In a few years’ time, the crypto world is going to look back on the DeFi Education Fund as money well spent.
Last week, controversy broke out when the new advocacy group sold about $10 million in UNI tokens for USDC so that it would have ready cash to get off the ground. The news was cast in a particularly bad light when one member of the organization’s new governing committee made a sale of UNI right around the same time the trade was going through.
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I have it on pretty good authority that while it might be bad optically (it definitely was bad optically), it was a harmless trade. Time will tell, I suppose, but even if it was a malicious trade, that doesn’t mean the DeFi Education Fund (DEF) isn’t a good idea at its core.
The Defiant did a solid job reporting on why people felt weird about this vote. Uniswap governance, it should be noted, makes it particularly hard to get anything passed. This was only the fifth measure to rally enough tokens for a final vote and just the third successful measure since Uniswap introduced decentralized governance in September.
The proposal to create DEF passed largely with the support of very big UNI holders, deep-pocketed investors. It didn’t feel grassroots.
But let’s be honest about the core reason folks hated this grant: No one likes a big sale on a token they are holding. Investors in crypto have an especially short-term view of their favorite assets, probably because news and trades have a way of hitting their charts so fast and hard. Big sales are betrayals.
And the asset price was down 25% from the start of the week on Friday, but still up 100% from the start of the year. I know it hurt. No one likes a pinch in the smart wallet, but the objections are, in my mind, a bit myopic.
Decentralized finance is an industry that threatens the massive money spigots that run the whole world. Its potential to shake up how value moves globally is too big; folks can only guess at how far it might go, even its builders.
This is becoming disconcerting to the powers that be. They aren’t going to bother with learning how blockchains work to try to build competing technologies. No, the powers that be, both the state and the financial industry, will use the levers of power they know well: the law and regulations. And, of course, the law is built upon the state’s martial power.
It surprised me to see there was a group in DeFi prescient enough to get an organization like DEF funded now (nearly as surprised as I was to learn it was getting $20 million out of the gate, but that’s a separate question). I wouldn’t have expected folks in DeFi to get serious about politics nearly this soon. After all, Silicon Valley sat on its hands for years before finally going big making their case inside capitol buildings.
But everything in crypto really does move faster than you expect.
Founding a fund to defend DeFi was the right move. I know that big sale felt like a blow to the UNI hodlers, but your bags will be better off over time if someone is making the case for this technology with lawmakers.