SNS Neuron Fund scamming

Governance
1

Hello community,

I’d like to raise a critical issue regarding the Neuron Fund (NF) and its role in funding certain projects via the SNS.

Issue Overview

There appears to be a trend of emerging jeet-tier projects with extremely questionable viability that are fleecing the NF dry.

They lack:

  • A clear use case

  • Long-term feasibility

  • Genuine demand or interest within the ecosystem

Examples of such projects include FuelEV and Fomowell( definitely not the only ones, but they’re the most recent), which have sucked tens of thousands of ICP (100k and 70K IIRC) out of the NF.

Nobody used, is using or will ever use these two ‘projects’.

Make no mistake, the funds raised through the SNS will go back into the ‘team’s’ wallets through proposals where their neurons hold a vast amount of voting power.

Observations

  1. Participation Manipulation: Data from snsgeek.app (e.g., FuelDAO launch) shows clear manipulation of voting power. For instance:

  • Many top participants (holding over 4,000 ICP) in FuelEV/Fomowell’s SNS appear to be accounts with no prior participation in other SNS projects, raising questions about their legitimacy.

  • Some wallets have minimal investments (e.g., 0.0001 ICP), in order to artificially inflate participant numbers.

  1. Lack of Community Demand: Unlike projects with established teams and long-term vision (e.g., ICTO, Juno, Canistore), which have struggled to meet MINIMUM funding thresholds, these questionable projects rob huge amounts of ICP and haul it out of the eco.

  2. Slow-Draining Tactics: These projects will keep the smoke and mirrors up until they fade out of the spotlight, then take the entire treasury out in a couple of proposals. AFAIK, there is no legal repercussions for this.

Possible Solutions

To address these concerns, I propose the following measures for community consideration:

  1. Disable NF Participation in SNS Projects immediately: Reassess the necessity of NF involvement in SNS funding, as its current implementation may enable exploitation.

  2. Manual Voting for SNS Creation: Require all neurons to MANUALLY vote on SNS creation proposals, ensuring greater scrutiny and community oversight.

Open Questions

  • Are there additional factors or perspectives I might be overlooking?

  • People say these projects come from the same circle of individuals associated with YRAL. I haven’t looked into this but is there anyone noticing the same patterns and can bring up evidence?

Supporting Data
Since I can’t post links: go to snsgeek. app - > FuelDao/Fomowell → launch snapshot → scroll down → check the top 15-20 wallets that participated.

Anybody with 15 minutes of free time can clearly see what’s going on.

This has to stop.

5 Likes
2

I was actually talking to a friend about this earlier. I couldn’t agree with you more.

I am also curious as to if we could put requirements on new SNS launches that require a % of the commitment total obtained to automatically move to the liquidity for the token.

If adjustments need to be made after the launch is successful then they could put out a proposal to make those changes which would allow the participants to review and vote accordingly. Just as “we”-participants are locked for certain time frames. This would lock in at least a certain % of the commitment into the liquidity pool automatically so an additional vote to add /remove liquidity is not needed unless warranted. In addition, might deter incidents of never funding the liquidity aspect of the token.

I may not have a true insight here but wondering if this would be possible and what the pros/cons of it may be?

3

I personally think the one-size-fits-all solution that would also be the easiest to implement would be totally disabling NF participation in SNS sales.

If people want to participate in SNS sales, they can do it themselves. This way, projects raise an amount proportional with the interest/demand for their project and don’t get any freebie cash.

There’s literally NO reason to match the investment 1:1 by the NF.

2 Likes
4

I’ll cross post here because most of the discussion in my comment applies to your post. I chose to post in the other thread since it was initiated by a known member of the ICP community. From your post here, I suspect you have been around the ICP community a while, but felt the need to create a new account to make this post. Anyway, I think both of you are expressing many of the same concerns.

