GIP-34: Should Gnosis DAO support in a reimbursement plan to the Agave Community

[LuigyLemon]

GIP-34: Should Gnosis DAO support in a reimbursement plan to the Agave Community.

• Let’s do this!
• Make no changes

GIP: 34
title: Reimburse agave users in exchange for AGVE
author: Agave DAO
status: Draft
type: Meta
created: 2022-04-02

Simple Summary

Funds Stolen from Agave during the hack:

WBTC	LINK	WXDAI	WETH	GNO	USDC
16.77	24563.20	347787.56	567.98	8400.27	243423.97

Reimbursement strategy:

• GnosisDAO covers the full amount of GNO lost in the hack 8400.27 GNO (roughly 50% of lost funds)
• GnosisDAO loans the remaining amount of lost funds to Agave specified above which currently ammounts to approx 3.5M USDC, in Two years, 4 biannual payments.
• Agave will use 80% of all assets to compensate users immediately and the remaining 20% will be repaid in the same timeframes as the GnosisDAO loans, in biannual installments over 2 years (4 installments). This buffer will be used to accrue interest and fees in the protocol.
• Agave DAO does a 12.5k token swap with GnosisDAO and an Open Auction of 12.5k Tokens each for the purpose of raising enough funding to repay the loan and increase TVL allocated to the protocol.
• Kapartkey DAO will be responsible for managing the acquisition of assets loaned to Agave and the co-management of the funds that are acquired by Agave during the Token Swap.

Abstract

The exploit of the lending markets on Gnosis Chain left a significant amount of users affected. Over 500 users & communities lost significant amounts of their value in the chain. Roughly 770 total addresses were affected by this hack, which was possible due to a dangerous implementation of ERC667 in old bridged tokens. We believe Gnosis should help in this process.

There is a way to resolve this but there are no prizewinners.

From a technical standpoint:
Agave understands why the exploit happened, there were discussions with multiple security experts and we know hot we can fix the CollateralManager to be safe even in the case of asset reentrancy. However, the only way to truly be sure the protocol is as safe as it’s mainnet counterparts is with the hard fork in which the implementation of the tokens gets fixed.

Agave as protocol will be redeployed:

• The reason to do this is that the current state of the protocol is corrupted beyond what could be considered a safe recovery.
• There’s no significant infrastructure that is immutably dependent on the current protocol addresses right now, the first relevant integrations were being worked on the weeks before the pause.
• Reimbursed users will be “airdropped” agTokens at their net value before the hack took place,
• Agave DAO will deposit all the other reserve assets in the Protocol across all assets.
• Incentives will be skewed more into lending in order to get lending bootstrapped as fast as possible and boost Agave and Gnosis revenue.
• STAKE will be delisted from the new deployment, must also be recovered from the old currently paused deployment, converted into GNO, and dealt with in the same way as other assets.
• Stakewise liquid staking sGNO and FOX from Shapeshift is likely to be listed directly on the new deployment
• Other provided asset configs may be reviewed and adjusted in order to maximize efficiency within safety parameters.

Future of Agave:

• The future plans for agave are a lot about building on top of the lending protocol - a vertical growth strategy sounds like a better investment given the increased amount of lending protocols coming to market. If we successfully build a product with high demand for agTokens the requirement to subsidize interest rates at the Lending Market become mostly unnecessary. All products that integrate and increase demand for agTokens are a reduction in subsidies and a boost in the revenue for every stakeholder in the protocol. The Lending market is just the foundation, it’s not Agave.
• Proceed with the liquidity mining campaign in partnership with Gnosis, which will be supported with AGVE buybacks to maintain attractive borrowing rates.
• Ability to repay loans using agTokens is a priority when it comes to protocol improvements for a significant improvement in UX. If you have collateral in an asset, you should be able to pay debt in that asset with it. (This upgrade will require an audit).
• Ability to create partnerships with deeply aligned ecosystem participants for isolated lending markets with a deep focus on the tight community of Gnosis Chain. Example: WATER DAO lending market (WATER, AGVE, HNY, TEC, FOX, GIV…), DXdao lending market (ETH, DXD, SWPR, AGVE, OMEN), Gnosis lending market(ETH, GNO, COW, AGVE, SAFE).
• Let’s leave something for later…

Security:

• Agave would like to get access to the GnosisDAO’s smart contract auditing pipeline, which will oversee protocol upgrades and external integrations.
• Agave will improve the bug bounty program that was in collaboration with 1Hive into a better model. Scoping both Web and Smart Contract applications with more attractive bounties.

