The decentralized autonomous organisation (DAO) behind decentralized finance (DeFi), platform Aave, has accepted a proposal for retroactive funding of $16.28 million to members of Aave Companies in recognition of their contribution in developing Aave Protocol.
The vote began Tuesday. It has received 667,000 votes to approve the funding. This is more than twice the required 320,000 votes. The vote will close on September 8.
The original proposal was presented on Aug. 10. It sought “retroactive financing” to help develop the v3 protocol.
The $16.28million includes $15 million for developers’ work over a period of more than a year, and $1.28M for third-party auditors’ costs. Aave Companies, the company behind the popular DeFi protocol will receive the money.
After the proposal has been passed, the funding will consist of a mixture of AAVE tokens and Tether ( USDT ), Dai ( DI ), USD Coin( USDC), alternate stable assets like Frax stablecoin and higher-volatility assets like Synthetix.
Although the origins of retroactive public good funding are not clear, it was popularized after a collaboration post on Medium by Vitalik Buterin with Ethereum scaling solution firm Optimism. It was posted on July 21, 2021.
This post argued that retroactive public goods financing provides developers with incentives to work on projects. Developers can get paid once the project is complete and can be based upon the value it provides.
It is easier to agree on what was helpful than what will be useful as the core principle of the concept.
Vitalik says in his post that developers may not be able to receive enough grant money or donations to start a project. This makes it difficult to get the project off the ground.
Nansen, a blockchain data provider, says that the Aave DAO’s liquid assets have seen a dramatic drop in value during the crypto winter. It dropped from more than $800 million in April, to $378 million as of the time of writing.
The community overwhelmingly voted for the retroactive funding request despite this. Community members suggested “Aave Companies did incredible work and should be paid that.”
However, some community members were critical of the proposal’s lack of transparency. One commented that he supported the proposal but wanted more transparency to make it better for future retroactive proposals.
