DeFi gets leaner: Gnosis fires treasury manager with 88% backing

Complaints

However, the cost-savings appear to be too little, too late. Gnosis forum users pointed to “highly contentious” fees of 1% of AUM and 20% of yield generated (2022’s GIP-58).

One user referred to past discussions over underperformance against benchmark assets sUSDS from Sky, formerly Maker, and Lido’s wstETH.

Another accused KPK of failing to manage concentrated liquidity positions, where “around $8 million is out of range.”

In addition to the above, an incident with a EURe/sDAI liquidity pool on Balancer created tensions back in June. The pool was set up by KPK, Gnosis and Balancer, and held DAO funds to facilitate swaps and earn fees.

The pool, which acted as “the primary source of liquidity for GnosisPay,” was configured with an oracle which only updated every three hours and not on weekends.

The user who notified Gnosis forum estimated that $700,000 was lost to arbitrage of the lagging prices.

The post notes KPK’s (and Balancer’s) “catastrophic” incident management, while KPK apologized and promised a refund, including a bounty for the user who flagged the bug.

Responses to proposal GIP-143 also note “shameless” votes from KPK employees, which reportedly made up 75% of support.

It’s not only Gnosis where KPK’s performance has been brought into question. Discussions on the Ethereum Name Service forums noted that total returns didn’t beat inflation.

Users also found errors in some yield calculations.

KPK’s defence

KPK’s response to the proposal pointed to the poorly defined scope of the initial engagement and a ballooning of responsibilities. It also noted 2024’s proactive removal of “idle holdings” from the fee base, and a $2 million fee cap.

KPK does, however, recognise that they “should have delivered structured updates and clear reporting cycles.” This focus on communication was reiterated in an Open Letter, though users pushed back, stating “it’s not a communication issue, it’s a performance issue.”

DeFi getting leaner

Treasury managers and risk consultants are a way for DAOs to outsource sensitive work to specialists, rather than relying on token holder voting.

However, accusations of service providers siphoning-off fees while doing the bare minimum aren’t uncommon. DAOs are now seemingly pushing back on the fully decentralized model.

Last year, a public spat between DeFi lending giant Aave and its former risk advisor came to a head when Gauntlet jumped ship to competitor Morpho.

More recently, Uniswap’s move to turn on the long-awaited “fee-switch,” whilst consolidating operations left DeFi divided.

This month, the reputation of vault “curators” has taken a beating following spectacular collapses of strategies run by those happy to take fees while depositors take the risk.

One observer from Sandbox Tree Capital commended Gnosis DAO’s move as a “business sense driven decision.”

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