Tag: Governance

Arbitrum Foundation Proposes Control of $1 Billion in ARB Tokens

by Blockchain News

The Arbitrum blockchain, which recently launched its governance token ARB, has been rocked by controversy over a proposal to give the centralized Arbitrum Foundation control of 750 million ARB tokens, valued at almost $1 billion. The tokens would be used to fund a “special grants” program designed to foster growth on Arbitrum, the Ethereum layer 2 solution. However, the proposal, AIP-1, has sparked opposition because it would not allow ARB holders to have any say in how the Arbitrum Foundation allocates the funds.

The centralized Arbitrum Foundation would not need to subject its grant allocations to “full on-chain governance”, the process by which ARB holders shape the blockchain and its ecosystem, further fueling concerns about the lack of community involvement. This approach stands in contrast to other aspects of AIP-1 that emphasize the importance of token holders in governing Arbitrum.

Although the proposal is still in the preliminary stage and must go through a formal forum, some community members are already worried about the consequences of giving the Arbitrum Foundation complete control over such a large sum. “We’re talking about $1 billion to start,” said an Arbitrum community member who wished to remain anonymous. “Having seen other governance examples where large treasuries were drained for community pet projects, this is pretty concerning.”

Lemma Ltd, the organization that submitted the proposal, has not yet commented on the situation. The “special grants” program aims to fast-track grants proposals and prevent them from clogging up the governance channels. It would also alleviate “voter fatigue,” according to the proposal. However, community members who spoke to CoinDesk were not convinced by this argument, pointing out that governance is difficult but that due process should not be circumvented.

The situation highlights the importance of community involvement in blockchain governance, particularly when large sums of money are at stake. The lack of transparency and potential for abuse by centralized entities could undermine the trust that users have in the blockchain and its ecosystem. As such, it is critical that blockchain projects find ways to ensure that token holders have a meaningful voice in governance decisions.

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Stablecoin Depeg Event Reveals Risks to DeFi and Traditional Finance

by Blockchain News

The recent depegging event of Circle’s USD coin (USDC) has shed light on the potential risks to both decentralized finance (DeFi) and traditional finance. Traditionally, regulators have expressed concerns that DeFi could pose risks to the traditional financial services sector. However, the recent failures of established financial institutions, such as Silicon Valley Bank and Signature Bank, have shown that distress can also spread to the DeFi sector.

The depegging of stablecoins, such as USDC, BUSD, and DAI, has highlighted governance risks related to the custody of reserve assets. Stablecoin issuers’ reliance on a relatively small set of off-chain financial institutions limits their stability, and the reduction in the available pool of financial institution partners could make it even more difficult for fiat-backed stablecoins to maintain stable exchange rates.

The USDC depegging event caused the fiat-backed stablecoin to fall below $.90 following the announcement that Circle had up to $3.3 billion in exposure to Silicon Valley Bank, which had suffered a deposit run. Other smaller-circulation stablecoins also lost their pegs. Only USDT seemed to benefit from the turmoil, briefly exceeding $1, most likely because of investors shifting out of the depegged stablecoins.

While the depeg event was relatively short-lived, it has laid bare the risks associated with stablecoins. Moody’s anticipates that regulators could increase their scrutiny of stablecoins and require greater counterparty diversification. Last year, the Terra/LUNA collapse raised concerns about stablecoins’ reserves, leading regulators to recommend additional liquidity and transparency requirements. The EU cryptoasset regulation (MiCA) briefly touches on this, but leaves precise regulatory standards to be determined by European banking authorities.

As traditional finance and DeFi become more intertwined, the risk of systemic failure increases, emphasizing the need for effective regulation, transparency, and risk management. Regulators could potentially trigger additional regulatory requirements, notably on counterparty diversification, in light of the Silicon Valley Bank and Signature Bank failures.

In response to the shortcomings of stablecoins, there is growing interest in exploring alternative solutions, such as tokenized bank deposits. Tokenized bank deposits would allow users to hold digital tokens that represent ownership of underlying bank deposits, subject to the regulatory standards of banking. This would provide greater confidence in the underlying assets’ safety, although credit risks associated with traditional banking would still remain.