From a financial standpoint

Agave requires several assets to reimburse users, here’s a breakdown of lost assets:

We believe Gnosis should cover 50% of the funds depleted during this exploit which is also by coincidence the amount stolen in GNO.

Agave does not have the means to acquire the remaining funds to reimburse users. Attempting to raise funds without diluting completely the current Agave DAO holders is impossible without key support from the Gnosis DAO. The request is for Gnosis to make a loan to Agave under the supervision of Kapartkey.
80% of the assets allocated to reimbursements shall be used to reimburse users right away, the remainder 20% should be deposited in the protocol and contribute towards the reserve accumulation of Agave, in order to make enough for both users and Gnosis to be repaid in full.
Assuming a 6% average APY in the Agave protocol across the multiple assets for the next 2 years, without this 20% buffer the protocol won’t be able to build enough to cover the loan assuming no other sources of income.

In ETH:

This figure already takes into consideration a successful injection of capital into Agave via the token swap and the open auction. It also doesn’t take into account operational costs of the DAO which should however be incurred in AGVE tokens or incoming revenue from other sources. Worst case scenario Gnosis got a majority share in the most popular lending market in Gnosis Chain and reimbursed all users (which btw includes Gnosis itself) at the total cost of roughly 1600 ETH or 5M USD. The funds lost are still outstanding and the value is changing with the market until repaid, at today’s prices 2120 ETH or 7.4M USD.

The Token Swap and Auction are then absolutely key for the success of this plan. We fixed the price at 0.04 ETH per AGVE in our Excel model, due to making the target amount raised exactly 1000 ETH. If we lower the swap price, then either the Average APY has to go up significantly, especially in the first semester which will be the most important, or we will possibly fall down into a debt trap. Lowering the share of the user reimbursement is out of the discussion. If we can’t make it right in the community, Agave has lost its way.
Agave has been contacted about interested parties in bidding on the open auction… it’s impossible to tell how much is the effective commitment to any price. However, there’s definitely demand from groups with the funding capacity to both cover the full extent of the auction or to negotiate an exit of Gnosis DAO from their position in Agave in the future. The price may seem like a high premium on market price but it only takes just a few eth to slip $AGVE price several %. In regards to the otc swap rate, the market depth is too shallow to buy a significant share of Agave in the open market when 35% of supply is currently staked, 15% is owned by 1Hive as seed, 15% scattered around in LP positions. After the auction all of these holdings will get diluted by 50%. There’s no real arbitrage to be made by AGAVE holders since both the OTC and the Auction are segregated markets and large investors are not going to buy a large position to dump days later.

Motivation

The motivation for this proposal is to make sure the Agave community and affected GC users are reimbursed at the end of this operation and that the community and protocol can continue the journey that started one year ago. We believe it is critical for the chain to make sure a significant amount of the long-term builders, supporters, and communities in the chain are restored on their losses as much as possible.
For example, 1hive lost all of the rewards accumulated as a long-standing validator of the xDAI chain, multiple 1hive and DAO builders lost a significant amount of their piggy bank, and Kapartkey lost a sizeable amount in varied assets.

A large percentage of the lost funds is from users that either has been users from Gnosis Chain for a long time or came specifically to use Agave in the last 3-4 months period. There’s long-standing ties with 1Hive, DXdao, Symmetric, DaoHaus, Shapeshift, Giveth, TEC, and so many other grassroots communities that make Gnosis Chain the only genuine DAO chain. We don’t think Gnosis should invest in communities seeking to extract value from the chain, rather than in the people building which made this chain investable in the first place. If the community is to be seen as expendable we should ask why didn’t Gnosis start a new chain?

