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The decentralized autonomous organization (DAO) behind the decentralized finance (DeFi) platform Aave has accepted a proposal to compensate Aave Companies members with $16.28 million in retroactive financing for their contribution to the development of Aave Protocol v3.
Voting on the plan began on Tuesday, and at the time of writing, 667,000 votes in favor of funding had already been cast, exceeding the minimum need of 320,000. The vote will conclude on September 8.
Initially proposed on August 10, the Aave Request for Comment (ARC) sought "retroactive funding" for v3 protocol development.
The $16.28 million comprises of $15 million for work performed by the developers over a period of more than a year and $1.28 million for third-party auditor fees. Aave Companies, the company behind the popular DeFi technology, will receive the funds.
Following the approval of the plan, the funding will consist of a combination of AAVE tokens, Dai (DAI), Tether (USDT), USD Coin (USDC), alternative stable assets such as the Frax stablecoin, and higher volatility assets such as Synthetix.
While the origins of the retroactive public goods funding model are unknown, it was popularized on July 21, 2021, following a Medium post by Vitalik Buterin and the Ethereum scaling solution company Optimism.
The post suggested that the "retroactive public goods funding" approach provides an incentive for developers to work on projects by allowing them to get payment after the project has been completed and depending on the value the project delivers.
The fundamental idea underlying the concept is that "it is simpler to agree on what has been valuable than on what will be useful."
Vitalik says in his essay that it can be difficult to get a project off the ground in its early stages because donations and grants are insufficient to motivate developers.
According to blockchain data provider Nansen, the value of Aave DAO's liquid assets has plummeted over the crypto winter, falling from over $800 million in April to approximately $378 million at the time of writing.
In spite of this, the community has voted overwhelmingly in favor of the retroactive funding request, with members arguing that "Aave Companies performed outstanding work and should be compensated for it."
However, several community members took issue with the plan's lack of openness, with one member noting in the comments, "I support the suggestion, but would like as much clarity as possible to raise the bar for future retroactive proposals."
