Proposal to fund the Protocol Guild Pilot via a veFunder Gauge

trent · April 7, 2022, 5:43pm

Proposal to fund the Protocol Guild Pilot via a veFunder Gauge

Authors: Trent (Guild Member), Fiddy (Curve), Tim (Guild Member), AliG (veFunder)

Abstract

This is a signaling proposal for a Fundraising Gauge which will direct funding to the Protocol Guild, a group of Ethereum core protocol contributors represented onchain through a vested split contract. If passed, the next step is an on-chain DAO Ownership vote round for the gauge to receive CRV emissions.

References/Useful links

Context

As credibly neutral, maximally uncapturable infrastructure with no block reward, Ethereum doesn’t offer the same token incentives as applications or L2s. However, the protocol still needs to attract and retain talent to continue to evolve the protocol. As the broader ecosystem continues to grow, competition for talented individuals will only increase. This isn’t to fault individuals for rationally weighting financial incentives, or protocols for leveraging the power of tokens - this is just the reality of the current context. We also acknowledge that financial motivations aren’t the only or best motivator for people, it’s just one tool in our toolset that is currently underleveraged.

If we believe what we are building is important, then we should structure the incentives to attract more smart people to work on it. We believe that “Ethereum is an unprecedented arena for playing cooperative games,” and want to manifest the novel possibilities afforded by this arena. (Griffith, 2019)

The Protocol Guild aims to address this challenge with an autonomous value routing mechanism: a weighted split contract that includes vesting. This mechanism will grant Ethereum Core Contributors with upside exposure to projects and protocols that depend on this trustless infrastructure.

current contributors are rewarded for past work through the weighting mechanism
current contributors contribute for longer periods, and there should be less contributor churn
new contributors are incentivized to join core protocol work

Proposal

Proposal to add a new fundraising gauge for funding the Protocol Guild. Maximum emissions directed to this gauge would be 2,000,000 CRV, to be claimed by the Protocol Guild Multisig address.

What is the Protocol Guild?

Over 100 Ethereum core protocol contributors, including researchers, client maintainers, upgrade coordinators, and more. Read the docs here, or see the entire current set of members here. The membership and its internal characteristics will be represented onchain as a vested split contract, likely using 0xSplits). Weights are set according to how long each member has been contributing.

The Guild will act as an autonomous value routing mechanism, independent of any existing institution, purpose-built for incentivizing long-term core protocol work. Here are a few more reasons why we’ve worked together to bootstrap this new mechanism:

Core protocol contributors forfeit the upside exposure that many of their peers gain by working on DeFi / L2s projects that have a token
Existing solutions tend to be either too narrow or broad in scope, fail to exclusively target core protocol contributors, or depend on an intermediating institution
the Protocol benefits from contributor continuity, which is incentivized by a vesting period on assets that are sent to the contract

Here’s a longer exploration of the project rationale.

Typically, we would have any assets sent directly to the vesting module. However, because CRV Gauges require an entity to claim the allocations, we are using the PG Multisig as a temporary stopgap: a 6/10 Gnosis Safe, deployed here. Once claimed, it will be immediately transferred to the vested split contract. We do not plan to use the Multisig to accept funds except in special cases like this, if you are a sponsor from another project, please do not send funds to the multisig. The 10 signing addresses are held by Guild members, and listed here:

0x291f12Bc416a53235d2c3f79d96DdF15877A8D10
0x4Bfa4639Cc1f4554122aBB930Aa897CDAe90d13b
0xBFbeaB0896E29d0Db26ad60278d3Ab3C482BB199
0x235c73bec456a3bf84E71f91554d68e3E651EC83
0x0000006916a87b82333f4245046623b23794c65c
0xbC349D1BEeE33c61F0395d1667E70056B4C869B9
0x59b0d71688da01057c08e4c1baa8faa629819c2a
0x2D56Cd519540bE541A3261E22e95d6507F5504Ca
0xdd021e3341a2ae4c4c72d977405a9af6f563d5f2
0x0B916095200313900104bAcfc288462682C38700

PG Pilot

We’ve spent the last 5 months refining the mechanism, onboarding members, and articulating how the smart contracts should be constructed. At this point, we’re ready to test the mechanism’s efficacy with a 1 year / $10mm Pilot. These are intentionally modest parameters to make sure the mechanism operates smoothly before graduating to a full scale fundraising round.

We are currently outreaching to prominent DeFi protocols / L2s to get commitments for this important first milestone. If this pilot is successful, the Guild will proceed with a second round of outreach for a larger amount of funds, vested over several years.

Motivations for CRV to support the Protocol Guild

CRV on Ethereum secures $20b of TVL and daily volume exceeding $278mm - a secure and scalable Ethereum benefits CRV as a founding DeFi institution
Funding the Protocol Guild Pilot continues to build CRV’s reputation as a funder of Ethereum public goods
CRV’s participation helps to build positive collective norms around contributing to public goods

Motivations for using the veFunder Fundraising Gauge mechanism

Fundraising gauges have a proven track record of success (Vyper set to receive 10k $CRV each week: this helps their security budget enormously)
Inflation-sourced funding is inherently frictionless over treasury-sourced funding (this is how world economies and successful capitalist ventures fund growth and development)
Synergistic mechanics with Votium and bribe.crv, allowing other protocols to frictionlessly participate by incentivising the Protocol Guild Gauge

Next Steps

A DAO vote to do the following actions:

Add a new gauge (Protocol Guild Gauge) to fund the PG Pilot, which will positively impact the continued maintenance and evolution of the Ethereum protocol. Maximum emissions directed to this gauge would be 2,000,000 $CRV, awarded to the Protocol Guild Multisig mentioned above
An emissions cap of 2,000,000 $CRV is less than 1% of the inflation budget for the current inflation epoch (inflation budget for this inflation epoch is approximately 233 million $CRV). Directing 1% towards a Pilot explicitly centered on Ethereum Protocol maintenance seems reasonable.This is equivalent to USD 5.8 million at the current market value of approximately USD 2.9 per CRV (31st March 2022).

