Sept. 16, 2021: Decentra-LIES 🤥🔓

Curve + Convex Decentralizing Honestly Beats Faux DeFi

We agree with regulators on at least one thing, which is that too many DeFi platforms are decentralized in name only. Decentra-LIES hurt the DeFi movement. Such projects also only hurt themselves.

It’s of course common for projects to start centralized — you can’t effectively decentralize when your team is exactly one person, a shadowy super-coder with an idea they’re trying to build into a proof of concept between McJobs.

When projects take off, the sudden influx of wealth becomes overpowering. People get greedy, and the project never actually decentralizes. It’s like the ring in Lord of the Rings. Acktually, it’s not… if the ring was so powerful we wouldn’t have needed three insanely boring books to get to the end. It’s more like the Treasure of the Sierra Madre: for any group that achieves sudden wealth, human nature is such that greed and mistrust become overwhelmingly corrupting influences.

Ergo we witness the rapid rise of decentralization theater, alluded to in the above response to a now deleted tweet lamenting the faux decentralization of too many projects. They wrap themselves in the cloak of decentralization, but they are spreading decentra-LIES. They’re a wart on our community.

Therefore, in an appeal to greed, we’ll point to the benefits to projects that do successfully decentralize. Not even for the sake of fending off regulation. Simply that successful decentralization ultimately makes projects better.

In the early days, the biggest knocks on Curve were a high inflation rate and insufficient decentralization. The former solved itself right on schedule, the complaint proved FUD from people with an overly high time preference. Those with a lower time preference understood the centuries-long inflation schedule.

The concern about centralization also solved itself, through the self-same early inflation rate. A lot of voting power got sloshed around, and ultimately found its way to the players and parties most invested in building new protocols on top of Curve.

Now, the community leads Curve instead of Curve leading the community. This provably strengthens Curve. By way of example, here’s the top five pools as reviewed and approved by the Curve core team for access to the vaunted front page.

Not bad — the historical tAPYs you would have earned here would have been pretty good. And while everybody clearly understands future APYs will be different, there’s at least a good historical track record one could use to benchmark against promises from TradFi kingpins like Marcus.

Yet the winner is neither the hand-picked Curve pools nor the boomer basis points Goldman offers.

Curve built out its factory to give them less control over the process. In a few months, the factory boasts as many pools as the Curve team picked for their main interface in over a year.

Curve also built a fully decentralized voting system to give them less control over which pools earn Curve rewards. Now the top factory pools are dwarfing Curve’s performance.

In all cases, the community pools are dominant. Did the team ever plan to build an ibGBP/sGBP pool? It’s a good thing Curve empowered the community, it turned out to be the path that led to greater riches for all. These factory pools will surely displace the handpicked pools on the frontpage someday, Curve decentralization is so powerful it’s inevitable.

In the early days, users were worried that Curve governance voting would be corrupted by the outsized voting influence of its chad founder Michael Egorov. You don’t hear that FUD so much anymore. Egorov nowadays seemingly likes to sit around brainstorming advanced new math he can contribute to the evolving Curve community, judging at least by this Daguerreotype a paparazzo patiently snapped:

The loci of voting power has shifted away from the early founding team. If a freak meteor shower pulverized each Curve core dev into a smoldering crater through an improbable and tragic series of coincidences, Curve would mourn but move on unimpeded. Curve brilliantly formulated its tokenomics to give the token more value as the project successfully decentralized.

Interestingly, voting power has actually concentrated significantly, in the form of Convex. In a few short months, Convex has permanently locked 100MM $CRV, giving it overwhelming voting rights.

Convex also successfully resisted the trap of centralizing this voting power for itself. As they got rich, Convex also successfully launched Votium yesterday, putting voting rights into the hands of Convex holders. For the past few weeks or so, we saw the power of bribes to successfully shift votes on Curve. Almost overnight, the bribe power will be shifting directly to Convex:

In this manner, both Curve and Convex have walked the walk of decentralization, and the reward is that they have built the most powerful flywheel in DeFi.

When you use DeFi, you vote with your dollarcoins. Make sure to research if projects are actually decentralized, walking that direction, or spreading decentra-LIES. Curve and Convex demonstrate what a pivotal role decentralization can play in a project’s success.


UPDATE: It’s even more decentralized than hoped! The lies came from your fellow author… Votium is yet another layer of decentralization.


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