Dear Community,
The Grant Support Squad was created to support the grantees in achieving their goals and taking care of the DAO treasury.
After thoroughly reviewing this project, The Squad wants to communicate that we recommend revoking the vesting contract of this project.
According to our governance process, our recommendation will be analyzed by the Revocations Committee, the only body responsible for revoking grants. This triggers an automatic pause of Grant’s vesting contract, executed by the DAO Committee.
The arguments that opened this case are the following:
Timeline:
- The proposal passed the threshold.
- The onboarding process started.
- The Grant Support Squad analyzes if the Grant complies with the Grant program requirements.
- The Grant Support Squad went through the comments on the Forum and Discord to identify if a community member raised a concern regarding the project.
- HP submitted a governance proposal to revoke the grant
- A member of the community submitted a formal request to raise concerns regarding the project.
- The Grant Support Squad has consulted with our advisors’ consultant. In this case, Agus Mendez from the Protocol Squad team -security advisor- and Henri de Royare, Heavy user Exchange - Buen Bit exchange.
Analysis.
The proposal for the Decentraland DEX lacks essential details regarding liquidity provision, open-source publication, documentation, and security which are crucial for the project’s success.
Based on the information provided in the proposal for the Decentraland DEX, the specific details regarding liquidity provision are not explicitly mentioned. The proposal focuses on the development of the DEX, its features, and the potential benefits it can bring to the Decentraland ecosystem and $MANA holders.
While the proposal does highlight the goal of attracting liquidity providers and mentions that the DEX will provide key trading pairs and competitive trading fees, it does not provide a detailed plan or strategy for liquidity provision.
In fact, if the core contract functionality of the project allocates 60% of all swap fees directly to the Decentraland treasury (as they mentioned), why would this be more beneficial than Uniswap or other DEX that pay more than the percentage mentioned of the fees to the liquidity providers? The project imposes no benefit over existing pools and UI provided by Uniswap, 1inch, 0x, and other DEX platforms.
Without further information, it is unclear how this fee allocation model would attract liquidity and incentivize trading on the Decentraland DEX.
To ensure a successful DEX, liquidity provision is crucial. It involves incentivizing liquidity providers to deposit tokens into the liquidity pools to facilitate trading. Strategies for liquidity provision may include offering incentives and rewards or implementing mechanisms like liquidity mining programs, but none of this was explained.
This grant was requested under the Category Platform, which has the followings Requirements and performance metrics:
-
Requirements.
-
Build in the public, publishing open source code and documentation.
-
Performance metrics
- The number of contributions made to the main repository of code.
- Publish the tool or application to the production environment and provide usage metrics.
The concept of this category is to bring value to the Decentraland Protocol.
This proposal aims to create a tool to swap MANA over the SDK. However, this would trigger a big security problem because the translations could compromise users’ wallets and assets, because Native swap operations are, by design, not available on the SDK of Decentraland to protect the user’s funds. While greatly increasing the risk of fraud and losses for the community.
To mitigate that, they proposed auditing the smart contract created, but information regarding how they will perform this action is lacking. Also, the requested budget wouldn´t cover this action´s cost.
Something to highlight. The grantee mentioned that they would use a modified Uniswap V2 Core contract (open source) which receives no updates since the team is currently developing the V3 of the set of contracts and app.
Also, the project doesn’t explicitly mention how they will publish the code and the architecture documentation.
Last but not least, the proposal has another interesting point to mention. They Promise revenue to the DAO treasury, so it looks like the accelerator category would be more suitable for the project and not the category selected.
In conclusion, the proposal for the Decentraland DEX lacks details about a strategic plan for liquidity provision, open-source publication, architectural documentation, and security measures, necessary confidence in the project’s success and long-term sustainability.
For the reasons exposed, In line with governance procedures, we will elevate this case to the Revocations Committee (@dax @MetaDoge @maryana), recommending revoke the vesting contract. This recommendation will temporarily pause the grant’s vesting contract, which the DAO Committee will execute (@HPrivakos @Tobik ). This pause will allow time for the Committee to make an informed decision.
Regards.