Request for comments: Use DeFi to save the world

Proposals Vaults
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Hi there! I am Zefram, representative of WhalerDAO, and I have come here to ask for your opinion on using DeFi, and specifically yEarn, for funding charity as well as public goods.

DeFi are uniquely capable of funding good causes

We believe DeFi protocols will be the first for-profit entities in history capable of doing massive amounts of good.

Why do traditional corporations not donate significantly? Let’s look at an example: Facebook and Twitter (and many other such platforms) started out as completely different products, but now they share many features, such as livestreaming and chatting. Why are they “borrowing” features from each other? Because an hour spent on Facebook is an hour not spent on Twitter, which equates to ad revenue earned by Facebook instead of Twitter. As these platforms optimize for revenue, they start building walled gardens containing all the features a user would conceivably want, so that users stay on their platform rather than go use something else.

Thus, traditional corporations are locked in a zero-sum game, an arms race, a battle royale, whatever you want to call it, because they all eventually compete for the same scarce resources, be it time, attention, energy, or land.

DeFi is different. DeFi protocols mostly compete for liquidity, and liquidity is composable. Your money in Uniswap can be in Aave at the same time. Your money in Aave can be in yEarn at the same time. Your money in yEarn can be in Curve at the same time. This means that DeFi protocols are outside of the battle royale. While direct competition between protocols doing similar things will still exist, we believe the reduced competitive pressure will be enough to bring about charitable DeFi protocols that can still thrive. Given that DeFi has the potential to capture the multi-trillion dollar financial market, it is, at the very least, worth a try.

How can you help?

It’s awesome to see YFI holders supporting giving 1% of protocol income to Gitcoin for funding Ethereum public goods. It shows that it is possible for DeFi to be altruistic, so kudos.

While this is a great first step, it’s also most likely not enough. We need to fund not just Ethereum public goods, but public goods and charities in general. And we need to devote a larger percentage as well.

Of course, I understand that DeFi is still early, and yEarn needs all the money it can get to propel itself into mainstream. However, if we all waited until DeFi is managing trillions of dollars to try and coopt it for charity, it would be far too late, as its workings would’ve long been optimized for value extraction and shareholder profit. DeFi would be an unprecedentedly efficient tool for making the rich unimaginably richer, and the world would still be in deep shit.

We need to act now, while the leviathan is still leashed.

What we could do is sign a Windfall Clause. Rather than redirecting 10% of income to charity right away, we instead set a schedule: for instance, donate 0% when the total value locked < $1 billion, 1% when TVL < $10B, 10% when TVL < $50B, and so on. This way, small and early DeFi protocols can grow at full speed, while established protocols with plenty of money to throw around are bound to donate their fair share to saving the world; either way, they get free PR. And because we have the magic that is smart contracts, we can enshrine and enforce this windfall clause directly in the protocols.

So what do you think? Should DeFi be turned into an engine for saving the world, or should it be a tool for enslaving humanity to the whims of a few whales? It’s literally your decision. And it shouldn’t be a hard one.

Can DeFi really help?

You might still have doubts about whether DeFi can really save the world. Well, it already kinda can. yEarn currently get ~$70k of income per day, which is ~$25.6M/year. Let’s say we use 10% of it for charity. What kind of impact can you get for $2.56M per year?

That’s honestly quite a lot of good for an experimental financial protocol that’s “intentionally complex, deeply broken, and dangerous”. Imagine how much good we can do in 5 years.

It also puts things into perspective. The difference between 1% and 2% is not just some abstract number, it’s 73 lives. When yEarn manages 10 billion dollars, do you want us to save 7300 lives every year or 730 lives?

Join us

We at WhalerDAO pledge to turn DeFi into an economic power house for doing good and saving the world. If you like what we are doing, here are some links:

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A default theme blog and a 200 followers twitter account.
Please send me 2Mil a year!

This has to be a joke

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Don’t send money to us. Send money to charities and public goods providers. Send money to fund solving climate change. Send money to fund saving human lives.

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I like the sentiment but disagree with the mechanism. I think most would agree that charitable donations are a positive thing, but they can get politically charged very quickly, and could muddy the waters for governance.

I’d rather see charity campaigns centered around vaults where fees go to charities for the duration of the campaign, and capital can opt-in to the campaigns they want to support.

It also gives the opportunity to drive money toward specific initiatives.

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I don’t agree with this sort of charity. Handing over money to groups as corrupt as government. No thank you.

Change the world by starting at home. Educating the next generation and contributing positivity to the communities you choose to belong. None of which requires large sums of money.

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I would be fine with a small percent of fund going to charities and or gitcoin grants, but not more than 5%.

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Certain charities (such as the American Red Cross) are indeed extremely inefficient, spending over 90% of donations on operational expenses. But saying all charities are corrupt is simply false. If you want to see what the most effective charities are, check out GiveWell, who does in-depth independent research about charity effectiveness and impact, and also does site visits to make sure the charities are not corrupt/lying.

