Proposal To Halt A Bad Detail Slipped Into Pangolin Tokenomics Update Due To Potential Administrative Rug Risks - A Full Risk Analysis of This Corporate Structure & Guide For Better, Safer Implementation of Pangolin Foundation

NOT LEGAL, INVESTMENT OR FINANCIAL ADVICE. ALL RECOMMENDATIONS SUBJECT TO LEGAL REVIEW AND VARYING CONSTITUTIONAL AND STATUTE VIABILITY IN SPECIFIC JURISDICTIONS. THANK YOU FOR YOUR TIME.

PREFACE & CONTEXT

  • Pangolin is a community owned project founded by Avalabs. Current core team are not founders.
  • Money is the power. Thus, ownership of the community treasury is what gives the community power and ability to hold elected core team accountable.
  • Without control and ability to hold treasury administrators / elected admins accountable, the community has no power even if this continues to be called a DAO or community project.

CONTEXT OF OBJECTION TO THIS DETAIL SLIPPED INTO TOKENOMICS UPDATE
Pangolin tokenomics update, beyond improving APR rewards, is asking to have the community route 30M PNG treasury to a foundation that is legally and practically centralised due to the board being the core team.

Effectively this constitutes indirect ownership of Pangolin - an idea which was vehemently opposed when @hariseldon2 initially proposed himself for an elected position to lead the project. Rather granting him the position of Project Manager / Team Lead.

Further Context of Problems A - 6M PNG ‘Founders Allocation’, Team Not Founders
Currently elected admins are implying to be founders of Pangolin seeking a 6M PNG allocation. This cannot be accurate because Pangolin DEX was created by Avalabs and handed to the community for governance.

And aside the project being obviously founded by Avalabs and thus warranting no such allocation, the core team seeking this 6m PNG allocation only months after being voted into into the job is telling of the need for boundaries to be created.

It would be understandable if team said we need pay increases and proposed a budget. Or requested bonuses after a year or two of service to community.

More dangerously, and strategically baked into this proposal,

We as a community should understand that this 6M PNG allocationthen also gives this core team all the PNG tokens needed to instantly activate and proceed with voting on all future governance proposals even if against the community collective stance - since it only take about 3M PNG to activate the gov vote.

This creates a problematic situation for voting outcome and can be avoided by the community.

Further Context of Problems B - 30M PNG Administered Discretionally By Three Member Board
Admins also suggest that the 30M PNG treasury be moved to a ‘Pangolin foundation’ which they are to be exclusively the board members of and would constitute a full quorum of.

Since board is responsible for approving/disapproving direction, budgets, awarding pay / bonuses etc,

This means the core team would now achieve an exclusive control of the 30M treasury, with legal ability to simultaneously propose budgets and approve them, set new bonuses and pay (as the core team) and approve them etc despite appearances / facade on the face of it of this being run by DAO.

This ability to take legally incontestable decisions as the both executive team & board is effectively ownership. Corporate structure 101.

As OGs probably remember,

Justin @hariseldon2 initially proposed himself as owner of Pangolin from being a volunteer of the project. That was vehemently opposed right from the start. Under his new proposal, this sort of corporate structure will have effectively delivered that ownership and control to a small group of people and coerced/controverted the community foundations of this project.

It feels sneaky how this suggestion to create lopsided ‘Pangolin foundation’ has been slipped in with the larger and popularly demanded tokenomics update. This is a common tactic of control we’ve seen with our politicians where damaging policies are slipped with popular ones, where the ordinary people are unable to fish out the fishy detail.

We cannot allow this sort of behavior to fly. Admins may at no time attempt to coerce the fundamental nature of the project or take away the franchise of our community. Especially when it was clearly stated to volunteers (now elected admins) that no one person can be the owner of Pangolin or attempt to create a structure such as this ‘foundation’ which would effectively constitute ownership and legally irrevocable control of its treasury.

