- Simply Staking was awarded with 32500 ATOM as part of Proposal 72, but has not received any of these funds, despite the promises made by the Proposal 72 committee on behalf of the Cosmos Hub.
- The post aims to spotlight governance failures and a series of multisig mismanagement issues. Assertions are backed by an extensive timeline of events with screenshots detailing our experience of being ignored and misled.
- The financial implications of such actions are significant, and in the event that it was to happen again, it could potentially jeopardise promising, less-resourced projects in the future and further tarnish Cosmos’s reputation.
- We are asking for the Funding Committee to provide a clear and detailed explanation of their actions, as any committee appointed on behalf of the Cosmos Hub community should be naturally expected to do.
Apologies for the long post - please read till the end as there are important facts mentioned throughout
Dear Cosmos Hub community,
I’m writing to share Simply Staking’s perspective on the process surrounding the Proposal 72 funding, having been selected as one of the projects (today known as EntryPoint) to receive such funding. Entrypoint was allocated 32,500 ATOM (amounting to $234,975 as of 25/08/23) as part of this funding to support the project in its incubation. As stated in the Cosmos Hub Proposal 72: FAQ, “The funds will be put towards 3 projects that are looking to leverage Interchain Security”, yet in the end, only 1 of those 3 projects received their funds. To this day, Simply Staking has yet to receive the funds that were pledged to us as part of Prop. 72, with the entirety of the remaining funds in the multisig now having been sent back to the community pool without so much of a word to us, nor any comments on our forum post “EntryPoint within the AEZ - An open letter to the Cosmos Hub community”.
Further, this has had reputational implications for Simply Staking, as not only have we informed shareholders of our success in securing the Prop. 72 funds, as well as included these in the project’s budget, but these have also been a central part of our external fundraising activities. How are projects supposed to build and collaborate with decentralised third parties when promises and commitments can be revoked without any recourse? Surely we cannot expect innovative projects, institutional adoption and serious capital to work with the Cosmos Hub if we can’t even uphold basic professionalism and courtesy? How can the world, which already thinks of the crypto space as extremely dodgy, feel at ease working with the Cosmos Hub DAO, when some of its most important members act so recklessly while performing duties on behalf of the wider Cosmos Hub community?
I would like to stress that my intention here is not to start a smear campaign, but to share our perspective on our recent experience of this entire funding process as described in Prop 72, to highlight the gaps in the governance process and centralised multisig management. In fact, the primary goal of this post is to enlighten the community about the flawed handling of this funding process and to ensure that such oversights don’t recur again, potentially further jeopardising the future of promising projects and tarnishing the reputation of the Cosmos Hub.
The loss of these funds is very upsetting for us, but while Simply Staking can (although it should not be expected to) absorb the setback of not receiving said funds, it is essential to recognise that not every team or project in the ecosystem has this luxury. Given the nature and objective of Proposal 72, those funds were meant to cover parts of core operational costs, R&D and engineering that have been invested into EntryPoint. For less well-capitalised teams, such a blow could’ve possibly meant the end of the project and developers not being paid their wages. We are very disappointed in the fact that the Funding Committee were happy to leverage Simply Staking’s brand and reputation to market their initiative at Cosmoverse, but then did not honour their own commitments.
To fully appreciate the problem we the Cosmos community have in our governance process, it is important to understand the context of the issue at hand. What follows is first a timeline of events leading up to the present day, where we have not received the grant from the Proposal 72 Funding Committee despite being promised so. Quite frankly, we have been left perplexed at the recent decision of the Funding Committee to return all the unused funds back to the community pool without communication, despite repeated efforts from our side to contact the Committee members, which have on multiple occasions left us without a reply.
As you know, Proposal 72 was introduced with the primary aim of allocating a portion of the Hub’s community pool funds to support and help finance and incentivise new consumer chain projects. The implementation of the proposal was overseen by a multisig committee, with the responsibility to review, approve, and distribute funds to promising projects that aligned with the Hub’s objectives. This committee consisted of four prominent members: Jelena Djuric, (prev. Informal Systems, now Noble), Jack Zampolin (StrangeLove Ventures), Zaki Manian (Iqlusion), and David Feiock (Galileo Group).
Please note we have purposely blanked out the names of the individuals in the screenshots of the direct messages shown below
The first contact was made between David and I.
The idea of our product (now known as EntryPoint) being a good fit for Proposal 72 was mentioned.
A meeting was set up between David, myself, Jelena and Thyborg to discuss the grant.
I was informed that Simply VC, now Simply Staking, had met the criteria for the grant.
One of the committee members reached out with the following, confirming that we were to receive 32,500 ATOM for our project.
At Cosmoverse, our project was announced to the public as one of the first consumer chains that will launch.
We were approached to publish a Forum post to showcase our project and the fact that we were being funded by Prop 72.
This is where we admit we took our time. We did not wish to push out a forum post before having a solid product and plan forward, something that was meaningful rather than a post for the sake of getting the funds quickly. Instead, we worked on the project while maintaining regular communication with all the committee members to inform them about the status of the project,
At no point during any of these meetings did anyone make any indication that the funds promised to us as part of Prop. 72 came with a deadline, nor the fact that the agreement had seemingly been changed and the funds were being moved without our awareness.
We are informed by one of the Committee members that, after having considered investing in EntryPoint themselves, they cannot do so due to a conflict of interest with one of their portfolio companies.
EntryPoint posts its open letter to the Cosmos Hub forum, which to date is yet to receive any comments from any of the Committee members, who seemed so keen about the project only a few months earlier.
In late July we attempted to reach out to the members of the funding committee, both through the messages displayed below as well as through in-person contact with multiple committee members. Most of our attempts were unsuccessful with the other parties ignoring our messages. The answers provided during in-person contacts were limited to explaining that the committee will be meeting to discuss what to do with the remaining funds very soon.
A day after the final message of the above conversation was sent, one of the committee members finally reached out and disclosed to us that the remaining funds in the multi-sig had been sent back to the community pool.
The funds being sent back to the community pool indicated to us that the funding committee had gone behind our backs and fallen back on their initial agreement to grant us the funds as initially outlined in October 2022.
They indicated that they had suffered from some unfortunate selective memory loss vis-a-vis the promises made towards us.
We are informed by one of the committee members that this forum post has been put up with regard to Prop. 72. Seeing how I personally tried to contact multiple members of the Committee on a number of occasions, both in-person and in chats, the word ‘miscommunication’ appears completely misplaced, as the Committee’s intention to avoid communication is glaringly obvious.
We care deeply about the Cosmos Hub and have been here since the start, soto be honest it’s quite disheartening to see how this situation was handled. It is somewhat ironic that for a very decentralised community, the allocation of funds to multiple beneficiaries requires a centralised body. To return to the Cosmos Hub Proposal 72: FAQ, it contained the question: “What do we gain from having a committee manage these funds on behalf of the community?”, to which the answer was “The ability to move quickly and give potential partners the assurances they need to start committing resources immediately.” On this note, we, Simply Staking, certainly started committing resources immediately, but as evident from the timeline of events, the assurances gradually dwindled over time.
Members from the Funding Committee were even considering investing in our project, which in May this year fell through due to a conflict of interest on their end, as according to one Committee member, “EntryPoint feels competitive with one of our existing portfolio companies” (see the chat excerpt titled May 22nd). From here on we were essentially ghosted by the Funding Committee, as shown in the screenshots above. It became apparent that this conflict of interest was also in place at the time our project was selected for Prop72, but this was in no way disclosed.
We find this conflict of interest particularly concerning given how it seemingly changed the responsiveness of the Committee members towards Simply Staking. Any potential conflicts of interest within the Funding Committee should have been disclosed in the initial forum post to avoid doubt in the integrity of the decisions taken by the Committee and certainly made clear during the selection process. I think it’s fair to ask why this wasn’t the case?
Given the financial commitment made to us as outlined above, we’re reasonably asking the Funding Committee to honour the responsibility that was entrusted to them and come forward, provide the rationale for their decision and be held accountable for their actions.
Furthermore, based on the fact that the committee was meant to select 3 projects, apart from Neutron which was given the funds based on Proposal 72 itself passing, and the fact that only one of these projects has received any of the allocated funds, there must be another project that was earmarked to receive these funds. We are asking the Funding Committee to also explain the decision around the lack of funding to the other team. If no such team was identified then they should explain why this was the case since they were appointed specifically to identify 3 projects.
Based on this experience, it is clear that verbal agreements involve counterparty risk and do not (always) work so should not be taken for what they are i.e. a risk in the funding process that needs to be fixed when it comes to funding proposals that utilise a multisig to distribute funds. We want to reduce the stress and anxiety for future projects contributing to the Cosmos Hub, so that they may never have to realise a loss of grant funding or have to dispute this with other community members. This is unfortunately the case even when the multisig counterparties are “trusted Cosmos OGs”, according to the Cosmos Hub Proposal 72: FAQ, and that “Each signer’s reputation is tied to the continued success of the Cosmos ecosystem.”
With that said, we’re asking the Cosmos Hub community to engage with the issue exposed in this forum post, and together help us devise a solution so that we in the future have a more trustless way of distributing grants.
Thank you for taking the time to read this post and hear our perspective. We remain committed to the Cosmos ecosystem and hope that our experiences can contribute to a more transparent and accountable future.
P.S. An invitation was made to the Funding Committee to address this matter themselves on the forum but this was declined.
DISCLAIMER This letter does not constitute investment advice, nor any promises, offers, guarantees, representations or warranties, and includes speculative forward-looking statements about potential post-launch capabilities of EntryPoint.