How can you solve climate change at home? How can you reduce industrial methane emissions at home? How can you deworm African kids at home? How can you deliver Malaria medicine at home?

Education is nice, but we’re faced with crises today. The last generation waited for the next generation to solve climate change; that’s us, and if we don’t do shit then there won’t be a next generation after us. And yes, solving existential crises that can destroy societies and cause billions of deaths will need large sums of money.

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Would your opinion change when the TVL of yEarn increases dramatically? For instance, would you be ok with directing 10% of income to charities and public goods if the TVL is $10B?

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I’ve worked with a Nobel Laureate who won the Peace prize for lifting up millions out of poverty, I care about these issues a lot and… I’m good with gitcoin, we are already committing to that and it’s a better fit for Yearn at this time.

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Another cold call! This is a huge waste of everyone’s time and is increasing the noise to signal ratio on our governance forums.

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Should we have a YFI owner’s check? Posters must own YFI to participate, else random public has their own noisy forum. @fabien is that possible to do with your system? Sign transaction to confirm YFI ownership to post in forum?
So only YFI holders may post, all else can lurk.

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Sure it’s worth discussing, though not really relevant to this post.

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Not really a cold call, I’ve been part of the yEarn community since day 1 and made many contributions. I thought that the most decentralized & people focused DeFi protocol would be the most receptive towards saving the world, which as you know we all live on and whose destruction will spell doom for us all.

I see your point though, I’ll make a separate governance proposal post which will probably be clearer for you.

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Quotefancy-461768-3840x21603840×2160 1.99 MB

In this case, we are starting with ourselves by funding gitcoin.

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Yep I agree it’s a good first step. What I’m asking here is to consider the future, when yEarn will manage hundreds of billions or even trillions: do you think 1% to Gitcoin will still be good enough then?

You might say that “we’ll vote to change it when we actually reach that TVL”. But if we waited till that point, then the established interests will never give more money to charity/public goods, because at that point even a small percentage increase will equal billions. That’s why we must make a promise now to donate increasing percentages of yEarn’s income as the TVL increases, when we’re still early.

And it’s not as if yEarn won’t be getting anything back. It will get incredible PR: “yEarn, the world’s first DeFi protocol committed to charity!” Also in the case that yEarn gets in trouble with financial regulators/governments, not being a completely selfish protocol controlled by degens who only care about earning money will earn us favors. And if yEarn never reaches 10 billion TVL, all this is for free.

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WhalerDAO, you guys are amazing. I’m highly anticipating your Part 2 and 3 of your thesis on the future of DeFi, DAO’s, and humanity.

I hope you don’t take the posts above to heart as they don’t represent everyone’s opinion here. But my guess for the responses so far might be due to how messy things are here in its current state to consider your proposition. Yearn still has a lot of sorting out to do with our partially refreshed multisig and as you already know we’re in the process of distributing a percent income to Gitcoin, so there might be some burn out felt and are misinterpreting the OP as another way to reduce returns for holders. The air here is still murky but once things here become more solidified, I’m sure there will be serious consideration for the OP

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Yes, 1% to supporting gitcoin is and will continue to be an exponential act of giving.
Maybe something will change along the way, however saving the world is a bottomless pit.
I care about this topic a lot, and still do not believe it to be appopriate.
Gitcoin is a great fit.
But hey, that’s just my opinion, put it to a vote.

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Thanks for your support! Yeah it makes sense that we’re feeling burnout, I’m feeling that DeFi burnout too haha. Taking it more slowly might be a good idea; we are talking about more long-term stuff anyways.

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Disclosure: I am friends with Zefram, a member of WhalerDAO, and also a YFI holder.

I think that there are very important reasons to pay attention to where funding goes to do good. This is because the distribution of benefits is very heavy-tailed, so certain things can literally be 100x better. An obvious example for climate change is how carbon taxes can likely do much, much more than planting trees.

That being said, I think it’s true, as timbit pointed out, that this is probably not a good time. I don’t think the conversation has to continue today, but I do think that the Windfall Clause is a good idea, and I hope we can keep it on the back-burner for later. A lot of tech has done this with Founder’s Pledge, and I think it’s very positive.

I also think some things in the way Zefram worded things above in the intro can sound sketchy, scammy, or too serious.

To hopefully add some legitimacy, y’all can check out his GitHub here. He’s created several cool projects in the DeFi space, and I even worked with him in the initial stages of Betoken, a project which was doing decentralized fund management + DAOs + incentivizing good predictions in late 2017, before it was super hip.

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We would have to have a vote on which charities the money goes. Then this leads into political debate. I don’t like where it’s going. Maybe some don’t want to donate for clean air but would rather see their money go to wounded veterans? I think this should be a personal financial decision.

I’m all for funding eth ecosystem and developers tho.

Edit: agree with sentiment. Not the best time. I want to focus on yearn, eth ecosystem, funding devs. Yearn is so young, the protocol is fragile. Let’s not put the skyscraper before the foundation.

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