Vote on the Stablecoin Defi Liquidity Budget

I am voting YES on the Stablecoin DeFi Liquidity Budget with hash e5643c33f608642e329228a968770e5b19ef5f48ff1f698712e2ce864a49e3f0#0.

The metadata for my vote is located here, and this blog serves as a more human-readable form of that justification.

Justification

Cardano must reach economic feasibility. As the reserves dwindle, so too will staking rewards and compensation for SPOs. As that happens, we will need a strategy to replenish and even bolster it. Given the criticality, I believe we should tackle that problem in depth:

Leios, to increase the network capacity
Business development, to drive more traffic
Actively Validated Services, to diversify revenue streams
Appreciation of the value and utility of ADA through the above and governance
Active wealth management of our sizable treasury

The stability fund proposed here is, to date, the most comprehensive proposal for the last bullet point I’ve seen.

I believe the administration costs are reasonable given the size of the fund, but would expect those to grow in future iterations as the fund continues to attract premier ecosystem talent.

I would also expect to see future iterations of this proposal have more detailed descriptions of exactly how the decision making will be done, beyond simply a multisig: what criteria and metrics will be considered, what due diligence will be performed, what thresholds need to be met, how returns will be evaluated, accounted, and reported, etc.

However, I also appreciate that this first round exists to help develop those processes, so I’m willing to vote yes without them this time.

I considered abstaining on this proposal, given my role in the Sundae protocol which would be one candidate for receiving funds; However, since I will not be a decision maker on how these funds are used, and only a supplicant, I do not feel it is neccesary.

My understanding is that the team may send out a request for proposals for building the smart contract and treasury platform; We intend to apply to this, adapting the open source Cardano Smart contracts and treasury portal for the task, but will charge transparent market rates similar to what we charged for the original treasury portal, and have no expectation that our spot in that request for proposals process is guaranteed.

As a reminder, you can find my values here.

Here is how I evaluate this proposal against each of my values, attempting as best as I can to correct for my inherent bias on this proposal:

Integrity - Because I will neither be a direct recipient of funds, nor a decision maker on how the funds are used, I do not consider this a conflict of interest. I have disclosed my potential interests in the project above.
Freedom - This proposal has little to do with Freedom either way.
Social Good - Providing alternative revenue sources for the Cardano Treasury helps the chain achieve it’s goal of being a genuine social good product.
Technical Soundness - This proposal has little to do with technical soundness; the proposed smart contract seems reasonable, but will ultimately depend on it’s implementation and execution.
Economic Soundness - 50 million ADA is small, compared to most endowments or wealth funds. But the guard rails to ensure it holds its value and generate return are reasonable and well thought out.
Effective Discourse - The proposal has undergone extensive community discussion and review, with Nick Schuab engaging prominently and in good faith on Twitter; I feel this proposal has exhibited this value.
Transparency - The team has been transparent about usage, methodology, and membership. Caveats about future disclosures I listed above aside, I believe it has exhibited extreme transparency.
Flexibility - This proposal is part of a multi-pronged ecosystem wide effort to solve a critical problem; it is the essence of staying flexible to changing market conditions.