MY ADMONISHMENT

Community should remember this:

The money is the power of the community. It’s understandable that not everyone wants to be actively involved with governance. However in assigning such immense power, if we bequeath it to a foundation where all decisions can be taken autocratically and unanimously by admins we’ve effectively lose power and any method of regaining it.

It further needs to be understood that business legal instruments are not just devices for formalised interaction with the govt, but TRULY apparatuses that assign control and ownership. As such, if community power is not backed into the foundation of these business instruments, then whoever is assigned on paper become practically Lord of Pangolin.

FIRST STEPS - REASONABILITY & CUTTING SOME SLACK
This proposed corporate structure has either been deliberately crafted to effectively deliver ownership Pangolin to a few - or was a complete oversight caused by gaps in understanding of implications.

Deliberate Cause Scenario
@hariseldon2 has built and sold a business and understands full well the effect of a board, and indeed this is one of the reasons I had fought to find a middle ground to have someone of such background on the core team of Pangolin when disputes arose over the multi-sig.

However, this suggested power / board structure which would constitute totalitarian ownership of the ‘Pangolin foundation’ could be thus not be overlooked as an oversight given his experience. Rather a deliberate machination that would’ve have slipped under the radar I didn’t have the equivalent business experience to spot this or hadn’t asked the important questions here and here on Justin’s OP leading up to our community’s governance vote.

Deliberate Cause Resolution
If this was the case,

As a community, I’ll urge us to be extra vigilant and create boundaries against human nature and rational self interest so that admins are guided by accountability and legal recourse to the community - preventing them from trying to slip by (knowingly or unknowingly) proposals that destroy the community’s power.

Oversight / Non Deliberate Scenario
If however (and most likely) this aspect of this proposal was made by sheer oversight, then considering the gravity of the mishaps that could’ve resulted,

It stands again to ask why core team is suggesting to be the complete board, entire constitution of a board and quorum of the board, when there are such obviously large gaps in knowledge and perspective of the longer-reaching implications of gov decisions, proposals and effects of corporate rules.

NOT A MAXI STANCE - A Safety Stance For The Safeguarding of True Community Power
The same machinations lead to the same outcome.

It’s not that money has never existed before. It’s that, human nature (if left without hard caps and defined boundaries in place) always creates machinations that destroy the franchise and wealth and power of the people.

As you can see, these machinations may employed to even projects run by DAOs to fleece away the power of the people through legal instruments and little devils in the detail.

Several other DAOs following a cut/paste process have fallen prey and will continue to fall prey. Pangolin however, having the perspective of this opinion I have just raised and the full perspective of it’s implications, does not have to follow suit. And as a community we get to ensure a better decision is made.

Being the first project on Avalanche and more critically one founded by Avalabs, i would hope that we do better since all coming community owned projects and DAOs will inevitably look to us to establish their culture of what’s acceptable.

Which means we need to hold ourselves as a community and elected admins to a higher standard of not just copy/pasting what’s being done else where.

HERE’S A BETTER PROPOSED FRAMEWORK FOR PANGOLIN / FOUNDATION GOVERNANCE
Here’s a comprehensive framework for governance of community-owned projects that would circumvent a lot of issues we’ve just seen above, safeguard community ownership/involvement while mitigating potential for security classification as well as prevent us from becoming a legal target for regulators.

NOT LEGAL, INVESTMENT OR FINANCIAL ADVICE. ALL RECOMMENDATIONS SUBJECT TO LEGAL REVIEW AND VARYING CONSTITUTIONAL AND STATUTE VIABILITY IN SPECIFIC JURISDICTIONS. THANK YOU FOR YOUR TIME.

  1. Proposed Pango foundation should be registered by a middle-ground 3rd Party such as Avalabs
  2. A balanced board should be established and should have some seats reserved for local business leaders / professionals as it would be extremely dangerous and naive to enter a new jurisdiction without local members with pull in the jurisdiction.

Especially since crypto is such test tube of a space right now, and will be subject to much scrutiny and local compliance in the coming years, calling even more the need for local member with highstanding in Singapore where this is looking / recommended to be registered.

