10 revenue in in one year: the first year will give you, as its vesting: 1.05 $M USD, the second year 2.1 $M. While this is substantial, it’s not enough.

3 Likes
#28

Some reasons I’m personally not convinced that Curve should become a “proposal DAO” right now, I describe Curve DAO most of the time as “param DAO”, as we vote about params and upgrades.

  • We don’t have the legal structure for this. Most DAOs have a form of oversight entity, an foundation or association, in combination with a software AG. Voting right then represents a stake in this foundation and funds flow from oversight entity to the software AG.

  • This kind of change needs time, as it is a cultural change, for swiss stake and for the tokenholders of the DAO

  • While there are well working DAOs out there (a few only), most DAOs fail, other are DINOs. (DAOs in name only)

  • I consider Curve lindy, in the sense that curve ecosystem is working well (with some issues, as you name them), and why change a system who has been successful as this creates new risk.

  • While I like the permeability of people and ideas, which is a strong pro DAO argument and works well for many, part of the DAO idea is naive, in the sense, that this is not how companies, or even NGO work. Most contributors have close to zero interest in the politics and frictions governance creates, they want to do their work and be useful.

It’s not that Curve maybe should be more like a proposal DAO, but we have to be very careful in this process.

4 Likes
#29

I’d like to counter-propose that the vest be made instead to the Curve Grant Council multisig, which has been managing approval and distribution of Curve-related public goods funding since 2020. The council can pay Swiss Stake every quarter, accounting for CRV price volatility and subject to DAO review of Swiss Stake’s progress.

Since additional transparency is a point of contention, will Swiss Stake agree to publicly post a quarterly report that includes a summary of expenditure in the previous quarter and intended use of funds in the upcoming quarter as a prerequisite to approving its quarterly budget? There can be an on-chain text vote for the DAO to indicate its wish to terminate future payments, putting the Grant Council in the position of administrator of the DAO’s intentions rather than the decisionmaker.

The Curve Grant Council multisig is a 6/13 multisig consisting of the following Curve team and community members:

  • Mimaklas
  • C2tP
  • Phillipe
  • Ben Hauser
  • michwill
  • Charlie
  • mrblock
  • Kendrick
  • Julien Bouteloup
  • Amadeo
  • Julien Thevenard
  • Q
  • Wormhole

While there are employees of Swiss Stake on this multisig, the Grant Council has a long history of representing and respecting the interests of the DAO. In an administrative role, it is the entity with the longest-standing reputation that can be entrusted to faithfully carry out the DAO’s wishes for this purpose.

5 Likes
#30

I think this would help with the implementation part of the proposal. But the driver on core issues in the proposals V1 is lack of clarity on overall plan, deliverables and itemized things for the plan.

Once that’s resolved, implementation and continuation, this on paper seems reasonable. The only counter-argument on this (just playing bad cop here) is that we dont want to be bogged down by bureaucracy.

Not saying it does, but also dont want to over-engineer these things. If we’re going the actual DAO route, perhaps there’s a larger conversation to be had on the objectives, etc here (just thinking out loud here)

2 Likes
#31

Can we not give crv and give vecrv to him?
The income of the agreement determines their income

#32

Agree. In broad strokes, let’s focus on

  • Clearly defined deliverables, which I assume will be in an update shortly: x.com
  • Path to sustainability. What percentage of veCRV revenue to divert/etc in the most efficient manner? For example, we can take a portion from community fund while we transition.

Can address the rest afterwards.

#33

Example of budget for FRAX

1 Like
#34

At the beginning of this week, we published the draft grant request for Swiss Stake AG. We greatly appreciate the valuable feedback from the community. As a committed, reliable, and long-term contributor to the Curve project, we remain fully dedicated to developing advanced, first-class technology.

We take your feedback seriously and have addressed the most critical concerns raised by the community in this update. We are confident that this additional information will help you make an informed decision when voting. The proposal will be put to a vote later this week.

Once again, we deeply value your ongoing trust and support as we continue our work.

Thank you!

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.

9 Likes
#35

My 2 cents on this proposal.
I believe the proposal is reasonable.
The reflected net margin of Curve would be around 85% which is very healthy. It’s also a proposal which looks reasonable compared to what has been seen on other protocols (Maker for example iirc, but also many others with less revenue).
The “two-way lending market” in the roadmap got me bullish af ngl. Would be great if there could be multi-collateral also (like securing one loan with WBTC and WETH for example, instead of having to manage two loans).

In the past, the initial allocation of Mich was financing everything, but since this is over, we have to find a solution to maintain the development of the protocol.

At Stake DAO we went through a similar process with the StakeDAO Association based in Switzerland.
I think Annual grant is too scarce, and quarterly probably too frequent. We opted for half-yearly grants, and I can tell, time flies.
Also, what we did is to have a clear monthly reporting of the use of funds and progress report on the roadmap (you can see examples in Stake DAO’s governance forum, it can be very simple). Also, any unused funds end up being rolled over to the next period (deducted from the next grant). I think that if the grant is kind of in the same spirit, there would be no reason to go against it.

I will vote in favor of this proposal.

2 Likes
#36

If there are still unused funds in the next 12 months, these remaining amounts will be carried forward to the next period.

This will encourage the use of all budgets as much as possible, and there will inevitably be some unnecessary expenses. Can the budget be reduced? If it is insufficient, you can apply for an increase in the budget again. This vote is not complicated and will win more community support.

3 Likes