YIP-63: Fund Builder-First Legal Activism DAO

Proposals YIPs
16

I fully support this proposal. It’s critical to adopt a builder-first approach. This effort can’t be delegated to mercenary experts who stand to gain from a protracted fight in closed-door sessions.

On the contrary, the values of openness, transparency, and decentralization are DeFi’s greatest defense to traditional regulation and should be front-and-center when regulators and politicians interface with DeFi communities.

This is so important, and I would take it even further. I’d like to see this collaboration grow into a full-blown self-regulatory effort. Ideally, the collaboration between Yearn, Curve, and LeXpunK (and other communities) should result in thoughtful, actionable self-regulatory guidance for the decentralized economy at large.

To date, the efforts of activists in this area have been mostly reactive. Lawmakers or regulators float some flawed rule, and the decentralized community scrambles to make it “not fatal”.

Rather than letting the agents of the status quo take the first shot, we should be drafting the rules. Unlike other self-regulatory bodies or policy think-tanks, this collaboration would be driven by broad consensus of builders and users—not a star chamber of experts with dubious incentives.

At this point, the legitimate objectives and priorities of lawmakers and regulators are well-known. It’s all over the talking points: protecting investors from hidden risks, collecting taxes, avoiding obvious criminal activity, etc. We know the days of being “left alone” are over, so the task at hand is to make reasonable compromises on terms that we can live with.

The proposal covers the necessary tools to do this effectively:

  1. Builders and users with deep domain knowledge of how the decentralized economy actually works.
  2. DeFi-friendly lawyers with deep domain knowledge of the legacy rules and a reasonable budget for enlisting other experts, purchasing access to lawmakers, etc.
  3. A fair and reliable mechanism (LeXpunK_DAO) for hosting debate and establishing community consensus around thorny issues.

Decentralized finance should be the proving ground for application and improvement of these self-regulatory rules and testing them against real-world experience…before they become laws on the books.

After 20+ years of conducting all sorts of negotiations as a transactional lawyer (often on behalf of the TradFi giants), my experience is that the best way to get your adversary to concede is to make it very, very easy for them to agree with you. Specifically, give them a way to concede their position without doing any work or feeling like they lost anything.

If we do this correctly, lawmakers will work from the foundation we build for them, and everyone comes away with mutual respect intact and goodwill for the next time we need to work together.

8 Likes
17

This is a very important proposal that I fully support, given also the skills and high quality of the involved proponents.
I agree with everything written in the post.
Nevertheless, in the light of the important aim, I would avoid LexPunk to assume a too aggressive approach with respect to traditional lawyers and regulators. In the end, the goal is to impose a DeFi friendly line of reasoning based on the deep understanding of the ecosystem and a solid legal preparation. In my opinion, LexPunk should not appear as the revolutionary niche of cryptolawyers fighting for the independence of the DeFi movement.

2 Likes
18

This is a great question; one, ultimately, that should be answered by the LeXpunK Army as it evolves, as well as by the representatives from each contributing community when considering adding new contributors to the LeXpunK DAO.

I don’t think it’s possible to define an a priori formula, but my own view is that VC money as such is not a problem and VC input as such is not only not an inherent problem, but could in many cases be helpful. The question is whether there are binding structures in place–such as discounts, NVCA-style veto rights, information rights, fiduciary obligations the dev team owes to VCs, a ‘board of directors’ operating in private, a business plan focused on driving value to equity that could redound to the detriment of other members of the community, etc.–that create a systematic bias that doesn’t jive with the ‘builder-first’ mentality.

I am sure every community could do some things better in terms of openness, preventing role entrenchment, avoiding or disclosing conflicts of interest, improving governance process, etc. In the case of yearn and curve, I personally feel confident that they are naturally synergistic, not rigidly hierarchical and not beholden to off-chain stakeholders in a systematically biasing way. Thus, it makes a lot of sense for them to collaborate on this. I think at this time this is almost certainly true of MakerDAO as well, especially given its massive push to decentralize into separate autonomous teams this year (I don’t know whether at earlier times VCs had concerning types of rights over the relevant entities/people, but seems irrelevant now in any case).

4 Likes
19

Hey guys, I love this.

Note1 .I’ve been discussing with a lot of lobbysists about how to approach keeping this industry alive as we begin facing this question. Here was my feedback. Gather 3 - 4 legislators and get them strongly behind defi. The ones you lock-in need to have a base. 1 one the people you lock in should be from the opposite party.

Note 2. Even with all this pushback from the SEC regulation is still years away and now that defi is starting to flesh out, we can begin to organize and get ahead of future regulation. If we get ahead and gather a small team of supporters we can get start influencing legislation as long as we have the correct backers with the correct influence and in the right committees. (This is actually very possible).

