Layer2DAO - Grant Usage Final Summary

Note: It appears someone(s) is repeatedly flagging threads to make it impossible to reply, as such I am posting this as a separate topic and will copy it directly to the relevant threads once reopened.

In an attempt to put an end to what has been a long and grueling process to bring transparency and accountability to the misuse of grant funds, here is a succinct a final summary of my understanding of the core facts based on this statements and evidence presented to date. This goal of this summary is to serve as a clear reference for those looking to understand the events to date should further requests be made of Optimism Governance for funding for L2DAO, NFTEarth, LFGrow, their team members, and active partners.

While assumptions of good faith and positive intent are critical to the ethos of the ecosystem, I think it is critical, especially in circumstances of repeated breaches of trust, that we do not allow folks to exploit these positives intentions to obfuscate potential attempts to take advantage of us and the decentralized system we are building. My hope is that now that these details have been been clarified, individuals in the ecosystem will have all the information they need to make their own evaluations, and we can shift our focus back to the the work of actually building a more honest and accountable collective.

Summary of L2DAO’s Misuse of Grant Funds:

• L2DAO dumped all OP grant funds and bridged them to Arbitrum with no public disclosure

• L2DAO misrepresented the circumstances that lead to the dumping/bridging of funds

• L2DAO used these funds to farm and generate DAO revenue on both Optimism + Arbitrum

• After being discovered, OP was re-purchased (for less) and bridged back to Optimism

• L2DAO used OP grant funds to fund two multisigs which were controlled by their team

• These multisigs dumped / distributed all OP grant funds to an interconnected set of 20+ wallets

• Beneficiaries of these distributions from NFTEarth + LFGrow were often the same addresses

• These addresses engaged in a number of suspicious and manipulative activities with NFTE

• No evidence has been provided that any independent NFTEarth DAO voted to approve distros

• No evidence has been provided that any sort of independent LFGrow DAO governance exists

• Multiple anonymous wallets on these multisigs were funded by existing team wallets

• L2DAO declines to attribute any verifiable independent identity to these multisig members

• This makes it impossible to rule out team ownership of additional “private signer” addresses

• L2DAO declines to address evidence pointing to Weston’s potential ownership of the only other address that co-signs nearly every transaction on both the identical LFGrow / NFTEarth multisigs

• L2DAO principals appear to have been fully in control of / responsible for the actions of these multisigs

• No explanation has been offered as to why supposed five figure reimbursement payments to Weston were funneled through multiple wallets before hitting his Coinbase deposit address

• No detailed accounting has been produced detailing the exact purpose and recipient of each payment and transaction

• This obfuscates who from the team benefited and in what amounts from these transactions

• This obfuscates whether or not LFGrow funds were used for NFTEarth, contrary to promises

• This obfuscates who from the team engaged in manipulative trading activities + wash trading

• L2DAO continues to make misleading statements implying that the situation was “resolved”

• Optimism clarified that their statements do “not indicate that concerns have been resolved”

For reference:
• Tick-tock and on-chain analysis of events associated with the initial dumping and bridging of Optimism Grant Funds
• On-chain analysis of second and third instances of dumping and moving of Optimism Grant Funds
• Layer 2 DAO’s statements to date on the second and third instances of dumping and bridging


Okay, caught up on all of this. I think @0xWeston and @Exosphere’s responses in their statement made a good faith effort to address some of these claims. I appreciate the effort. As demonstrated by this thread, this clearly didn’t and likely won’t ever satisfy some folks. So how do we move on?

Just throwing out an idea, I wanted to respond specifically to this.

Let’s say hypothetically, I had malicious intent and I wanted to launder OP grant funds for my personal enrichment, I would literally follow the exact same playbook outlined by the on chain evidence. Get a grant for an org that can provide further grants outside of OP governance oversight, mix in some legitimate grants with some newly spun up orgs that I control, dump the OP for “expense reimbursements” and send it to myself. So I appreciate that you claim positive intent and are willing to show receipts for real expenses. However, I think breaking out the fainting couch to express your SHOCK that people continue to make absolutely baseless accusations to the contrary feels a bit disingenuous.

If we are being honest, this looks sketchy. This is crypto and there are scammers galore. Talk of good intent is cheap and there is ample on chain evidence that I think all reasonable people should agree needs to be answered for. After the first OP dumping incident the burden of proof that you are a good actor goes up. After this issue, it seems reasonable it should go up again. Assuming a, “well we meant well and once again didn’t know we were breaking the rules” should automatically patch everything up and we can move forward with sending you more OP is asking for a huge amount of trust that in my opinion needs to be earned back.

You seem to have a genuine passion for these projects… but you really are surprised that after the first L2DAO OP dumping incident people wouldn’t have a problem with OP funds being dumped and ending up in your coinbase wallet? It didn’t occur that maybe this should be proactively reported? That maybe having on-chain sleuths uncover this looks bad? Being on multiple multi-sigs that all received OP grants that were dumped is standard behavior and you can’t understand why anyone would have a problem with it? Any reasonable person would just remember that you are a concerned community member trying to build who maybe unintentionally cut a few corners on some rules because you are so passionate about NFTs on Optimism… really? If competitors are just out to ruin your projects as you seem to imply, why do things that will obviously give people pause?

All this to say, I think to move on and not have to rehash these arguments constantly a slightly more honest mea culpa from the L2DAO team is warranted and a little more self-awareness of how this looks would go a long way. Even a simple acknowledgement that you are aware of how any of this could be perceived as bad and that you are willing to satisfy extra accountability requirements during future grant rounds to prove the haters wrong seems like a good first step. I hope that we can start to deescalate things as this is starting to get pretty ugly. I think that you admitted that you may have made violated the letter of the law, but haven’t really acknowledged that you did anything wrong. I get you have some personal animus with folks here, but its not unreasonable that you need to take the first step to show good faith.