In conclusion, the depegging of stablecoins has brought to light the potential risks associated with both DeFi and traditional finance. The event has highlighted the need for effective regulation, transparency, and risk management, and has sparked interest in exploring alternative solutions to address the shortcomings of stablecoins.

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Blockchain Technology can Radically Revamp Government Structures, Cardano Founder Says

by Blockchain News

Blockchain technology has the capability of revolutionizing government structures from the whelms of archaic processes to modern ones, according to Cardano founder Charles Hoskinson. 

Speaking on Yahoo Finance’s The Crypto Mile, Hoskinson disclosed that blockchain technology promises to generate better governance on a global scale. 

 

For instance, this cutting-edge technology can create a tax revenue system that is open source, enabling everyone to see the origin and destination of the money collected.

 

He pointed out:

“The point of cryptocurrencies and blockchain technology is to take those resources that should be a public good, and if they’re digitizable, get them into a situation where they’re completely open, and basically then build businesses on top of that. But the underlying infrastructure is no longer controlled.” 

As society transitions into a global one, Hoskinson believes blockchain can enhance interconnection by enabling secure and seamless data transfer. He added:

“In a global society, you don’t want one actor to have complete control over critical things and resources.”

Blockchain enhances transparency, which plays an instrumental role in boosting public accessibility. Hoskinson stated:

“The poorest and most vulnerable person in society has equal access as the president of the US, and there has never been a time in human history that that has been the case.”

Additionally, the autonomy presented drives away the worry of having one controlling entity. Hoskinson added:

“Instead, you have a situation where no one entity is in control. It is a better way of doing things with less friction, fraud, waste, and abuse, and more transparency and ultimately less consolidation of power.”

Meanwhile, the value of the global automotive blockchain market is anticipated to hit $2.23 billion by 2027, according to a study by Research and Markets.

 

Therefore, blockchain technology is expected to streamline procedures by rendering immutable storage to curb fraudulent activities like tampering with vehicle mileages. 

Image source: Shutterstock

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Yearn.finance Jumps After New Tokenomics Proposal

by Cryptobriefing

Key Takeaways

  • Yearn’s YFI token is up almost 25% on the day and over 100% on the week.

  • The price growth is likely tied to a new Yearn Governance proposal that would involve major revisions to Yearn’s tokenomics.

  • The proposal has not yet passed but seems to have had some effect on the market.




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Yearn.finance token holders have been enjoying strong price appreciation this week, with the YFI token up almost 25% today alone. 

Yearn Surges Amid General Market Downturn

Yearn.finance (YFI), a DeFi aggregator with over $5.5 billion in total value locked, is up at a time when most other tokens and coins in the crypto markets are down. In addition to today’s 25% price increases, YFI is up roughly 100% over the last week.

In May, YFI reached prices of over $82,700 per token, but was trading as low as $19,594 as recently as Dec. 12. At the time of writing, it was priced at over $39,100 per token. 



The price action likely stems from a proposal circulating within the Yearn community concerning key changes to YFI’s tokenomics. For now, the proposal remains in the mandatory discussion phase and is not yet eligible for formal passage. 

The proposal focuses on four key steps, to be completed sequentially, to amend the tokenomics of the YFI token:

  1. First, a portion of YFI tokens would be bought back by Yearn’s Treasury and distributed as rewards to YFI holders who are actively involved in Yearn Governance. 

  2. Second, four different methods by which YFI holders could be rewarded for locking up their tokens are introduced. 

  3. Third, the proposal would grant Yearn Developers the ability to roll out these new features as they see fit.

  4. Fourth and finally, the proposal introduces a restriction on Yearn Governance: only YFI staked in xYFI (beginning in Phase 1) and/or locked (as per Phase 2 and onwards) would be eligible for use in voting. 

