Oct. 26, 2021: Waiving the Whitelist 🏳️🗳️
Curve users debate removing the protocol whitelist
Last week @WormholeOracle woke up and chose violence:
Since the launch of the Curve DAO Token, the Curve whitelist has been in place. The whitelist ensure that any smart contract wishing to lock CRV or participate in DAO governance must be approved by the DAO (51% approval, 30% quorum).
The original Github states non-whitelisted contracts are banned because the veCRV “can be tradable and/or tokenized.” To date only three smart contracts have been whitelisted: Yearn, StakeDAO, and Convex. All other DAO participation comes from regular wallet addresses.
The recommendation to remove the whitelist sparked a hefty debate within the Curve community. We summarize the arguments for both sides here:
PRO
Before submitting the proposal, @WormholeOracle took to social media to test the waters:
Shortly thereafter he posted the full take to the governance forum. Appealing directly to Convex, the largest owner of veCRV, @WormholeOracle writes:
"The way to ensure long term prosperity for Curve, and thus Convex itself, is to relentlessly maintain a policy of supporting permissionless innovation. The whitelist is a form of permissioned access, and it turns away developers who might otherwise produce something of value to Curve.”
The primary argument being that a wide variety of apps built on Curve is necessary to build a strong ecosystem, and the whitelist inhibits this.
Notably, @bantg of Yearn, the second largest holder of veCRV, expressed support for the proposal.
As did several other commenters on Twitter.
Supporters argue that impeding developers serves to inhibit Curve from reaching its full potential. Another argument is that implementing a whitelist is against the spirit of DeFi.
In the proposal, @WormholeOracle details projects which were interested in building on CRV, but ended up going with other platforms or getting blocked by governance, including: Pickle Finance, VolumeGauges, Aave, Frax, and Earning.farm.
CON
Given the heavy voting power, the Convex community is most outspoken opponent.
Invoking Godwin’s law, @CryptoWinthorpe argues that Convex played by the rules of the game to get to this point, and requests these same rules should apply to future innovations.
The argument that Convex has a near monopoly of voting power is also rebutted as being overly reductive, given the complexities of voting.
Additionally, the claim that a whitelist goes against the principles of DeFi is rebutted as insufficiently nuanced. The whitelist itself is attached to a democratic process after all.
Most opponents cited the importance of the whitelist to preventing scams and hackers.
The rebuttal to this point would be that Convex could potentially block worthwhile projects out of anti-competitive fears.
To date this is trafficking in hypotheticals. I’ve not seen any accusations that Convex has ever acted in any way that has negatively impacted the Curve community.
One point I’ve also not seen raised, which is perhaps only of concern to Americans, is the point that the elegant locking mechanism of Curve provides a very strong argument that $CRV/veCRV are not securities, outside of Mr. Gensler’s overly expansive definition that everything is a security.
The non-transferability of veCRV would make it difficult to argue it falls under the purview of the most prevalent interpretations of securities law. Absent a whitelist, anybody could launch a smart contract that tokenized veCRV in such a fashion, immediately handing ammunition to regulators even if the project was scarcely used.
On the above point I need a fact check — are any of the whitelisted protocols already tokenizing veCRV in such a fashion?
YOU DECIDE
It’s a controversial proposal because it is indeed thought-provoking and both sides present credible arguments. The governance discussion considers compromises, such as blacklists.
Convex does not hold monopoly voting power, and several large stakeholders have not weighed in. DeFi remains far more democratic than traditional forms of government. Your opinions can still shape the outcome of this debate, and we’d be interested to hear them, whether in the comments, on the governance forum, or more broadly on social media.
Read Disclaimers! Author is a $CRV/$CVX maxi and undecided on this vote.
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"On the above point I need a fact check — are any of the whitelisted protocols already tokenizing veCRV in such a fashion?"
cvxCRV is tokenized CRV.