Note 3. Polling has apparently been very poor for democratic party across the board. It is very likely the house will be owned by Republicans by next election cycle.This means that we can likely push regulation in our favor by next election cycle and begin establishing precident. I have people putting together a list of stratgic partnerships and potentially a PAC to help get the support for good regulation for this space.

I’d like to support this any way I can. Let me know how I can help

4 Likes
20

Great initiative!! Very important to have these conversations out in the open and start building consensus . This will help all parties involved, both the regulators and the regulated. This effort will help highlight the fact that not all of defi is the same. There is a wide varity of approaches and motives for the actors involved in defi. This needs to highlighted and reflected in future regulations. This is as much a public relations campaign as it is a regulatory one.

3 Likes
21

@lex_node I think it’s a great proposal, and I fully agree that law enforcement in the US is one of the biggest ‘threats’ to DeFi.

At the same time, authorities in the US and politicians dominate the discussions about DeFi and set the tone globally. The focus of raids should therefore be the US and only shift to other countries or the international level if necessary.

Concerning campaigns, my understanding is a bit different. While it makes sense to prepare position papers for the analysis of Yearn-relevant primitives in the US, the community should actively try to lobby for better legislation. Since capital and financial markets regulation is heavily influenced by the recommendations of global standard-setters (FATF, FSB, CPMI, IOSCO etc.) - even in the US - it would make more sense to lobby at these levels and to educate the standard-setters accordingly.

The moment initiatives, such as the travel rule, are picked up on the national level, it is too late to change the overall direction.

I also suggest proposing new regulatory approaches to DeFi rather than simply modifying legacy rules. The approach discussed here, might serve as a basis but further discussions are necessary.

https://www.reddit.com/r/defi/comments/ot0ez5/a_new_regulatory_approach_for_the_crypto_industry/

22

I fully agree. A more proactive approach is needed. In addition, the approach should be more comprehensive. Current initiatives mainly focus on risks related to money laundering, terrorist financing, and tax evasion. Investor protection has a high priority as well.

Other topics such as market integrity, market efficiency, and financial stability do not play a major role so far. If DeFi becomes mainstream - and at some point it will - these issues have to be addressed as well. It is better to deal with them all at once rather than piece by piece.

Self-regulation might be one possible solution. As it will be difficult to hold DeFi protocols accountable, it will face similar problems as the current regulations, however. I’m not saying that it is impossible, but certain changes would have to be made to the protocols.

An ‘opt-in’ approach might be an alternative. But also in this case, changes on a regulatory level would be necessary.

1 Like
23

Hi everyone!

This is a great proposal personally I think this a crucial initiative for the space, and a perfect counter to the non-transparent proposal that has recently passed in a popular DeFi protocol’s “Governance”.

I’m also speaking on behalf of DXdao, and we would also like to join and contribute to this initiative. DXdao prioritizes decentralization and trailblazing fully on-chain decisions and such wide ecosystem collaboration is right down our alley.

This issue has been discussed before in DXdao, and a decision has already been made to allocate funds for any legal issues around the DXdao. That being said it’s a more reactive approach than a proactive one here.

At any rate, we have reached out to members of LeXpunK and we would like to get involved, both professionally and financial.

More info about DXdao can be found in our documents hub

2 Likes
24

Honest question: Why not hire lobbyists?

2 Likes
25

I too wrote a memo on yearn’s status as a security or not, the question remains how to best effectively leverage the existing power structures for the benefit of Yearn / etc.

Hire K Street

<3

1 Like
26

Similar proposals in other DAOs:

1 Like
27

this could be one use of the funds that should be explored, but to even get to the stage of ‘hiring a lobbyist’ on behalf of DAOs a lot of groundwork would need to be done as to what that looks like, who is best for it, what the lobbying would focus on, how to do it in a way that doesn’t betray the values of these communities, how to help them understand who they represent (there is no entity), etc.

28

This proposal is currently in the voting phase.

:ballot_box: Cast your vote on Snapshot.

You can learn about our voting rules in YIP-55 .

29

Can we vote with Woofy? @banteg

1 Like
30

I’m curious on everyone’s thought concerning the recent US legislation spear headed by the evil senator warren. Here is the twitter excitement from last night concerning this. 2k plus people joined in the twitter spaces on the spot call with many big names. It was a great discussion. Really it comes down to people needing to contact their local senator and ask them to support the new amendment. Hope this is helpful and it ties right into this concept. This is real as I do not do spam or tauting for monetary gain. This is just pure knowledge sharing. TY
https://twitter.com/CynthiaMLummis/status/1423477647288328193

31

(sic) Murum Aries Attigit

32

The voting has ended, the proposal has moved to approved state.

It has received 100% support with 862.01 YFI for and 0 YFI against.

3 Likes
33

wait it passed?
I didn’t think that hit quorum?

1 Like
34

Yearn has transferred 1,000,000 DAI to a multisig controlled by Yearn, Curve, Lido and LeXpunk DAOs.

5 Likes
35

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