With EIP-1559’s massive ETH burn creating some excitement around a supply shock and other protocols like Polygon following suit, it is possible that Yearn holders are banking on increasing token scarcity (resulting from lockups) if the components of this major governance proposal are passed and implemented. 


Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

Disclosure: Andre Cronje, founder of Yearn.finance, is an equity holder in Crypto Briefing.



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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

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Polkadot Community Approves Parachain Auctions

by Cryptobriefing

Key Takeaways

  • The first Polkadot parachain auctions will begin in November.

  • The move is seen as a major step toward enacting multichain interoperability.

  • DOT token is responding to the news.


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 A proposal for Polkadot’s first parachain auctions was approved by its community today. These parachains are said to be the “last piece of core functionality” needed for Polkadot to realize its goal of multichain interoperability.

Polkadot Community Approves Proposal for Parachain Auctions

Polkadot, a layer-1 project promising to make blockchain networks interoperable with one another, took a major step toward that goal today by voting to approve a proposal to launch its first parachain auctions. 

The proposal was introduced on Polkadot’s community governance discussion platform, polkassembly.io, by Web3 Foundation member Joe Petrowski. He laid out that, given the success of Kusama’s parachains, as well as Parity’s public assessment that “the code for parachains, auctions, and crowdloans is ready for an initial production release,” Polkadot should be ready for this critical move. 

Parachain auctions decide which blockchain projects will be selected to receive one of Polkadot’s parachain “slots,” of which there are only a limited number that can only be changed through a governance vote. The winners of these slots win the right to develop a parachain integrated with Polkdot’s main blockchain. 


The winners of the auctions are determined not by the highest bidder at the time the auction ends, but rather by who was the high bidder at a randomly selected point in time during the auction’s duration that cannot be known until the auction is complete. 

There will be 11 parachain auctions divided into two batches. The first batch will start on November 11, with one auction per week, and the second batch will begin on December 23, with one auction every two weeks. In both cases, the auction duration will be seven days. 

When asked last month about the timeline for parachain auction launches, Polkadot co-founder Gavin Wood said, “It’s really just up to the governance of Polkadot… I can’t flick the switch myself.” In a nod to the nimbleness of the Polkadot governance community, just yesterday Wood tweeted: 

“Whereas other chains take months or even years to deploy an upgrade, @Polkadot and @KusamaNetwork created, voted and deployed new logic on to [sic] the chain within 8 hours. All going through a secure, stakeholder-governed decentralized process.”

Polkadot’s native DOT token has responded, up over 17.5% at the time of writing. Trading volume is up over 100% in the last 24 hours. 

SIMETRI Research
Sanctor Turbo Demo Day


Toward Multichain Interoperability 

Polkadot is a protocol that enables different blockchain networks to work together. Parachains are individual layer-1 blockchains that run parallel to the Polkadot Relay Chain, where their transactions are finalized. Parachains make interoperability between blockchains possible by connecting their architecture. Currently, there are roughly 100 parachain slots available on Polkadot. 

Kusama is an experimental blockchain that has been used to prepare Polkadot for parachain auction launches.

(Disclaimer: At the time of writing, the author of this feature owned DOT, BTC, ETH, and several other cryptocurrencies.)

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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

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$25M Uniswap Proposal Sparks Another Governance Controversy

by Cryptobriefing

Key Takeaways

  • Flipside Crypto has requested a $25 million grant from Uniswap to build a community driven analytics firm.

  • Critics of the proposal have questioned why the Uniswap grant should favor only one actor in the space.

  • Uniswap’s governance process was also criticized last month as a small number of parties can influence votes due to the number of tokens they have been delegated.




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A controversial new governance proposal is up for a vote on Uniswap. The proposal would allocate $25 million worth of UNI tokens to the crypto data analytics firm Flipside Crypto.

More Criticism Over Uniswap Governance

A new Uniswap governance proposal has sparked debate over decentralization and favoritism in the crypto community.

Flipside Crypto, a community-driven data analytics firm focused on crypto, has requested a $25 million grant to finance its activity over the next two years. Competing data analytics firm Dune Analytics took to Twitter to express its discontent at the proposal. “Grants should go to community members, not service providers,” the announcement read.