Specification

• AGAVE will execute an OTC token swap with Gnosis DAO of 12500 AGVE at 0.31GNO per AGVE. Which may be executed in GNO or ETH at the discretion of Kapartkey DAO.

• AGAVE will initiate the Gnosis Auction with 12500 AGVE at the minimum bidding price of 0.036 ETH. Kapartkey executes a minimum bid on all tokens.

• Timeframe for the execution: Q2 2022 - before hard-fork.

• After AGAVE is ready to operate we will work with Kapartkey to make the deposits in the protocol and distribute the agTokens to the users.

Specific amounts per token:

WBTC	LINK	WXDAI	WETH	GNO	USDC
16.77	24563.20	347787.56	567.98	8400.27	243423.97

• 8400.27 GNO is the portion of the reimbursement from Gnosis DAO.
• The remaining assets are a loan to Agave DAO at the USDC value of those assets in the moment of the tx to Agave.
• AGVE token buybacks: Gnosis DAO Treasury does AGVE buybacks in the open market to target attractive borrowing rates on Agave.

Rationale

The rationale is pretty straightforward. Agave and Gnosis should do all they can to keep this tight community excited to work together and excited to speed run adoption with the help of Gnosis and new investors. Agave as a team will be laser-focused on increasing network effects and integrations of Agave across the GC Defi space beyond what we have already been. Agave will effectively be safer after this event and an entrust of Gnosis in the Agave Platform will be seen positively across the space.
Agave does not see an explicit conflict of interest for Gnosis with other lending platforms, Gnosis wins by bridging as much liquidity to Gnosis Chain as possible, so does Agave. Competition between lending markets should make the fight for better rates more fierce and to an extent, the plan of Agave to achieve that with the least subsidies as possible is a challenge even more interesting of undertaking. In case this isn’t clear enough… Agave loves Aave, that’s why we forked it rather than other options when literally nothing was out here.

Implementation

The implementation will be handled and executed in close collaboration with Kapartkey and the Gnosis DAO contributors.

[refri]

I don’t lost much but appreciate how you dealt with this. Hard times, but a bright future…I am waiting eager to use agave again.

[project_uwb]

I am one of the users of AGAVE and have been around xDAI and 1Hive for a while! Its great to see the commitment that AGAVE has shown to get hack victims compensated. Thanks for this well thought out and laid out proposal. I guess whatever the outcome thankful for both AGAVE and GNOSIS communities for having considered and bought this proposal this far!

I really hope that GNOSIS DAO and GNOSIS holders see the value in this proposal and the mutual value extract that is possible while retaining some of the 500+ affected users. I see the users as pioneers that really helped in the growth of this chain to what it is today. I guess my views could be influenced as an affected user - so leave it to the community to decide which is tbe best part of being a DAO!

[Claud999]

Luigy states that there are no prizewinners here, I agree at first it seems there isn’t. But, GNO having a stake in AGAVE will present a chance for significant growth , support and strength to the project, due to the professionalism and presence in the industry longer than most DAOs. I believe that in the end both agave and gnosis will be prize winners.

I’ve been an xdai user since 2020 and 1hive supporter since then, they are one of the best DAOs to be a part of , honest and always get the job done with some very smart people. And not only programmers. What started out as a small hipster crowd grew in to fruition. GNO is lucky to have 1hive and visa versa. Two great teams.

I support the proposal as (1) An agave depositor who got rekt and (2) a long term user of the GC who will not and maybe cannot leave.

Gnosis chain is truly a DAO of epic proportions when considering all projects deployed on it and I am looking forward to the future oF GC.

[0xce9b37656e7d331b70]

100% GC must support this reimbursement plan

[litocoen]

I am in favour as i think no investment + loan will probably kill agave and leave gnosis chain without a lending protocol for a few months until Aave eventually deploys.

Even then, their focus is not going to be on GC and they will be slow to list local assets as can be seen on Polygon.

Having a native lending market that lists ecosystem tokens (like sGNO e.g and others in the future) will be quite important.

But i think it will improve the proposal if you would link a to pitch in the proposal that outlines the vision & bull case for agave. maybe this could come from the agave team?