  1. Executive directors - i.e. the core team - may not constitute more that 20% to 30% of the board. Core team may not be assigned role of chairman of the board due to the clear conflict of interests, as a board chairman steers an impartial conversation.

  2. Quorum of board meetings - i.e. the number of board member that must be present for meeting and decisions made to be legally enforceable - should at minimum equal twice the core team plus one so that the final power is always balanced.

  3. CEO and CFO of Pangolin Foundation should have mandatory executive director seats.

  4. Board term should not be more that 5 years, except by extraordinary performance and written request to instate said baord members to an extra term.

  5. Scope limiting of NDAs should be effected for all DAO - barring executive and board members from speaking on matters critical to growth. But allowing whistleblowing should something ever go wrong years down the line. Otherwise, NDA succumb to the common use in tradfi of being used to censor good actors from calling out bad actors. Legal will have to craft the finer details of this.

THE MONEY MATTER & A CASE TO CORE TEAM’S & PANGO STAFF’S HARD WORK
In terms of remunerations, it is understandable that we need to pay Pango executives and staff well to attract the best talent and get the project past SBF’s rumored token dumping and JOE’s overtaking speed. Nonetheless, this should be subject to board approval for both principle and decorum to be observed. Core team should not have the power to both propose and approve - via the board - payments and bonuses to themselves. That’s dangerous ground.

SUMMARISED ACTION POINTS OF THIS PROPOSAL
Here’s the summary of action points proposed:

a/ YES - Allow tokenomics update in the regards where rewards are to be given to liquidity providers are increased for the growth of Pangolin.

b/ Completely halt the creation of Pangolin foundation till improved corporate structure and recommendations above are implemented into the fine print so core team doesn’t acquire a totalitarian control of the treasury. The risk is not that core team are bad people - not at all, to the contrary I kinda like these guys and think they’re great esp on the technical side.

However, the real risk is that rational self interest takes an autonomous route to enrich itself or do as it pleases where there are no legally enforceable bounds or deterrents. It’s not a matter of if, it’s a matter of when and how drastically it will affect Avalanche & Pango’s reputation, your PNG token price and thus value of APR rewards (as it won’t be worth much if people are dumping due to bad governance.

c/ Immediately implement an independent core team for community involvement

I’m going to suggest myself, @aslowcheetah (Telegram) and @abominablesasquatch for this next crucial role.

Here’s my background & relevance to Pango:
I’m a Physicist turned business operator and ardent crypto proponent with perspective on how this technology could be used to solve a lot of the world’s governance and power slant issues being from a line of rulership myself. We have the opportunity do things right from the start, thus creating a good precedent for other crypto projects as well as for the world when world governance eventually turns to DAO.

With regards to Pangolin, I have been an active contributor behind the scenes and played much of the conflict resolution role that ensured that the Pangolin core team could get hired at a time where all our other Pango OGs were throwing in the towel since there couldn’t seem to be a reasonable solution to the multi-sig issue. Seeing as no one else had that skill, hopefully it will be crucial to resolving further issues in governance as important issues are raised down the line.

Beyond that I have also established relationships with several project admins in the community and I’m a prolific growth strategist for both private and community enterprises.

Here’s ASlowcheetah’s Background:
Slowcheetah is an experienced developer who has been very vocal about calling out loopholes / backdoors in code for the Avalanche community even before audits were a thing.
Indeed, he’s also worked on Pangolin’s smart contracts par excellence.

While all this is great, the other key reason I’m proposing Slow because he’s vocal and has no reservations against calling out technical problems without relent. While I can be bamboozed on the technical side, he cannot himself.

So this recommendation of being a member of the impartial governance board is as much a technical recommendation as much as it is a recommendation for his character, vocal dispositions and commitment to ensuring things are done right in the Avalanche ecosystem even when his opinion may seem unpopular.

Abominable Saquatch @abominablesasquatch :
While I haven’t spoken with Abominable yet, I’d also like to suggest abominable here for this role for his extreme technical detail and marked openness to speak his mind and give community guidance on critical issues.

