[Proposal #839][ACCEPTED] Fund 2024 Hub development by Informal Systems and Hypha Worker Co-op

Hub Proposals Community Spend
84

I’ve worked outside of finance as well and I can tell you from all the companies I have worked at (in Silicon Valley, outside of Silicon Valley and Wall Street) Goldman had the highest base salaries for a given tech position/skill set. You have to go to top hedge funds (Bridgewater, Millenium, TPG) to beat Goldman pay. Goldman usually prices itself about 10% below the top hedge fund salaries. Basically you pay (ie get less salary) for the name and the reputation and for a lot of people this works - they never leave Goldman on their own :slight_smile:

In this situation, I am sure all of the devs have big ATOM bags (which means they have big upside) so I don’t see why we need to pay such a large premium over what is the industry average as you suggest.

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85

We don’t. We shouldn’t.

86

It’s 3 days before the vote closes, and I see less than 33% turnout (vs a typical 55-60% range).

We’ve read doubts about allegations towards ICF with @Ash_Han’s Letter to ICF and @jacobgadikian’s holler on security issues on Twitter and on this forum. Those should be addressed, with the security issue discussed independently. Love that passion, btw, hope we can channel it into a new thread.

We’d like us to all stay focused here on the improvements on Cosmos Hub and the proposal here is about the costs, hence we’re staying focused on the discussion here on the deliverables and the budget.

We’re highly concerned that the USD$5.7M costs for 2024, equating to USD$225K per headcount as being a reasonable rate. Crypto has brought people together from all over the world. Standards of living varies drastically across the world. Not everyone is paid at Silicon Valley mid-level FAANG software engineer rates. For example, if I live in a developing nation and getting USD$60K per year as a BD or project manager, I’ll be highly content. This is an unfair reality.

Also, we understand this is a contractual rate, and not a full time employment (which is base + 30% or more). In recent crypto winter (hopefully thawing by now) many organizations have faced cuts, either in salary, headcount or both. If @lexa can address whether similar prudent steps have been taken by both organizations, it will give the community confidence that this is the right level of compensation to go with.

The 100K ATOM bonus, in our opinion, is also a tough sell. Prudent times call for prudent spending habits. We would like to propose nixing that. Also how driven will the committee be evaluating things? They could be passionate about quality, are they also compensated for their time? (which we think they should, just enough to stay focused)

On the flip side, what we didn’t see are other operational costs, which was glossed over as “legal, HR, finance and other support”. What about cloud operations, security audit, marketing for GTM for Mesh Security, IBC, wargaming sessions, etc.? Also profit margin was mentioned, what’s this currently at? Running a profitable business is sensible, but if one is already getting paid for it and that the profit margin is there, doesn’t that count as the “bonus”?

We’re leaning slightly towards a NO at this point. We can really see the benefit of continued research and development, and GTM for Mesh Security, IBC routing, etc. but the costs seems quite high

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87

Hi sir, I just wanted to let you know that currently if you want for this proposal to fail, then you should not vote at all because it has not yet met quorum.

If it does meet quorum, then you should veto.

Additionally I’m going to get an alternative proposal up today that:

  • provides funding from a group of validators to the individuals involved, or a new co made by them.

  • Eliminates the bonus

  • creates the expectation that a bonus gov prop should be made in the same amount at the end of the term

  • removes the harmful influence of @ebuchman and Informal

  • mentions that ICF may or may not contribute atoms (they have not yet done so, we should assume that it will not occur)

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88

:thinking: … maybe we shouldn’t put the cart before the horse?

This proposal might actually pass. Also, it looks like @lexa had put a lot of effort into this and it’ll be deem worthy that we allow her to take the lead in making the adjustments if it doesn’t pass.

I think it’s worthwhile for the community to jump into a call or schedule an emergency Twitter Spaces event co-hosted by a few folks such as Lexa and yourself, and post the TL;DR here thereafter

89

Oh I’m aware that it might

And that’s a shame

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90

Everyone should read @crainbf blog

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Good morning! We voted YES.

CosmosHub community in control of its development is a good thing! A couple caveat that we’re assuming – Request is in USD of $5.7M. Excess of funds are returned immediately, and the governance can amend elements of this proposal in the future. More on our blog:

92

It’s a Yes. Informal is the only team that shipped something on the Cosmos Hub and completed a roadmap, the ask is big, but also the value of the work done so far.