[0xBandicoot]

Thanks for this proposal in the name of every current and future users of our chain. I’m fully supportive and a think of it as the start of a successful partnership and a prime example on how to handle unexpected and difficult situations by a DAO. I’m excited about what comes next and I fully support this proposal.

[the_gno_star]

Thank you for fleshing out the proposal, I can now get a better idea of what is being asked.

I support the 50% compensation piece but not the investment piece. My view is they should be separate proposals to allow GnosisDAO members to hold different views. I am undecided on the loan, given that we are providing the loan and indirectly paying it back with the investment (never a good look).

In total this is a very generous package, we are basically completely propping Agave up to the tune of approximately $11m initial outlay and taking all the risk. This is akin to a nationalization - which is a big decision for a DAO to take.

To back Agave like this we need to be confident that they can drive significant TVL to the chain, can deliver on a strategy that differentiates itself from a generic forked lending protocol and can adapt to the changing lending landscape. I see nothing in this proposal or their track record that suggests they can do this.

If one of our goals is to attract TVL, we need look no further than Curve. Whilst Agave’s TVL maxed out at about $6m, Curve has nearly $100m on GC. On other chains (e.g. Polygon, Avalanche), Aave’s TVL exceeds that of Curve (by 3x on these chains). What is Agave going to do differently to go from $6m (0.06x of Curve) to $300m (3x) in TVL for GC? I don’t see any of that ambition, strategic thinking or track record of execution to warrant our investment.

If we are to support a GC focused lending protocol, we need to see the potential of something like a Trader Joe that can successfully compete against the big mainnet protocols. Or the innovation and execution of a CowSwap. Otherwise we’d be better off allocating resources to attracting those mainnet protocols.

I am highly unconvinced by the ‘Future’ section, it demonstrates no understanding of the changing landscape for lending protocols. It feels very early/mid 2021 and generic in its thinking, with a usual wishlist of partnerships and building more on top of a thriving lending protocol. Last year was the time you could get away with that; it was a time for generic forked protocols to build their brand, a good reliable TVL and start to identify a clear USP and develop a moat.

The game has moved on this year, you have to have a better offering (e.g. Aave v3) or offer something more out of the gate (e.g. Bastion Protocol on Aurora that has just launched is a compound fork but with locked TVL and separate risk pools). Newer protocols on mainnet etc. are tackling some of the core issues with these older protocols that make them more suitable cross chain e.g. Rari Fuse, Euler , Timeswap and Silo Finance. If we want to be a canary chain for Ethereum, we should be focusing on attracting these types of innovative protocols (Timeswap was set for Ethereum, but switched to Polygon for obvious reasons - we should have been pitching at that table). A generic forked older version protocol is just meh in 2022 as an investment and looks to have limited prospects.

A strategic price we would pay for this investment is a significant conflict of interest, we will no longer be a credibly neutral platform for other lending protocols. That undermines our ambition to be a canary chain for Ethereum. It is one thing to have a program of incentives that supports some protocols more than others, it is a whole other game to own a significant stake with no foreseeable exit.

I acknowledge the case to support Agave, it is largely a sentimental one versus one grounded in strategic thinking. I see how given the history of the chain, there is a desire to support the team as they have been here a long time and shown loyalty. Sadly, in a hyper competitive chain environment where many chains will ultimately flounder or die, sentiment is a hinderance not a strength. The tone of some commenters (I suspect mostly those who have a direct conflict of interest) has a hint of blackmail: compensate or the users and devs will leave. This chain will not live or die based on the 1hive or Agave team, or happy memories of xdai, we have to attract new TVL, developers and protocols. In a year when many chains exploded, xdai/GC did not. If we keep doing the same things, we’ll get the same results.

I’m still trying to find reasons to vote for this, because I do strongly believe we should be compensating lenders who lost money. But whilst this is a combined vote and by looking at this as investment decision, vs as part of the compensation (as I see others do), I’m going to find it very difficult.