He’s a legend of a dev and quietly behind several other projects in the Avalanche ecosystem. Despite his affiliation with Leo and Justin on those projects, he’s someone I reckon the community can trust to provide good impartial guidance and simplified explanation of implications of proposals.

I hope he will answer this call.

CRITICAL NOTE:
I probably won’t do this alone as I wouldn’t to able to present a full safeguarding function to the community alone in this office. Reason being my experience is limited to business and strategy side. I lack the technical perspective of being a coder, so I am really calling on @aslowcheetah and @abominablesasquatch to carefully consider this role as a necessity in instituting a new DAO culture for the Avalanche ecosystem that has commitment to balance and power of community at the core.

If these requested actors, are not aligned I may leave it up to community to remain vigilant. I have no interests in day to day running of Pangolin. My only true concern is governance of crypto projects and setting the right foundations and culture before global adoption arrives to copy the precedents we set.

FUNCTIONS (CORE TEAM COMMUNITY INVOLVEMENT & IMPARTIAL ENGAGEMENT)

“Tell me, I forget. Show me, I remember. Involve me, I understand.”

#1 - Declare and expose all sides of governance proposals to the community in clear simple language that anyone can understand. This will not only create comprehension of what’s going on, but will create a hodl perspective as token holder can now feel more involved with this project because they understand what’s going on - not just being bamboozled with technical proposals to vote for in hopes of better price.

Case in point…

Do you easily understand the governance proposals made with regards to Pangolin?

Do you truly understand why this new tokenomics proposal has been suggested and implications to PNG price upwards or downwards after update?

Did you see the implications of ‘Pangolin foundation’ and it’s corporate structure before this article detailing the ramifications?

What token holding, token selling, and passive staking strategies could you make if you have better understanding of DAO / governance proposals in simple language?

That’s the point of having a detailed impartial assessment of all proposals henceforth - that there be no gaps in your knowledge, so everything is clear and you’re informed on all the matters of gov if you chose to be actively involved. And that can community can knowledgeable propose informed amendments made if objectives, principles or intent of proposals are not satisfactory.

It will also safeguard us as community from being taken advantage of by intelligent individuals in the future who could attempt to slip in damaging policies in the details of larger, more popular updates -

Because to counter that intent, this impartial team ensures every governance detail will be analysed with a fine toothed comb by the impartial core team for governance. And recommendations given to the community from an impartial perspective with total accountability and recourse only to the community / not the executives of Pangolin.

It cures the situations of proposals only being presented in a light, context that allow them to be passed and safeguards PNG token value and project reputation / integrity long term.

PRE-EMPTIVELY REMOVING THE CONFLICT OF INTEREST OF CORE TEAM TO FIRE A IMPARTIAL ASSESSMENT TEAM

Further, judging by the gravity of what the role means for safe-guarding the community’s interests and the uniqueness of skillset, acumen and character needed, I’ll suggest payment should be be commensurate with what the executive core team receives in salary and bonuses, and paid directly by community approval via either of our multi-sigs.

This ensures core team is only fireable by the community and prevents executive directors from attempting their removal when inevitably countering impartial assessments are made for the community good that do not align with core team’s perfect wishes.

A CRITICAL CAUTION & BRIEF DEMONSTRATION OF THE URGENCY OF THIS ISSUE…
It’s hard to teach the effects of bad corporate structure in abstract. So allow me to use some scenarios and examples.

Empathetic Caution Against The Mob Response
In the following scenarios you should please remember that what we’re really up against isn’t a nefarious core team at all. Rather, the natural self interest common to all our human psyche and the natural course it takes if boundaries aren’t defined.

I’m not calling for a mob action against the team, rather for things to be done right since Pangolin’s actions set a precedent for all other DAOs in the community. And so we shouldn’t be copying what other DAOs are doing without making improvements that preserve the integrity of our community project.

A - Bonuses Scenario
Let’s say the Pango core team wants to approve a billion dollar bonus for itself in the year 2025. It makes this proposal under ‘fair rate’ and the board is supposed to object or scrutinize the alternative use of those funds for growing the project right?

