Proposal 72 funding gone wrong - A governance scheme with holes

TLDR • 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…

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Hey man super great disclaimer at the bottom.

Really sorry to hear that things haven’t gone smoothly for you in this aspect of your work. I hope that we can set up a call to discuss.

Thanks so much.

Im very curious to see how many other projects have been rugged - as a community we need to take a look at the processes carefully to determine how we can patch this weak link and avoid this happening again.

And here is why the past 5 years I have been campaigning against multisig governance. Welcome to reality as they say =) Not trying to be an a-hole here, just stating the obvious. The reality is that ALL corruption happens due to the ability of the adversary to twitch accounting history in one way or another. The beauty of a verifiable and distributed consensus-based DB kinda removes that ability… unless… unless one starts having multisigs. The so called efficient decision makers that can manipulate the whole reason why we dont want to temper with accounting books.

Thank you for bringing this to the community’s attention. Can’t you just submit an onchain proposal like Neutron did with 819?
https://www.mintscan.io/cosmos/proposals/819

Indeed the current process has plenty of holes in it. We are engaging with other members of the community to come up with potential solutions to these. Would be very happy to discuss your views on such solutions.

We can, but would first like to give the funding committee time to reply. David has indicated on Twitter that they plan to do so imminently.

This is terrible and highly unprofessional from the committe. Not only does this impact your business but it affects Cosmos Hub as a chain and whole Cosmos ecosystem. Action like this will repel investors and builders if this continues like this. To paraphrase Zaki every validator should strive to operate at the highest excellence. The way I see here a validator did more than most by trying to contribute to the ecosystem and in a way got punished for trying to achive more. To be clear I am not targeting Zaki, I am targeting every Committee out there. Action like this will cause miss trust from builder and investors, development of the ecosystem will be slowed down because the team didn’t recive the funds, and actions like this will repel any new builder. If from validators is expected to run their node without ever missing the block window, there should also be some commitment from the people in the committee. If the team needs to drag this through social media in order to get response because at the moment it looks like the team got ghosted. Truly a disgraceful act from the whole committee. To the team of Simply Staking i hope you haven’t given up on the project even with…

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Matt, first, on behalf of the Prop 72 committee, we want to thank you for bringing this to the attention of Cosmos Hub stakeholders. Prop 72 was a novel experiment in leveraging Cosmos governance for on-chain funding. Like any experiment, we hit bumps along the road and, despite the net success of the effort, there were undoubtedly shortcomings. The decision making process and communication surrounding whether to fund EntryPoint would fall into the latter category. We wholeheartedly agree that on-chain / multisig governance leaves a lot to be desired, and that more rigorous decision-making and communication processes need be in place for future Community Pool funding efforts. With respect to grant funding for EntryPoint, we acknowledge there could have been improvements in process / communication. For example, when we reached out to the EntryPoint team to ask for a detailed summary of EntryPoint’s value proposition so that Cosmos Hub stakeholders could review it and offer their feedback, we could’ve set a deadline and worked closer with your team to ensure this was followed through in a timely manner. Unfortunately, as you pointed out, EntryPoint took ~9 months to share…

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Hi David

It is correct that many of the community wasn’t keen on the entry point proposal but that does not automatically mean that they were againsat the project itself and not an excuse to go back on agreements made on 72.

As per my question on twitter, why weren’t entry point given a tranche at the same time Fairblock were given one? fairblocks were far from ready to receive the grant which subsequently ended up being wasted.

Hi LitBit, Thanks for the continued follow up. “why weren’t entry point given a tranche at the same time Fairblock were given one?” As part of the Committee’s due diligence, we requested (on 10/19/22) more supporting information in the form of a community forum post from the EntryPoint team. It was explicitly noted that the post was a prerequisite of being funded (We requested the same of Fairblock). Fairblock made their post within a week. We received no substantive negative community feedback on that post, therefore funds were delivered. The EntryPoint team took 9 months to deliver their post. During that time the ecosystem had evolved, and ultimately it seemed clear that there was a lack of community support for the project. Community support (or lack thereof) is not only valid rationale in decision making, it should be heavily weighted as a determining factor for a committee elected by… the community. Therefore, we made the decision to forego the grant and return funds. If you, or any other Cosmos Hub stakeholder, are dissatisfied with that outcome and/or believe that the committee made that decision in error, please take initiative in rectifying the issue…

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Hi David, Thank you for replying to some of our questions. I have gone through both of your answers and quite frankly I am appalled by your attempts to misinform, by your clear lack of understanding of the situation and the committee’s agreements with us and by your inclination to use two weights two measures on many aspects. First of all, the success of Prop72 is very much wrongly attributed to the committee. In fact, the success of this proposal is only due to the successful launch of Neutron, which was directly addressed in the proposal itself and the committee did not need to make any type of selection in terms of fund recipients. The committee’s purpose was to select 2-3 projects that could potentially use ICS and to subsequently fund their development team for 2-3 months. The committee had 100k ATOM allocated to this funding. It allocated 32.5k ATOM to Fairblocks, 32.5k ATOM to Simply VC and if my maths is correct 35k ATOM to another team. I come to this conclusion based on our communication with members of the funding committee (see above) and the fact that Fairblocks was sent 16.25k as half of their funding commitment. This brings me to my first set of questions:…

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Thank you Matthew for the write up. I’m shocked and saddened to hear that this happened to you and wanted to share that something similar happened to us (Apollo DAO). In July of 2022 we were led to believe by Jelena that we had been selected as one of the projects for the prop 72 funding, until about two months later when we were told they had instead selected other projects. In our case this contributed to us delaying our fundraising attempts and ultimately requiring many of our team members to seek other employment after we ran low on funds. At the time I chalked this up as just an internal miss-communication within the prop 72 committee, but now learning that it has happened to other teams makes me think that the committee members seem to not have taken their role very seriously and not considered the possible negative consequences of their actions. I hope the committee members can learn from their mistakes and understand that making projects believe they will receive funding and then not following through can have real life negative consequences.

Really sorry to hear about Apollo DAO’s experiences.

Starting up a project is incredibly challenging anyway, adding uncertainty to a project’s finances makes it even harder.
The promise of decentralised ecosystems was for an environment that moved away from transactions based on trust.

This situation has demonstrated the flaws in the Cosmos governance processes that many projects depend on. Its imperitive that project’s that have suffered due to financing committees such as that seen in this event, come forward.

Its only by working together, that we can help patch these flawed governance schemes and reduce the probability of this occuring again.

Sentiment on the nature of the deal presented in the EntryPoint open letter doesn’t necessarily mean the community was against the idea of EntryPoint becoming a consumer chain.

Much of the feedback was centred around the valuation of the project, being too high. When a negotiation is underway it is very normal for the price of a product, in this case a valuation, to fluctuate until a deal is made.
It shouldn’t be conflated with a complete disregard for the product, which is evident in your reply.

Would be nice to see some more participation from the people mentioned in this post. Hopefully the conversation is not let to die by itself but the responsibles actually address the issue instead of just ignoring it. I feel like silence should be interpreted accordingly (as a clear lack of accountability and care for the ecosystem’ overall health and transparency). Cosmos should not only grow the teams that are fine for few.