[refri]

@the_gno_star

If we want to be a canary chain for Ethereum, we should be focusing on attracting these types of innovative protocols (Timeswap was set for Ethereum, but switched to Polygon for obvious reasons - we should have been pitching at that table). A generic forked older version protocol is just meh in 2022 as an investment and looks to have limited prospects.

Fully agree that we should attracting innovative protocols, but disagree that older ones will be worthless (outdated) by this, usually there are different pros and cons to use one or the other, and a canary chain has to provide as much as possible as is available on mainchain. I still use uniswap V2, Agave V2 and Balancer V1 besides the newer versions and even have some liquidity in uniswap v1 left;-).

[Stonky]

Strongly in support of this proposal, which has been carefully written keeeping in consideration the loss of the users (short term), the safety of the network, and that aims to strengthen thee relationship between Agave and Gnosis.

The importance of a community, and a strong one, is not to be underrated if we want to succeed as an ecosystem.

Thank you for writing this up Luigy and Monstrosity

[LuigyLemon]

The answer to your TVL question is quite simple. Because reward incentives were always lower than Curve’s specially when you compare to other chains.
Where else do you get a pretty stable 16% APY rate on your stables?

In Gnosis Chain the lending market was harder to scale because the liquidity to go into short or long positions was always limited by the liquidity availability in the market. Other chains have uniswap v3, and that makes a huge difference for organic usage of the protocol.

If we had the ambition to realistically achieve 300M TVL in the current network we would have to build it ourselves because there’s never been any grants or VCs creating any sort of support to development in the chain.
Agave was bootstrapped with literally zero investment - so questioning track record is honestly insulting.
About adapting to the changing landscape, that’s what we are doing: the lending market is quickly getting saturated and with so many competitors doing basically the same thing it all comes down to subsidies, agave could never count with subsidies that took us to the next level so we started looking into how we can leverage utility over subsidies.

I think you are actually the one a step behind the curve… developing a new lending primitive right now is guaranteed to be a non profitable endeavor. Aave with 20B in assets is generating about 30M per year whilst spending roughly 100M in subsidies - they did great btw because lots of that was given by Avalanche and Polygon without any conditions. Compound just reduced their subsidies almost in half to drive out speculators but it also spent over 100M in liquidity mining to make roughly 45M.

This isn’t sustainable… this isn’t the model Agave could even consider without insanely large backers that would be willing to throw money at the problem. And it’s only going to get worse now with all the new wave of lending protocols coming out of the VC craze during the bull run. Agave was not about the lending market, Agave always was about deploying a lending primitive and then building on top of it in order to make profits and allow communities in the network to generate passive income on their treasury.

Your perception of the market is clouded by the bull run hype, rather than looking at the fundamentals. Sure, i agree there’s improved markets being pushed out and that’s cool but your perception of the costs associated with creating trust, bringing liquidity, teaching a new primitive, and maintain a team to do all that is not being accounted for.

From the financial standpoint I don’t get your position either. You mention that it’s a bad investment because you take all the risk, but right after you mention Gnosis essentially owns Agave. Therefore, the loan from Gnosis DAO is to a large extent Gnosis DAO itself. Then you expand that this is bad because of neutrality of the DAO in regards to protocols. This is untrue imo, you frame this as if Agave is taking advantage of the hack to become Gnosis preferred lending market. We simply want our people be made whole - We aren’t really asking for a standard Investment, are we? We will literally still be working for AGVE tokens after this, Agave DAO never had anything liquid in amounts to be able to hire the absurdly good team we have into full time commitment.
Without Gnosis helping out paying the reimbursements, and having no deposits in the protocol the token will effectively collapse… So yes it could be the end.

[sisedieltan]

I wouldn’t waste time arguing with that guy. He is a troll obviously and makes the same nonsensical comparisons and out of subject arguments on every discussion. I agree with your proposal and think we should support the pioneers of this chain and builders instead of trying to bring rent-seekers via grants.

[the_gno_star]

Thanks you for your response. I’m glad to see some fight, that’s going to be necessary to survive and thrive!

Because reward incentives were always lower than Curve’s specially when you compare to other chains.

