Clawbacks are appealing in principle because they gesture accountability however, in practice they’re extremely difficult to execute once funds are deployed.
On-chain governance can express intent or send a strong signal through proposals, but it has no ability to compel or enforce action. Actual enforcement depends entirely on the continued cooperation and availability of signers, which is an assumption that degrades over time.
Unfortunately, we have a very poor record of msig signer cooperation on the Hub.
In reality, team-controlled msigs consist of contributors that disengage, change roles, or leave the eco altogether. And msigs don’t get updated. When this happens, wallets become partially or fully inoperable, and even well-intentioned attempts to return funds can stall indefinitely.
I’ve been dealing with this firsthand for the past seven months in coordination with Cosmos Labs leadership. Proposal 800 authorized AADAO to “steward” 450,000 ATOM POL on Stride and Neutron, and unwinding those positions has proven far more complex – at times, impossible.
Had Labs and I not actively intervened, those funds would likely have remained indefinitely deployed, as the AADAO contributors who originally requested the stewardship exited before fully unwinding the arrangements they irresponsibly put in place.
Ambiguous or subjective acceptance criteria further undermine enforceability, too. In this case, multiple teams, including Hydro, made competing claims for why the 450,000 ATOM should be redirected to their respective DAOs, illustrating how post hoc interpretations of “intended use” via our alleged “governance” is too operationally immature to organically resist exploitation. This is a concrete example of why clawbacks are unreliable – in my observation and experience it enables dereliction rather than capital recovery or accountability.
There’s a great deal of inefficiency to undoing all that “capital efficiency.”
Operational and protocol fragility also compounds these issues. We had to get stATOM delisted on Astroport before initiating the unwind. It’s been a total mess.
The Prop 800 funds are currently being unstaked in tranches due to rate-limiting constraints, with the final tranche expected to complete shortly. Once complete, a new Stride msig will need to be established with a reduced and clearly accountable signer set, after which the full 450,000 ATOM will return to the pool by end of Feb. This entire process will have taken roughly TEN months.
The broader lesson is that clawbacks without pre-defined internal controls, external controls, objective acceptance criteria, explicit compliance timelines, and durable accountability structures are largely symbolic.
Once sent, all leverage is lost, governance signal is only signal.
If the Hub wants clawbacks to function as real enforcement tools, mechanisms and clear duties of obligations must be embedded prior to the time of disbursement, not improvised or deconstructed months later or years later when organizational fidelity or community’s collective memory fails. The only reason the 450,000 ATOM is going back is because the Hub elected an oversight member to remember.
For more context and background on how messy clawbacks can get – you can read this: https://daodao.zone/dao/neutron10xwzc88kefwtlup9c2tmw4mj4ng7u79g8lsapp0c9jc02xt247zqwzzghf/proposals/A176
I also agree the cp funds should be used productively; however, authorizing 7M solely due to a lack of alternative proposals is not, on its own, sufficient justification for funding 7M of this.
Maybe time to revisit @Govmos staking proposal.