Well guess what, core tam are also the complete board and quorum under this proposed ‘foundation’ and can unanimously approve this expenditure without recourse to the community. That is the nature of rational self interest, not them being villains.

The solution to this is to ensure that we have boundaries in place against those natural tendencies. Especially in this proposed cases where it would be perfectly legal to take having given away full board authority without a counterbalance.

B - Conflicts Scenario
It’s been proposed under this board structure that conflicts would be brought to community. But who’s going to raise that conflict when it goes against their natural self interests.

Further, with zero legal recourse of community since we’ve given them both the money and the power, there’s no deterrent.

And giving out all this treasury money and zero accountability could create a situation where team just throws money at problems instead of finding innovative solutions to issues and engaging the growth objective strategically for max market share.

C - Regulatory Alamo Scenario
We need to understand that admins are also individuals who’ve got people they love - family, wives & husbands, kids etc.

With this much money under exclusive control, if they became a natural target for regulators and were legally pinned under risk not having time with their wife and fam for say 10 years or would they take a stand detrimental to their freedom or just give up the community’s treasury to secure freedom. Would it be the alamo or self interest?

Now of course, this is unlikely to happen since the community treasury is dispersed across multi sigs and all members are unlikely to be present at one time except for critical meetings.

But the philosophical point is that natural and rational self interest would surely play out if it came to it, as we’ve already seen with the 6M PNG request. All the more reason to not have this type of power structure that makes them such a target.

And these are only a few of bad outcome scenarios.

There are many more implications which brevity and not wanting to cause a raucous publicly will not allow me to fully explain today. Hopefully these will be resolved quickly now that the spotlight is on them and we’ll realise the core team’s dedication not only to execution, but to the integrity of community ultimate ownership.

PROPOSING IMMEDIATE COMMUNITY HOT SEAT…
I have done much to propose these glaring timebombs waiting to tick are removed.

Unfortunately it’s been brushed off by core team - whether due to personal interests or gaps in insight - as not urgent. Now that these points are out in the open and explained in simpler clarity, I hope the gravity of the matter and how it coerces power and balance out of the community’s hands is understood. And that much will be done to immediately rectify the situation.

I’ve been unfortunately running around a bit these past two weeks. But I’ll reach out to president of Avalabs and get him to weigh in his thought leadership on this issue and the need to provide more education to the community and/or place competent independent guardians in governance of community projects to safeguard community interest.

As I already mentioned,

I’ll end by once again suggesting the core team makes themselves available for a community hotseat far in advance of the vote to pass this so we discuss the practical matter of day-to-day operations led to the feeling the need for this type of absolute control.

Then we can know how to execute a balanced and sustainable middle ground that allows them flexible execution without causing the community to totally lose all its bargaining chips while operating under facade of project being a DAO when community has no power over the treasury and thus no control.

Truth, both in what is professed to be a decentralised nature of Pangolin & compliance of execution team to this ethos of community ownership and power. Once again, this is a safety stance not a maxi stance.

Ever crucially, it’s important that we (both community and leadership) guard against the same machinations of lopsided bargaining chips, that has turned democracy into a facade benefitting a ruling class. Turning previous stakeholders into helpless protestors as machinations disintegrate the very essence of integrity. Crypto will be no different if we allow the same.

The same machinations lead to the same outcome. And if we allow the use of the mould of a broadsword, we cannot expect the outcome to be a peaceful butter knife. It’s beyond the money. It’s about the power and making sure that crypto doesn’t became much of the same facade show - whether it’s called democracy or DAO.

NOT LEGAL, INVESTMENT OR FINANCIAL ADVICE. ALL RECOMMENDATIONS SUBJECT TO LEGAL REVIEW AND VARYING CONSTITUTIONAL AND STATUTE VIABILITY IN SPECIFIC JURISDICTIONS. THANK YOU FOR YOUR TIME.