Until Dune Analytics’ post, votes were in overwhelming favor of the proposal. Dune Analytics argued that Uniswap was effectively picking a single winner out of the many firms interested in crypto analytics. Other leading data analytics firms in the space include Nansen, The Graph, and Token Terminal.


The proposal has since received many competing votes mostly against the proposal. The majority has now shifted to a NO vote, with around 41 million for and 46 million against at the time of writing. Voting ends on Aug. 20.

SIMETRI Research


Of the yes voters, the various university blockchain clubs to whom Andreessen Horowitz distributed most of its UNI tokens represent most of the support for the proposal. Some of the biggest opponents include Dharma, Compound founder Rob Leshner, and vocal crypto advocate DCinvestor.

Composition of Yes and No vote on the Community-Enable Analytics proposal. Source: Sybil.
Source: Sybil

In a tweet addressing the proposal, DCinvestor said that the precedent of projects “using the UNI treasury for large cash grabs to support pet causes often benefitting narrow groups of actors is very bad.”

The Flipside Crypto proposal is the second incident in which Uniswap’s governance process has come under fire in recent weeks. Last month, the DeFi Education Fund was criticized for dumping $10 million worth of UNI for USDC after it received a $20 million grant from the Uniswap treasury. The vote for the proposal passed after some university clubs that Andreessen Horowitz had delegated UNI tokens to voted in favor of the proposal, sparking debate over Uniswap’s degree of decentralization.

At this point, the latest proposal seems very unlikely to pass due to the vocal opposition on Twitter.

Disclaimer: The author held ETH, and several other cryptocurrencies at the time of writing. The author also holds UNI through an index token.

This news was brought to you by ANKR, our preferred DeFi Partner.


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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

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Vitalik thinks token-based decentralized governance is holding DeFi back

by Cointelegraph

Ethereum co-founder Vitalik Buterin has taken a deep dive into token-based decentralized governance, suggesting that existing voting mechanisms are flawed and may be holding the DeFi sector back from realizing its full potential.

In a lengthy blog post published Aug. 16, Buterin stated the crypto community needs to “move beyond coin voting as it exists in its present form.”

Currently, the majority of decentralized finance (DeFi) projects manage their protocol upgrades, reward issuance, and other facets of governance elections where votes are distributed among token holders according to the size of their holdings.

However, many projects have come under fire for allowing their voting process to be dominated by whales holding vast swathes of the governance tokens, allowing them to vote in support of their personal interests.

Buterin highlighted two issues relating to token-based governance, emphasizing the risk of incentives misaligning among community members, and its vulnerability to “vote-buying” and “outright attacks” influencing the outcome of governance votes. He added:

“The most important thing that can be done today is moving away from the idea that coin voting is the only legitimate form of governance decentralization.”

Buterin noted the prevalence of “unbundling,” whereby “vote-buying” can be achieved and governance systems can be manipulated by borrowing on crypto collateral and using the tokenized assets to vote.

In the context of unbundling, “the borrower has governance power without economic interest, and the lender has economic interest without governance power,” he added.

Looking beyond token-based governance, Buterin advocated the exploration of “Proof-of-Humanity”-based governance systems where one vote is allocated per each of a protocol’s users.

Buterin also offered “Proof-of-Participation” as a possible solution, where voting is limited to the users of a protocol that have contributed work to the benefit of a project or its community, suggesting voting rights could be exclusively distributed to addresses that complete a specific task.

Ethereum’s co-founder also suggested quadratic voting — where the power of a single voter is proportional to the square root of the economic resources that they commit to a decision — could offer unique solutions to decentralized governance.

Related: Can DeFi and on-chain governance change human nature?

He also suggests a “skin in the game” approach that makes individual voters responsible for their decisions, stating:

“Coin voting fails because while voters are collectively accountable for their decisions (if everyone votes for a terrible decision, everyone’s coins drop to zero), each voter is not individually accountable.”