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93

Proposal #839 is poised for approval.

In passing 839, we are illustrating a state of insufficient decentralization.

The SEC has posited that networks that can be characterized as “sufficiently decentralized” might be exempt from securities classifications. However, the precise criteria delineating adequate decentralization remains ambiguous. And while the exact level of decentralization required is not clearly defined, their aptitude and appetite for discerning what is “insufficiently decentralized” is sufficiently an acute existential threat for crypto.

You know, regulators be regulating without regulatory clarity.

This stuff about centralization/decentalization matters bc the SEC is all over this stuff. They just sued in Texas saying ETH is subject to US jurisdiction bc majority of validators are located in states.

Centralization is the vulnerability regulators use to bring action. Our centralization via Ethan, Jae, ICF, AiB were already cited factors leading to ATOM being classified as a security in the Binance lawsuit.
In view of this fact, the manner in which 839 is been rationalized by principal agents is a very bad and big problem.

Centralization makes us a target. The appearance of corruption makes us a desirable target.

To me, the ICF has exhibited and expressed an unequivocal and “essential managerial interest” in advocating for a specific outcome in hub governance. Framing of the discussions around 839 can be characterized as principals using an assignment of privilege and resources as “influence seeking” for “rent-seeking.”

Imo, 839 has not been an equitable decision-making process. It is passing because the hub or the community does not have bargaining power.

As to why and how regulators can perceive centralization + corruption on the hub, here are my reasons:

  • The arrangement to send Atom from foundation treasury to the hub can be interpreted by regulators as a donation for influence. Because that is the effect of the “offer”. The offer to donate/reimburse/transfer shapes the voting response. Brian’s blog and subsequent comms about ATOM contribution from the ICF can be viewed as an interference with consideration of an on chain proposal with off chain inducements and agreements.

  • The offer made by ICF to hub community has yet to be made “official” although ICF says it is official. There is no MOU, LOI, or other contract to memorialize the understanding exists or can be enforced. The understanding was brokered informally over socials, and reinforced over a variety of social channels. Redundancy in messaging does not make an offer “official.” Common characteristic of influence peddling requires the inducement being transferred to remain “off the books” – or in our case, it stays “off-chain.”

  • Ethan and Brian are lobbying the pro 839 vote. Brian also voted Yes with his validator, Chorus One – a top 20 hub validator used his voting power to support an affirmative outcome. Given his role as President of ICF, and due to what can be perceived as conflicts of interest, the responsible Chorus One is to abstain in the matter.

  • The ICF hasn’t finalized it’s delegations for Cycle 2, and many of the early voting on chain indicates smaller operators existentially dependent on ICF delegations are voting in favor of.

  • The proposal undeniably carries elements of a “sweetheart deal” for an incumbent provider.

  • Lead proposer is a “privileged” incumbent that has no competition. There is no viable second best alternative at the present time. Lack of BATNA is often incidental to monopolistic player environments.
    Incumbent’s competitive advantage is they have no veritable competition.

  • One can argue that years of undisclosed support from ICF to Informal have conferred to the lead proposer the position of being a sole provider of software maintenance and development relevant for the hub and components of CESS.

  • The lack of disclosure is a problem for equitable and informed decision making. With insufficient disclosure, the hub is unable to compose material criteria that can be used to evaluate and contextualize the funding request. Roadmaps and KPIs are not disclosure. A proposed budget for spending is not disclosure. Disclosure means making plain the historical economic relationship between ICF and Informal. This hasn’t been done outside of the 2022 report.

  • No only criteria used is not germane to creating a meaningful evaluation framework. The crux of the argument is that lead proposer (Informal) is the team that has been funded so shall be funded. This reasoning equates to preserving preferential treatment. Preferential treatment is an antecedent to, and incidental to corruption.

From a regulator’s view, all of the above, which is true, suggests Cosmos hub and broader network may 'insufficiently decentralized."

WHY I’M REALLY REALLY WORRIED:

I was at brunch yesterday attended by several members of a certain law enforcement office, one of the lawyers quipped the $3.5M looks like a bribe to push the proposal and there’s nothing more inviting than the combination of centralization and corruption for an agency to take action. Please note, this is a remark made by one lawyer. This is not legal advice.

The optics of 839 are messy and poor.

We are inviting scrutiny bc the appearance of corruption is the bonus kicker politicos look for.

