Behind the rejection of a $17 million CRV grant: weakened founders' proposal power, with Convex and Yearn becoming the main players in governance.

A few days ago, a funding proposal from Curve to allocate $17 million to the development team (Swiss Stake AG) for CRV development was rejected. Convex and Yearn both voted against it, and their voting power was significant enough to influence the final outcome.

Since the Aave governance issues began to escalate, governance has started to attract market attention, and the inertia of simply providing funding has begun to break. There are two key points behind the Curve proposal:

1. Some voices in the community are not against allocating funds to AG, but they want to know how the money was used in the past, how it will be used in the future, whether it is sustainable, and whether it has brought benefits to the project. At the same time, this overly primitive grant model means that once the money is out, there are no constraints. In the future, DAO needs to establish a Treasury, make income and expenditure transparent, or increase governance constraints.

2. The major voting members of veCRV don't want to dilute their own value. This is a clear conflict of interest; if the projects supported by CRV grants cannot predictably generate benefits for veCRV, they are unlikely to receive support. Of course, Convex and Yearn also have their own self-interests and power dynamics, but we won't discuss those issues for now.

This proposal was initiated by Curve founder Mich, and AG is one of the teams that has been maintaining the core codebase since 2020. The roadmap provided by AG for this funding roughly includes continuing to advance llamalend, including support for PT and LP, as well as the expansion of the on-chain forex market and CRVUSD. It seems worthwhile, but whether it deserves a $17 million CRV allocation needs further calculation, especially since Curve's governance differs significantly from Aave's; its power is distributed among several teams with distinct stances.

Let's compare Ve with conventional governance models:

In conclusion, most conventional governance models currently have virtually no advantages in their design. Of course, if the DAO is mature enough, the traditional structure can also function well, but unfortunately, no Crypto project has reached that level of maturity yet. For example, even Aave, a leading project with market consensus, has encountered problems.

If we talk about model design alone, Ve has certain advantages. First, it has cash flow and liquidity control behind it. When there is liquidity demand from the outside world, this power can be bribed. So even if you don't want to lock up your tokens for a long time, you can delegate your tokens to proxy projects like Convex/Yearn to earn returns.

Therefore, VeToken is a model that links voting rights to cash flow. Its future evolution will most likely follow a "governance capitalism" path. VeToken binds voting rights to "long-term lock-up," essentially filtering out those with large capital, the ability to withstand liquidity losses, and the capacity for long-term speculation. Over time, this will result in the governance group gradually shifting from ordinary users to a "capital group."

Meanwhile, due to the existence of proxy layers like Convex/Yearn, many ordinary users, and even loyal users, hope to gain benefits without sacrificing liquidity and flexibility, and will gradually choose to entrust their governance to these projects.

This vote also reveals some clues: in the future, governance of Curve may not be primarily driven by the Mich, but rather by those with large voting rights. When Aave encountered governance problems, some proposed the idea of "delegated governance/elite governance," which is actually quite similar to Curve's current structure. Whether this is good or bad remains to be seen.