The DAO behind decentralized finance (DeFi) platform Aave has accepted a proposal to reward members of Aave companies with retroactive funding of $16.28 million for their role in developing the Aave V3 protocol.
Voting for the proposal began on September 6, and as of this writing, 667,000 votes have already been cast in favor of the funding, more than double the 320,000 required. Voting is expected to close on September 8.
According to the initial proposal, which was first submitted on August 10, the Aave Request for Comment (ARC) requested “retroactive funding” for development work on the V3 protocol.
The $16.28 million consists of $15 million for work done by the developers over a period of over a year and $1.28 million for fees paid to third-party auditors. The money will be given to members of the company behind the popular DeFi protocol, Aave Companies.
The funding will consist of a combination of AAVE, Dai (DAI), Tether (USDT), USD Coin (USDC) tokens, alternative stable assets (e.g. Frax stablecoin) and higher volatility assets (e.g. Synthetix) after the passage of The Proposal.
Although the origins of the retroactive funding model for public goods are unclear, it has been popularized following a collaborative Medium post between Vitalik Buterin and Ethereum scaling solutions company Optimism on July 21, 2021.
The message argued that the “retroactive funding of public goods” model incentivizes developers to work on projects by allowing them to be paid after the project is completed and can be based on the value it provides.
The basic principle of the concept is that “it is easier to agree on what was useful than on what will be”.
Vitalik suggests in the post that it can be difficult in the start-up phase of a project to get it started, with donations and grants being insufficient to motivate developers.
According to blockchain data provider Nansen, the Aave DAO has seen a huge drop in the value of its liquid assets throughout the crypto winter, dropping from over $800 million in April to around $378 million in April. time of writing.
Despite this, the community overwhelmingly voted in favor of the request for retroactive funding, community members to suggest “Aave Companies has done a wonderful job and should be paid for it.”
Some community members however took issue with the proposal’s lack of transparency, with one member stating in the comments, “I support the proposal, but would like as much transparency as possible to raise the bar for any other retroactive proposals in the future. . .”