Funding proposal for Swiss Stake AG, the company building Curve

Proposals
#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.

4 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.

8 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
#37

Hey Mich,

Thank you for iterating on the original proposal, and it is a step in the right direction and laying out the itemized product deliverables.

I am of the mind that we absolutely need to support Swiss Stake AG, and it’s important for us to set good examples and precedents, not just for Swiss Stake, but the ecosystem and its proposal submissions overall.

Is it possible for us to better understand what core priorities are for deliverables on a quarterly basis and assign the costs for that?

Secondly, it’s really unclear how this translates to sustainability for Swiss Stake.

"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.

Why can’t this be worked on now for the proposal? This reads as ‘we’ll figure it out’ does not set a good example or precedent for future grant submissions from Swiss Stake nor ecosystem contributors/partners etc.

How will Swiss Stake get to sustainability given the ask size? What is the plan there? Swiss Stake AG, and anyone applying for crv funding, need an answer this basic question. The secondary effects also impact analysis of Curve’s future to the community and institutions at large.

If another entity applies, I’m confident you’d want to have insights in how those teams are thinking about it as well.

These two items are still outstanding imo. The rest is fine irt to community updates/reporting, and vesting to a smart contract - I think that’s basic level requirement and should be a strong and positive precedent overall.

I’d like to strongly reiterate - I am incredibly bullish on Curve, and fundamentally back the spirit of this proposal. However, it’s just not clear whats what in terms of quarterly deliverables and the costs associated with those deliverables - these should be operational items anyway that have been worked on should be completed.

Frax Example for budgeting has some insights into what’s being spent and where, etc: [FIP - 3XX] Frax Finance Annual Budget Request (2024 - 2025) - FIPs - Frax Finance Governance

Budget Framework Example:

Q1 - Deliverables

  • Research 1

  • Research 2

  • Feature 1

  • Audit 1

  • Anticipated Budget: $X

Q2

  • Research 2

  • Research 2

  • Feature 2

  • Feature 3

  • Feature 4

  • Audit 2

  • Anticipated Budget: $Y

…and so on.

Sustainability

How does Swiss Stake AG get to sustainability? If we don’t have a budget, what is Swiss Stake AG aiming for targeting revenues?

1 Like
#38

I don’t see why it would encourage unnecessary expense. Don’t forget that Mich is also amongst the largest veCRV holders and therefore has no interest in over spending…

2 Likes
#39

我的想法是为每个目标设置一个金额，做到了某个里程碑就拨相应的款项，一次性付清实在是太有风险了，考虑到创始人的花钱习惯

3 Likes
#40

You mentioned Mr. Mich here. Are you trying to increase your persuasiveness or reduce it? Mr. Mich’s previous behavior and constant liquidation have dragged CRV into the abyss. If it weren’t for the CRV holder’s persistence, the project treasury would not have allocated so much funds. Considering the various situations before, Mr. Mich should have higher standards and criteria for himself, formulate budgets according to stage goals, and then vote quickly. Funds can be flexibly adjusted during multiple budget formulation processes.

1 Like
#41

Service tweet, the vote is live:

https://x.com/CurveFinance/status/1828079810360344993

1 Like
#42

Not sure if mentioned already and I expect this is common knowledge, but worth mentioning anyways. There is no guarantee that liquid veCRV will stay on peg or even that there will continue to be adequate liquidity back to CRV. If such positions are being held temporarily to earn some yield, there is a possibility that Swiss Stake will have to sell at a loss that exceeds yield earnings.

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If Swiss Stake thinks it can pay all its expenses from veCRV yield and will never need to sell the liquid lockers, I have no problem. But if the plan is to juice some yield for 6 months and sell, I would rather Swiss Stake not mess around with those at all and just liquidate the CRV on a regular schedule.

2 Likes
#43

That’s a good comment, all depends on the yield tbh. Currently, the yield of wrappers is super low because of low crvUSD revenues and low bribes, but for the past 12 months it was sitting around 20% for the lowest up to 40-50% for the highest solutions. If we take the example of asdCRV, for the largest part of last year 1 week of yield was basically offsetting a potential 1% depeg. Since the biggest depeg ever seen on sdCRV was 92% iirc, it means you can always get your position back by staking 2 months. And those depegs never last long.
However, past performance is no relevant information to assess future performance, I give you that.

1 Like