Just a thought experiment, but should a blockchain engineer code of ethics apply to protocol builders who create, launch, and promote risky “investment/yield” farming games? And should we publish risk ratings to various projects?
Obviously the US securities laws are one deterrent to creating unsustainable games that are built on top of masked ponzinomic / tokenomics, but not all countries have such legal recourse and consumer protection in place. (cough cough Singapore / Korea / etc…)
Let’s all be honest here, if a project is smart enough to write a complex yield farming game mechanism and hype it up to a non-trivial TVL, the creators know in the back of their minds what are the flaws and weaknesses in their game design. There’s obviously personal incentives for them to down play the risks for personal gains, but as we see what’s happening with UST + Anchor (built by the same company), when shit hits the fan, its ordinary people who are wrecked.
So, should we:
- Publish a Celo block chain developer code of ethics (similar to doctor’s Hippocratic Oath)
- Create a community system to vet and assign risk to projects gaining TVL on the network (kind of like Moody’s rating agency)
I know the chain is decentralized and anyone can use it, and both of these points won’t prevent bad actors / losses, but shining some light on this at least help drive away the unsavory projects to other networks.
I also don’t think saying individuals ought to “do their own research” is a good answer either because there’s a lot of marketing BS, and let’s be frank, who actually reads the smart contracts except professional players on the network?
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Yes.
System would not let me just say yes.
So, Yes, absolutely, for sure, wait we don’t have that?, of course we should… 
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I love this! I was also jamming with @nraghuveera and @0xHelena earlier this week that it would be cool to have an independent DAO do research on different protocols to assess and provide some sort of risk rating.
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- Publish a Celo block chain developer code of ethics (similar to doctor’s Hippocratic Oath)
- Create a community system to vet and assign risk to projects gaining TVL on the network (kind of like Moody’s rating agency)
Yes, I think that both a code of ethics and standardized/transparent methodology for evaluating risk on various projects would be beneficial.
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Definitely would love to start working with our builders and community on putting together a DAO for rating apps in our ecosystem. Risk assessments and the overall user experience should be the focus, but it’ll also be great to have more transparency and documentation of the progress Celo apps have made over time.
So I did some research over the weekend on Perpetual V1 (perpetual futures position trading on Gnosis Xdai network) since I run a liquidator on that protocol, and I was seeing really large dead whale positions that would sink their entire insurance fund.
I brought it to their protocol’s discord attention on Saturday evening, and by Sunday evening, some of the whale positions were closed out & the insurance fund is indeed no longer solvent… The protocol shut off their V1 that evening and is now in the process of deciding a fair final settlement price…
I think for this DAO who does risk rating to be effective, we need software engineers who will build infra to track various DEFI / trading platform’s overall positions in real time and alert when the books look toasted. All of the liquidators on Perpetual V1 saw this coming cus we have to track all outstanding positions in a database, but normal Defi users have no clue how healthy the entire protocol is or isn’t.
Likewise, the Perpetual team didn’t unwind the protocol until 24 hours later when the dead whales started getting liquidated and it was indisputable that the insurance fund was toast… Incentives do NOT align between protocol team & the welfare of the general public.
There’s very objective ways to gauge health of many types of DEFI protocols by just tracking ALL positions in a database for everyone to see & analyze.
Whether a protocol is close to insolvency or not, it’s just a SQL query if you have the right database being maintained offchain.
In the hope of furthering this conversation I’m providing an example of a document used for a Traditional Finance investment in an early stage company that explains the hopes and risks and the who and wherefore blah, blah, blah stuff.
The point I’d like to make here is that for anyone willing to read it, it provides a really good assessment of where ‘they’ are at today, how ‘they’ got here, and the risks any investor may face if they choose to put money in.
Within crypto there is a generic claim of everything being transparent, which is true in a transactional sense, but this one document provides more pertinent information and engenders more trust in me as an investor than any crypto project I’ve studied has provided.
The folks at Prime Rating would love to take on this kind of challenge. Happy to make an intro.
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