$17 million CRV funding rejected behind the scenes: founders' proposal rights weakened, Convex and Yearn have become governance protagonists

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

Since the issues with Aave governance started to ferment, governance has begun to attract market attention. The inertia of just giving money when asked has started to break. There are two key points behind this Curve proposal:

1. Some voices in the community do not oppose funding AG, but they care about how the previous funds were used, how they will be used in the future, whether the funding is sustainable, and whether it has brought benefits to the project. Additionally, this primitive grant model, where money is just given out without any constraints, is problematic. In the future, the DAO needs to establish a Treasury, with transparent income and expenditure, or add governance constraints.

2. The large voting power holders of veCRV do not want to dilute their value. This is a clear conflict of interest. If projects supported by CRV grants cannot foreseeably generate benefits for veCRV, they are unlikely to be supported. Of course, Convex and Yearn also have their own interests and factions, but those issues are not the focus here.

This proposal was initiated by Curve founder Mich. AG has been one of the teams maintaining the core codebase since 2020. The roadmap for the proposed funding includes continuing to promote llamalend, supporting PT and LP, and expanding on-chain foreign exchange markets and crvUSD. It seems worthwhile, but whether a 17M grant is justified requires further calculation, especially considering that Curve’s governance differs significantly from Aave’s, with power distributed among several distinct teams.

Let’s compare ve with traditional governance models:

In conclusion, most conventional governance models currently have few advantages in their design. Of course, if a DAO is sufficiently mature, traditional structures can work well. Unfortunately, no crypto project has yet reached that level of maturity; even market-leading Aave has experienced issues.

Focusing solely on model design, ve has some advanced features. First, it has cash flow; it is backed by liquidity control rights. When external liquidity needs arise, these rights can be bribed. So even if you don’t want to lock your tokens long-term, you can delegate your tokens to proxy projects like Convex or Yearn to earn yields.

Thus, ve is a model that binds voting rights to cash flow. The future evolution is likely along the “governance capitalism” route, where ve tokens link voting rights with “long-term locking.” Essentially, this filters for those with large capital, capable of enduring liquidity loss, and able to engage in long-term strategic play. Over time, governance power gradually shifts from ordinary users to “capital groups.”

Additionally, due to the existence of proxy layers like Convex and Yearn, many ordinary or loyal users hope to earn yields without sacrificing liquidity and flexibility. They will increasingly choose to delegate governance to these projects.

From this voting event, some clues can be seen: in the future, Curve’s governance may not be led by Mich, but rather by those holding large voting powers. When Aave governance faced issues, some proposed “delegated governance/elite governance,” which is quite similar to Curve’s current structure. Whether this is good or bad remains to be seen over time.