Thanks for your time. This has been my piece :v:t3:

2 Likes

It is so good to see people stepping up to govern our Pangolin community;
I agree with what Jaz has proposed here, the core team should emphasize on a un-exploitable foundation and board system;

We should halt these proposals inside the tokenomics update and propose them separately with the added considerations!

Thank you for weighing in on this matter @Luxe

Hopefully we get some resolution soon and additional vocal perspectives from the community.

All stances for / against issues raised here and complications that could arise are welcome.

1 Like

My intuition tells me that this post was not made in good faith or have the best intentions of Pangolin in mind, but rather has ulterior motives. Also I don’t think this post has the proper perspective of what Pangolin needs right now in the current landscape of Avalanche DeFi to stay competitive and relevant. What this post says to me is that you would rather rip out what has been established and install yourself instead, instead of working in cooperation with the community and team, which seems like a power grab.

As such, I don’t feel like it is right for me to engage in the specifics of this post because I do not agree that some of the perceived issues are critical, and should not be engaged with at the cost of derailing progress and momentum which Pangolin critically needs right now.

Appreciate you taking the time to share your views.

3 Likes

@Leo_Pangolin thanks for weighing in. I appreciate it.

Intuition does not address the facts raised or points addressed.

As I have said earlier, I have no desire to be involved in day to day operations of Pangolin - nor have I proposed to be involved to be given any executive duties.

I’m however ardent on the fact that community must have governance clarity and that community have full understandings on anything they vote for. And seeing the absence of some perspective, that an impartial team assessing and explaining governance be instituted. Further even suggested that other can be recommended in my place where they have the experience.

Quite the contrary. This sounds disingenuous as I have called repeatedly in this post and on Telegram that team always be maintained and technical issues be addressed.

Just as loopholes found in a technical / code audit wouldn’t be grounds for removal of the team, administrative loopholes found aren’t grounds for removal either in my opinion.

The problem are the loopholes, not you. And just as issue uncovered are naturally plugged/fixed in code situation, I was counting on them being fixed in this administrative / DAO engagement situation in good spirits. Rather than personal attacks at my integrity which I take very personally.

Addressing specifics would be quite beneficial. Because I’m frankly not comprehending the aggression and personal attacks with which this is being opposed. That said, I’m personally quite zoned out due to the sense of “us vs them” vs “us with them” team is broaching this conversation.

Discuss further details with the community.

Although @jazavax‘a statement comes off a tad alarmist and hyperbolic, I believe what he has proposed should be considered. I think the core team has done fantastic work thus far and only has good intentions for Pangolin. That doesn’t mean one of the core team won’t leave for another project and the next person won’t abuse their power. The proper governance guardrails need to be put in place to ensure the lasting success of this DEX.
I agree that there should be a stand alone governance proposal separate from the tokenomics update to discuss details further.

2 Likes

Hey mate,

I have addressed them here Pangolin Foundation Update

Unfortunately this attempt at War and Peace doesn’t ask specific questions, and is fairly incoherent. If anyone want’s to ask specific questions on that post we’re happy to answer.

Also if Jaz knew anything about the community, he would know that Pangolin has worked very closely with SlowCheetah and Sasquatch.

I talk to them weekly. Sasquatch is part of the core team with me on Sherpa and SlowCheetah has been a great help and contributed code to Pangolin.

So I’ll be looking forward to Jaz’s free contributions to the community. I have a long list of stuff that I’m looking forward to handing over to him for his kind offer to do them for free.

2 Likes

Haha!

Abominable

Slowcheetah

@hariseldon2 I’m not quite sure you took the time to read this article or much of what was raised and suggested -

Else you would’ve probably figured I recommended Slow & Abominable specifically because the already have associations with you and Pangolin - something I stated explicitly above and imagined would key to an you having easy working relationship to safeguard the future of this project and they chose to assist with gov.

Guess back and forth could go on ad nauseum.

It’s up to you and community to decide now. Hopefully they still have some power when all this is said and done.

My last piece on the matter. Shalom :v:t3: