A proposal to provide Aave Companies members with $16.28 million in retroactive financing for the development of version 3 of the Aave Protocol is likely to pass.
The decentralized autonomous organization (DAO) behind the decentralized finance (DeFi) platform Aave has approved 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 started on Tuesday, and at the time of writing, 667,000 votes in support of financing had already been cast, exceeding the minimum need of 320,000. The voting will conclude on September 8.
Initially proposed on August 10, the Aave Request for Comment (ARC) requested “retroactive financing” for v3 protocol development.
The $16.28 million comprises of $15 million for work completed 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 get the funds.
Following the approval of the plan, the financing will consist of a mix of AAVE tokens, Dai (DAI), Tether (USDT), USD Coin (USDC), alternative stable assets such as the Frax stablecoin, and greater volatility assets such as Synthetix.
While the origins of the retroactive public goods financing model are unknown, it was popularized on July 21, 2021, after a Medium article by Vitalik Buterin and the Ethereum scaling solution company Optimism.
The article suggested that the “retroactive public goods financing” approach offers an incentive for developers to work on projects by enabling them to get paid after the project has been finished and depending on the value the project delivers.
The fundamental idea behind the notion 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 may be difficult to get a project off the ground in its early stages since contributions and grants are inadequate to motivate developers.