I see that is a factor, but I also saw for nearly all of last year Curve had better yields than AAVE for stablecoins on avax and polygon. They serve different use cases; a reliable, trustworthy, capital efficient lending protocol generally seems to attract a lot more TVL than Curve outside of Ethereum (different type of capital), even when yields are lower.

In Gnosis Chain the lending market was harder to scale

Yes, I agree with this, definitely a mitigating factor. The conditions on Gnosis have made your job harder compared to other chains.

Agave was bootstrapped with literally zero investment - so questioning track record is honestly insulting.

We don’t have the luxury of taking things personally.

The way I look at it there were basically 2 good template options for last year: (A) take investment and scale rapidly, ride any exploits and worry about revenue later, or (B) bootstrap and focus more on community, trust, security and revenue. (Focusing on PMF is a given)

So for track record I’m evaluating you against (B). Agave seems to have a decent & loyal community which is a good start, but not really a functional DAO (which is hard). And there has been an exploit that drained your pool so you are now insolvent (questioning security practices and undermining trust), and no real revenue to speak of.

At the moment you’re not viable for investment… except if the team is highly investable and there’s a strategy where there’s a viable pathway to market share and strong revenue. So that’s what I’m probing for.

I know you don’t see this as an investment, but from GnosisDAO perspective it is. We’re going to own 25% to 50%. If we do not think Agave is a viable proposition, we shouldn’t be using Treasury funds to prop it up.

the lending market is quickly getting saturated and with so many competitors doing basically the same thing

Looking forward you see a saturation of v1 lending protocols and a race to the bottom. I mostly agree. But what I also see is the end of mixed risk asset single pool lending protocols (what I’m calling v1) within 6 to 12 months. The v1 design was a good start, but the risk of protocol insolvency and risk of loss of funds for lenders is too high (and requires significant governance to keep it secure, which forked protocols tend not to have). Any protocol that doesn’t pivot is going to be caught on their heels.

If I’m right, then your strategy to build a base lending protocol to support other profitable products won’t work if your base product is approaching end of life and no longer fit for purpose.

I think you are actually the one a step behind the curve… developing a new lending primitive right now is guaranteed to be a non profitable endeavor.

I agree for the generic v1 forked lending protocols. For the newer protocols trying different approaches, the innovation is not just on protocol design, but also different revenue streams. May or may not work, but by no means is there a guarantee it won’t work.

Plugging in more products in search of revenue is not the only model.

Agave always was about deploying a lending primitive and then building on top of it in order to make profits and allow communities in the network to generate passive income on their treasury.

I get this strategy, it is a pretty standard playbook that is being used on many different chains. Many bootstrapped / community owned lending protocols are plugging in swaps in search of some revenue, unfortunately, that is likely also a race to the bottom with fees approaching zero. The other common add-on is a launchpad, but most of them are weak offerings and struggle to compete with dedicated launchpads that are well connected. Metis has seen this on steroids.

Your perception of the market is clouded by the bull run hype, rather than looking at the fundamentals.

My concerns and challenges here are actually because I see protocols forged last year in up only mode that haven’t developed the operational and financial resilience to survive when conditions change and exploits occur. The VC backed protocols are playing a different game, at least until the money dries up.

I like the sentiment on focusing on fundamentals and seeing beyond incentives, but that bet has backfired. After a year you didn’t build a sufficiently robust protocol to avoid an exploit or to financially survive one. You’re insolvent and needing a bail out from an investor backed DAO.

Basically you’re asking us to rely on unknown future products that will turn on the revenue taps. Most bootstrapped protocols claim that. We need to see evidence of a plausible strategy, otherwise it’s just a pipe dream.

I know this sounds harsh, but these are the facts on the ground, and to ignore them is us not acting judiciously with DAO Treasury funds.

but your perception of the costs associated with creating trust, bringing liquidity, teaching a new primitive, and maintain a team to do all that is not being accounted for.

I’ll accept this, I do have a bit of a blind spot here.

From the financial standpoint I don’t get your position either.

GnosisDAO is taking all the financial risk. $11m is the total sticker figure, but with the loan and dependent on secure custody arrangements, I accept at least some of that risk is mitigated.

Then you expand that this is bad because of neutrality of the DAO in regards to protocols. This is untrue imo, you frame this as if Agave is taking advantage of the hack to become Gnosis preferred lending market.

I don’t think anyone is taking advantage, the conflict of interest is just the reality. If we own a large chunk of a protocol, we have a conflict of interest when dealing with competitor protocols. Conflicts of interest aren’t a showstopper, but we’d have to make sure we act appropriately (very difficult with current maturity of our DAO).

Agave DAO never had anything liquid in amounts to be able to hire the absurdly good team we have into full time commitment.

This worries me for longevity and commitment. Is the team not full time and not taking any remuneration? The design of the protocol you forked requires several different committed skillsets to maintain its security, as well functioning governance that encompasses a breath and depth of knowledge and experience.

Without Gnosis helping out paying the reimbursements, and having no deposits in the protocol the token will effectively collapse… So yes it could be the end.

I don’t want to see this, you seem like a good, well-meaning team. But I can’t overlook that if the protocol is not viable without this bail out, what’s going to change so it does become viable and we’re not back in the same place again. We have to make sure we’re not wasting money bailing out Agave.

[the_gno_star]

First of all, I’m not sure why you’re assuming I’m male?

Secondly, I’m sorry if you lost money on this exploit, and on a personal level I genuinely hope you get 100% back.

You might pause for a second, and consider that with more due diligence, more people constructively challenging the actions of teams, communities less dominated by moon boys (see what I did there) & hopium addicts who shut down any criticism, we might not have so many of these compensation situations? Food for thought.

[sisedieltan]

All you are constantly arguing is how better this treasury money could be spent. If so, where were your suggestions before this topic opened up. All I see is you trying to spam out-of-subject alternative suggestions as if an amount to invest was preallocated and the vote was about where to put it in.

The money that is going to be paid out of the treasury was sitting idle for long time and you were nowhere to be found to ask for grants to bring big projects here. Perhaps if you had a history of offering alternative investments for a long time, one would assign your constant out-of-context arguing on your general views but it seems that you were never here to offer Gnosis your grand strategy on investing. So the vote here is about this protocol, if you think it shouldn’t pass, please offer your views on the subject instead of comparing agave to other lending platforms or dreaming bringing aave like a telegram newbie.

Your advices look like what a moonboy would suggest without any deep understanding of how liquidity moves between chains and the importance of native good actors and communities like 1hive.

[the_gno_star]

Play the ball not the (wo)man

Last time I respond to you unless you challenge the substance of my points or line of reasoning, which is very welcome

[Carson]

I am in support of this proposal

Personally, regarding the_gno_star, I’ve been in the 1hive community for some time and can safely say Agave is a fantastic team that, if anything, has been underfunded. This isn’t due to any mistakes on their end - in fact it’s the opposite. It’s due to them prioritizing community, always being extremely fair, and being grass roots. They have always impressed me with their ability to punch above their weight, and have always done justice for their community. I feel like these acts and the response time to trying to resolve these issues proves that even further.

They are very skilled and competent. If Gnosis really wants to thrive on their new chain, then embracing the quality old teams is the way to go. In my eyes, there are only 3 teams that have consistently impressed me on xDai - Agave DAO (of 1hive DAO), Tulip DAO (of 1hive DAO) and Symmetric (of Symmetric DAO). Gnosis backing these teams is crucial to earning our trust. I still see many people referring to the Gnosis takeover as “hostile”, and these types of decisions are what solidifies for us whether this was a TRON->STEEM hostile takeover or a genuine DAO expanding themselves.

From my research, the GnosisDao has not been using these treasury funds, which makes sense. It’s back to the difference between a corporation and a DAO. A corporation tries to spend all their money every year to keep their profit low, while a DAO tries to situationally use their funds to better their communities/protocols. As long as the GnosisDAO community is in favour, that’s what matters.

The way I would boil down these hypotheticals vs reality is to ask some questions:

Is there a better way to spend the treasury?

Arguably yes, there might be a more profitable way to use the funds.

Is there any active proposal that this takes away from that would be better to do?

No, there are no active proposals that want to use these funds in a more profitable way.

Is there any other proposal that could show more goodwill to the Gnosis Chain?

No, there are no other proposals that could spring up that would earn the trust of the formerly-xDai community than this.

Is this potentially profitable to Gnosis and a financially good investment of the resources?

Yes. Gnosis is full on Gnosis Beacon Chain/Gnosis Chain in their roadmap. The team believes this is the financially successful path to go. xDai was specifically acquired for a number of reasons, one being that is was disproportionally used relative to the amount of incentives to come here. Despite the lack of Polygon, BSC, Avalanche or other funding, it was used heavily. The success on Gnosis Beacon Chain relies on Gnosis Chains ability to, like AGVE, punch above its weightclass. Gnosis came around and chose it for this reason. So logically, it makes sense that an investment in the first and most used lending protocol would be healthy for their chain. Acquiring a large amount of AGVE in anticipation for the Gnosis Beacon Chain’s release is a financially smart decision.

Regardless of whether there COULD be a more profitable use of funds, this is A profitable use of funds that are otherwise sitting idle, and one that sows goodwill in an ecosystem that still has many users questioning Gnosis’ intent with the acquisition. This is a smart move for Gnosis, and benefits all parties affected by this exploit

[20goto10]

I think the gno star has many good points and ideas here from an investment point of view. These ideas will be valuable I think for Agave moving forward in the future.

@the_gno_star

I know you don’t see this as an investment, but from GnosisDAO perspective it is. We’re going to own 25% to 50%. If we do not think Agave is a viable proposition, we shouldn’t be using Treasury funds to prop it up.

As I see it Gnosis will “prop up” the victims of the theft and not Agave itself. In return, Gnosis will get tokens in return. It is mainly a compensation. All incoming funds will go to compensation more or less as I understand it. For me, a victim of the theft, it would work equally well if Gnosis compensates 100% and no tokens are given in return.

[veronika]

This plan helps to build stronger confidence in GC it’s ecosystem and community
thank you for this plan,
please vote positive for stronger future of GC

[the_gno_star]

It’s different to my framing, but I like it and see the merit in your view. Food for thought.

My threshold here is good enough, not optimal.

I recognise some people don’t see this an investment, just a part of compensation. If you strongly hold that view I suggest you skip the rest of my post!

It’s fine taking risk with the Treasury, I’m up for that, we just need to establish that it’s a good enough punt with an acceptable R/R (qualitatively and quantitatively) and that it’s strategically aligned. We don’t just want to spray and pray in a way that compromises strategy just because the cash is sitting there.

From the headline numbers, Agave’s track record doesn’t stand out and I’m unconvinced by their strategy from what I’ve seen.

To survive I think they need to be more ambitious, position themselves better for trends in the lending environment and get more concrete and realistic plans for revenue generating products. They need to be realistic about how much money and commitment this will take.

They need to build the financial resilience to independently survive another exploit. To make this more manageable, they need to cap exposure to this kind of exploit so the whole pool is not at risk again.

They need to plan to implement the supporting components around the forked code to make it secure. Aave and Compound have significant off chain infrastructure to secure their protocols and manage risk. It is not a coincidence that Aave and Compound haven’t been exploited in ages, but forked protocols without this supporting infrastructure are exploited regularly.

They need to be confident in how they will survive when more competition arrives, particularly Aave v3. Other lending protocols on other chains have shown how it’s possible, but time is of the essence.

Lending protocols are still a way off from ossifying, a strategy that depends on this is a problem (generally a criticism of many forked lending protocols, and arguably a contributing cause of these exploits).

I am concerned that they are part-time. Part-time = hedged bets. As an investor, you want to see full commitment and skin-in-the-game. I would prefer they planned to use some of these funds for at least some core team members to go full time and be appropriately compensated. Squeezing out 100% compensation but not being realistic about the resources and commitment needed if this is going to work is an issue.

In some ways, I would rather they put a better plan together and we fund them properly, not just patch them up and send them on their way whilst still having questionable viability and being fragile (conflict of interest concerns aside).