HODLpac 2022
Why HODLpac's chose quadratic funding for the 2022 election cycle + a slew of policy proposals, polling on DeFi, and more.
Hi all, keep scrolling for:
A description of the quadratic funding-powered donation application HODLpac is using during the 2022 election cycle.
A review of the past week in crypto policy.
This week’s “Crypto in Congress” update from Ron Hammond.
A collection of must-see Tweets, articles, and podcasts related to crypto policy.
Also, welcome to all our new subscribers!
Three things you can do to get involved with HODLpac:
Subscribe and share our newsletter with your friends and colleagues:
Join our Discord to help shape the future of HODLpac:
Donate to HODLpac, get governance tokens, and be a part of the first political DAO in history:
HODLpac 2022
As some followers of this newsletter know, the way HODLpac worked during the 2020 election cycle was as follows:
Crypto supporters donated to HODLpac in fiat.
They received HODLvote tokens in return (which were ERC20 tokens on Rinkeby to avoid gas fees).
They used those tokens to vote (using quadratic voting) on which candidates received HODLpac’s available funds.
Donations were made by HODLpac.
This worked pretty well! We donated $7,500 amongst ten different candidates, five Republicans and five Democrats, while HODLpac members got to experiment with a cool, token-based voting system for a PAC.
However, there are a few issues with this system:
Though we didn’t raise enough for this to be a problem, we were technically limited to donating just $5,000 to each candidate (per election, i.e. primary and general) by FEC contribution limits rules. We want to donate, as a community, much higher sums of money directly to campaigns and this system wouldn’t have been able to do that.
Even though we used quadratic voting to limit the influence of whales in the Community Ballots, if this community governance system was done at scale (i.e. much more money and many more voters) then individuals donors to HODLpac may have ended up in a situation where none of the candidates they wanted to receive donations (perhaps for personal political reasons) won the Community Ballot and received HODLpac funds. This could have the effect of discouraging individuals from donating to HODLpac and, as such, limiting the amount of money that would go to candidates branded as “donations on behalf of the crypto community.”
Though DAO/community governance tooling has certainly progressed since then, our custom tech solution was a tad hard to use and we want to make it as easy as possible for people to participate in HODLpac.
So, for 2022, HODLpac is going to work a bit differently. Our new design solves for these problems and enables HODLpac to have a bigger impact in the election (read: donate more money) and be a more effective community-governed organization.
Many of you are aware of Gitcoin Grants, the fundraising platform for public goods in the Ethereum ecosystem which uses quadratic funding. Essentially, how it works is this: There is a pool of funds that matches individuals’ direct contributions to projects that are seeking grants but the number of contributors matters more than amount funded when it comes to how much is matched.
During the 2022 election cycle, HODLpac is essentially going to work like Gitcoin Grants but for politics, wherein PAC funds act as the quadratic funding matching pool.
How it will work:
Donors donate to HODLpac in fiat or crypoassets. The first $5,000 donated by an individual in a calendar year goes to HODLpac’s “traditional PAC” bank account, which is able to make donations directly to candidates’ campaigns. These funds function as the quadratic funding matching pool.
Then, we hold a few “Donation Rounds” where individuals in the crypto community can donate directly to candidates they want to support in fiat or cryptoassets. They can use HODLscore data to supplement their own personal political views when making decisions on who to donate to. These donations are counted towards individuals’ contribution limits to each candidate ($2,900 per election, i.e. primary and general), through a process called “earmarking” which means HODLpac effectively passes through the donations to the candidates.
PAC funds are disbursed based on the results of these direct contributions, according to the quadratic funding algorithm. HODLpac can give up to $5,000 per election (i.e. primary and general) to any candidate.
Like Gitcoin DAO, donors to HODLpac and individuals who participate in Donation Rounds receive HODLvote tokens - HODLpac’s governance token. In the coming weeks, we’ll dedicate a newsletter to talking about the vision for HODLpac community governance.
Why is this better? Three reasons:
Bigger Impact. We can get more money to candidates that deserve it by using this structure. Candidates can receive up to $2,900 from each individual donor per election + the $5,000 max contribution from HODLpac per election (rather than only $5,000 from HODLpac itself).
Avoid Partisanship. HODLpac’s new quadratic funding design enables individuals to donate only to candidates they are willing to support (while having those funds amplified by the matching pool). HODLpac will also have separate matching pools for each political party, giving matching pool donors the ability to support one party over another.
Progressive Decentralization. As mentioned above, following in Gitcoin DAO’s footsteps gives HODLpac an elegant way to distribute governance tokens to its members.
If you’re reading this and have opinion on this design, hop in our Discord and join the conversation.
Love it and want to contribute to the matching pool?
The Week in Crypto Policy
This past week was an eventful one in the world of crypto-related public policy. Here are some highlights, including three different policy frameworks introduced by companies in the crypto ecosystem:
Coinbase’s “Digital Asset Policy Proposal”
Coinbase released their Digital Asset Policy Proposal, in hopes of “animat[ing] an open and constructive discussion regarding the role of digital assets in our shared economic future.”
Coinbase CEO Brian Armstrong also penned a Wall Street Journal opinion article entitled “We Need a New Approach to Regulating Crypto”.
A version of the proposal is available on Github for others to fork and add to.
a16z’s “Agenda for the Future of the Internet”
Andreeson Horowitz, a major venture capital firm, published their own policy agenda for Web 3.0
They are maintaining the proposal as a “living document” on a Web 3.0 policy hub on their website. This announcement followed four legislative proposals they put forth earlier this month regarding regulating crypto as well as a report entitled “Stablecoins, Stability, and Financial Inclusion.”
FTX’s Public Policy Blog Series
Joining Coinbase and a16z, crypto exchange FTX released the first of a series of blogs on the current state and future of crypto-related public policy.
DeFi Polling
Earlier this year, the DeFi Education Fund made a grant to Future Majority to conduct polling on what Americans think about crypto and DeFi.
Reps. McHenry, Emmer, and Davidson Send Letter to Treasury
Stablecoin regulation is a hot topic right now. See the Podcast section below to hear Coin Center’s recent podcast on the topic.
Last week, Reps. McHenry, Emmer, and Davidson sent a letter to the Treasury Department asking Secretary Yellen to clarify how Treasury categorizes stablecoins and the regulatory implications that flow from its classification.
Crypto in Congress - October 18, 2021
By Ron Hammond
Let's do a quick dive into the importance of engaging with policymakers on the state level and the ramifications it has for DC. States are at the forefront of policy and many times the challenges we face in DC happen beforehand in the states.Whether the policies promoted are pro-crypto or anti, many times Members of Congress will lead on issues that are important to their constituents and colleagues in the statehouse. Investing in groups that promote sound policy at the state level will lead to a ripple effect in DC.
The most obvious example of this is Wyoming. The efforts of Caitlin Long, former State Rep Tyler Lindholm, and Banking Commissioner Cynthia Lummis and many others not only put Wyoming on the map as a hub for crypto, but also gave rise to one of the crypto industry's biggest DC advocates: Sen. Lummis.
Another state that has been a leader crypto policy is Texas. The efforts of Lee Bratcher and Natalie Smolensky with Texas Blockchain Council resulted in several pro-crypto bills getting signed by the Governor. Not only is Gov. Abbott pro-crypto, but many Texas Members of Congress are now too.
It's not just R states though. In Washington state, Arry Yu has been leading educational efforts at the state level that have resulted in several Members of Congress approaching us in interest of this rapidly growing sector. The same can be said for Ally Medina and her success in the California State Assembly which has led to several progressive Members of Congress from California reach out to us wanting to learn more as well as become champions for the technology.
While there is a lot of positive efforts, there is still a long way to go. New York is a great example as the State Assembly nearly passed a bill which would have placed a moratorium of proof of work mining. This won't be the last time we see a bill like this.
There are many other leaders at the state level and there are too many to tag, but understand that we communicate as a group on a regular basis. Even though there is friendly competition among the states, the work of these state organizations has a direct impact on DC policy.
🐦 Tweets
📚 Good Reads
“Inside the World of Black Bitcoin, Where Crypto Is About Making More Than Just Money,” Janell Ross, Time Magazine
“Bitcoin and the U.S. Fiscal Reckoning,” Avik Roy, National Affairs
“Crypto Is Too Big for Partisan Politics,” Kristin Smith, CoinDesk
“SEC Commissioner says ‘safe harbor’ laws would’ve made ICO problems worse,” Brian Quarmby, Coin Telegraph
“Congress needs to step up on crypto, or Biden might crush it,” Former Rep. George Nethercutt (R-Wash.), The Hill
“New York joins crackdown on crypto lending, seemingly targeting Nexo and Celsius,” Kollen Post, The Block
“Crypto Learns to Play the DC Influence Game,” Rob Garver, CoinDesk
🎙️ Listen/Watch
“Stablecoin Regulation,” Jerry Brito and Peter Van Valkenburgh, Coin Center’s Tangents Podcast
“Forward With Crypto featuring Andrew Yang,” David Hoffman and Ryan Sean Adams, Bankless Podcast
“Gary Gensler, Coinbase Lend, the Howey Test & the biggest legal problems facing crypto featuring Collins Belton,” Jacob Robinson, Law of Code Podcast
“Demystifying Crypto Legalities, the Motivations of Regulatory Bodies, and Stablecoin Regulation with Gabriel Shapiro,” Tom Shaughnessy, Delphi Digital Podcast
Disclaimer: HODLpac is FEC-registered hybrid political action committee and is not legally affiliated with any party, party committee, candidate or candidate committee.