I strongly strongly recommend this proposal be resubmitted. A new proposal should make a funding request of $2.2m from the Cosmos hub. The ICF should send ATOM or cash directly to Informal and Hypha. ICF should not send any ATOM related to 2024 hub development to the hub.

If you’re a lawyer, please lean into this conversation.
@jflowers515

@mpg especially keen on having your response to any of the above. Thank you.

P.S.: I’m looking to retain an expert law firm to provide their assessment on 839 and to support what I heard yesterday. I am using my own personal funds for this. I no longer work in Cosmos or for any Cosmos affiliated projects.

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Please bear in mind we’re on the cusp of another deranged political season in America. Figures like Warren, James, and Gensler are on the lookout for actionable narratives to bolster their sanctimonious pursuits.

Power thirsty politicos are illusionists turning apples into oranges.
839 makes Cosmos an apple.

Imo, because of 839, we are now regulators’ low-hanging forbidden fruit.
So, Howey like dem apples?

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95

Not a lawyer or legal advice. But It doesn’t seem to make sense for the Comos Hub community NOT to accept a donation from a Swiss foundation. We are not giving any token or anything else in return.

If this is still a concern, it would be pragmatic to get a legal opinion from a reputable source like Fenwick on this matter.

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When the donation is used to influence the outcome of a vote it is influence seeking.
And when you vote ‘yes,’ you can be perceived as participating in the influence.

And yes, you are not a lawyer. In part, the reason I want to secure a lawyer to provide comment and analysis is we take unqualified takes to create agreement – to our own peril, ser.

97

Think of it this way. The best practice is the practice that eliminates unnecessary questions.

This is strategically dumb. And irresponsible – all because proposers cannot “afford” the time to resubmit a proposal that requires simple change. Change the numbers. The funding request should read $2.2M and the allocated support from the ICF should be paid directly to developer teams.

98

The funding request should read $2.2M and the allocated support from the ICF should be paid directly to developer teams.

Connecting the two would be a problem.

Initially there was no connection. What actually happenned was, the community questioned about ICF funding and ICF were open to it.

99

It is still a concern. If you have Fenwick retained ask them.
You’re referring to Fenwick and West, right?

For a stakeholder-operator like Stakefish, you should review this with legal. You’re not just another validator on the hub. Your vp is 2.87% – meaning, your respective part in the exertion/expression of influence is more a concern for you than a validator that has .019% vp.

101

Can you be more clear? Connecting what is “a problem.”

So that I am more clear, the fact that the “donation” is connected to 839 IS A PROBLEM.

  • No donation should be made from the ICF to the hub
  • ICF should send ATOM/cash directly to developer teams.
  • Informal and Hypha should resubmit a revised proposal with funding request for $2.2M
102

The proposal can’t be made with the condition of external entity’s action.

I see where you’re coming from, but I’m looking at it from many factors as written in our blog. I can see that this is a deal breaker for you and I can respect that.

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103

You have to look at this like a regulator.
Right now, what you are authorizing is a bribe.
This is the anatomy of corruption working as a bribe, provided to me by a lawyer that is a friend.
This is not legal advice.

“…agents who seek a rent may use bribery—transfers of income—to gain access to the rent.”

The agents: Informal and Hypha, are seeking funding through the hub through a bribe for the hub, and are utilizing a donation from the ICF to the hub, as an inducement/reasoning (bribery) to secure funding for 2024 hub maintenance and development.

Transfer of income: ATOM from ICF treasury to the hub

Objectives of corruption via vertical centralization:

  • “restricts entry to economic activity” (how ICF behaves, and how ICF has set up Informal to gatekeep contributors)
  • “…creates artificial scarcity” (there is not viable alternative other than Informal and Hypha to do this job. In part, this is the effect of ICF’s management over contracting development of hub and CESS. ICF funding decisions over the past 6.5 years promotes artificial scarcity of providers. You can’t even make a goddamn security report without preferential treatment according to @jacobgadikian)

PLEASE NOTE: I am not all saying that bribery is the intention from the ICF. What you must consider is that it looks like a bribe and the offer of the “donation” has the very unfortunate effect working as a bribe on the hub.

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No. I’m saying the proposal should not be accepted factoring in the condition or promise from contributions from another entity.

Every validator voting Yes is effectively expressing approval of this condition/promise that has the effect of a bribe.