If the curation of the Guild curation is found to be corrupted or biased, emissions can be turned off at any time.

Community Signal

Fund the Protocol Guild via a Fundraising Gauge
Do not fund the Protocol Guild via a Fundraising Gauge

0 voters

charlie_eth · April 7, 2022, 7:38pm

I appreciate what it takes to refer to $10m a year as modest parameters but I fail to understand several things:

What is it that you plan to do the money?
Why do you want Curve to fund this when the EF is sitting on a bit over a billion dollars?

I know this is crypto where some DAOs will happily give you an eight figure blank check just for having a Twitter account but this veFunder initiative, in my opinion, has to have more tangible impact if it wants to justify taking inflation away from Curve users. Don’t get me wrong, I’m all for Ethereum contributors getting paid well but I think it’s the Foundation’s job primarly to do so (having said that, if you are an Ethereum contributor, we do pay better so feel free to email me on [email protected])

We are happy to fund Vyper because it is part of the Curve culture, it’s a relationship that is very important to us but more importantly it has direct impact to our capacity to keep building out the Curve DAO. We’ve recruited Vyper contributors before and will keep doing so. It’s also a non profit which doesn’t receive funding, acknowledgement (except if you want to count that one article written by a moron called Piper which addresses Vyper’s technical debt and many bugs) or love from the EF so that endeavour makes sense to us (mainly because the SC dev team would rather quit than write Solidity).

It’s disappointing that this is what it’s come to for Ethereum contributors. The EF has repeatedly failed to allocate funding to those who need it (see Vyper) and continues to operate with the bizarre mentality that contributors don’t deserve to be compensated generously for work that nobody else is capable of doing. I haven’t tried to recruit Vyper developers by telling them the prestige of working for Curve is worth more than the ability to pay rent but maybe I should give it a go.

As mentioned on Twitter, I don’t think veFunder is a good fit for this but perhaps a grant from the community fund would work.

trent · April 7, 2022, 8:56pm

Thanks for the questions!

$10m a year as modest parameters

This refers to the entire Pilot, not our proposal to CRV. $10mm over one year to ~100 contributors is modest relative to both the expected value per contributor, as well as where we’d like to scale for future versions of this (length of vest, total vesting pool). The CRV community is welcome to set the gauge at any level they feel is appropriate for a project like this, including lower than our proposed 2mm CRV.

What is it that you plan to do the money?

The core goal is to directly reward the people who are maintaining the Ethereum protocol. If the CRV community decides to participate, the allocation will be regularly claimed and transferred into a 1 year vesting contract, during which it can be periodically distributed to the membership. There’s no budget and no treasury for this organization: the key is to route value as seamlessly as possible to the people putting in work.

I’m all for Ethereum contributors getting paid well but I think it’s the Foundation’s job primarly to do so

A few things to note: the Protocol Guild is not “the EF”! This is an independent effort with membership spanning 21 different teams and 9 organizations. Only 30% of members are actually employed by the Foundation itself, see the complete list here.

Further, this misses a few key things about the aims of PG:

yes, the EF already pays salaries, grants, ETH incentives to client teams; whether salaries could be higher is a separate discussion. The reality is that these will never be comparable to having a basket of exposure to the success of protocols building at the application layer. This proposal is one of several we are pursuing with a number of ecosystem projects.
We’re not trying to solve every incentive gap, only this very specific one.
This is the ecosystem continuing to leverage its ability to fund protocol maintenance. The EF might go away at some point, and it’s important that we have the mechanisms in place and norms developed long before that transition actually happens. We’re inviting the CRV community to participate in a new type of funding experiment.

We are happy to fund Vyper because … it has direct impact to our capacity to keep building out the Curve DAO

Echoing this sentiment as well! Ethereum is a continually evolving project - a well maintained, robust base layer benefits all applications that are built on it - including Curve.

Let me know if this response is helpful, happy to hear any suggestions on how to better approach this - I’ll also amend the original post with some of these clarifying comments.

WormholeOracle · April 8, 2022, 5:42am

Can you clarify why a grant from the community fund would be preferable? Why do you feel that method would work if your stance is that this sort of funding is the EF’s responsibility?

bout3fiddy · April 8, 2022, 2:17pm

I agree that the veFunder approach might be sub-optimal. My idea was that other protocols could leverage the gauge for funding the protocol guild via bribes. But it looks like key parties are more interested in a community grant than a gauge.

I am happy with this outcome as well.

Regarding why Curve should fund eth core devs instead of the EF when Curve pays much better: I assume they’re in there working not because of the upside but because they love their jobs. One could even say that Curve paying eth core devs would be a way to attract the brightest minds into the Curve ecosystem (not that there’s a lack of this, but more is always better!). In that sense, I think it is in the DAO’s best interest to fund the most brilliant minds as long as they have some peripheral positive influence over the long term future of Curve. Maybe they see that the grass might be greener on the other side indeed!