2 Likes
5

A point of clarification, the NF match is not 1:1. It follows an S curve that requires a certain amount of participation before it really ramps up and then it is capped at a maximum amount that is a small portion of the overall funds that are in the Neuron’s Fund (less than 10%). This capped amount moves up and down based on people who opt-in and opt-out of the Neuron’s Fund. Currently, it sits around 100k ICP that any SNS can raise from the Neuron’s Fund, but they have to raise more than that in order to get that match. If an SNS sets their minimum raise to 500k ICP, they still will not get past the 100k ICP match of the NF. I only bring this up to point out that the NF match is a bit more complicated than a straight 1:1 match.

If your point is simply that the match is an incentive for SNS projects to try to game the system, then I do agree. However, there are many great and worthy SNS projects that really do need to benefit from the Neuron’s Fund and that are truly not trying to game the system. NFID is one such SNS that recently launched that falls into this category. As long as there are worthy projects out there like NFID (and many others), then I would not want to abandon the Neuron’s Fund.

I would rather see the gaming problem solved in better ways. For example, I don’t really understand why so many people think we should pass all SNS projects and let the market decide if the SNS should launch based on their performance in the decentralization swap. I would rather see known neurons incentivized to perform due diligence on SNS projects and for there to be an incentive for neuron owners to follow those specialized known neurons on the SNS topic.

The only known neuron that performs any kind of due diligence on SNS projects today is DFINITY, but they have people who are paid a salary to perform that work as a portion of their overall responsibilities. No other known neuron has the resources to staff any kind of thorough review, which is a lot of work to do it correctly. DFINITY doesn’t vote on all SNS proposals and there are certain exceptions that they are willing to make on their criteria based on whether the SNS wants NF participation or sometimes based on community demand. They have to be very careful with their vote on SNS projects because they trigger over half the voting power that votes on SNS proposals. That means that no matter how every other neuron votes, DFINITY will decide if the SNS moves forward. This is the result of the fact that so many people have chosen to follow DFINITY over the last 2 years.

I think we will see some important changes to the NNS governance framework as well as to the SNS framework over the next 6 months that will greatly improve this situation. These frameworks are actively being worked on by DFINITY and are on the short list for their roadmap activities.

5 Likes
6

Thank you for taking the time to reply in depth to my concerns.

Yes, I’ve been in ICP since genesis but I’ve lost access to my old account so yeah, using this for the time being. All of my points still stand.

You’re right, the 1:1 NF match in funding is capped but it’s still a huge amount that’s free for taking for these projects with little to no effort. Sure, good projects will make good use of the NF but do we want to sit on our hands and watch these cash-grabs fleece the NF dry until there’s nothing left to offer to the good ones?

Incentivizing DD is a step forward but I’d rather have the initial sale go without any NF participation so that the team has actual skin in the game and if the sale is complete, the project enters a DD state that spans several months where the community/known neurons raise up issues. If the project is legit, the NF slowly issues funds to the project at a rate agreed by all parties.

Or even better, the project has to hit certain verifiable milestones that show progress and adoption before even getting close to the NF funds.

I look forward to these changes you’re talking about.

7

The Neuron’s Fund is made up of maturity of the neurons that opt-in, which are very large neurons and are earning maturity daily at a rate of about 14% APY. Hence, the size of the Neuron’s Fund is increasing daily. Also, the match is based on a percentage of the total Neuron’s Fund (it might be as low as 5% max for each SNS). Hence, there are throttles built into the Neuron’s Fund design that keep if from being drained to zero. A SNS benefits by waiting for time to pass since the last SNS.

Anyway, I’m not arguing against your suggestions. I’m just trying to clarify some of the details.

4 Likes
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I have another perspective if I may.

If we stop the NF altogether won’t we be discouraging and stop better funding good projects? (that are creating ICP cycles usage)

That is, to protect a bit from the bad, aren’t we causing a lot of pain to the good?

:confused:

4 Likes
9

My second contribution, is that I personally don’t see the real situation to be as bad as you depict.

When the first SNSs came out, the amounts “dropped” and scared many that the NF would become depleeted, then the “s curve” (that Wenzel mentioned) came out and if you see it’s graph, it’s looking quite sustainable. So I don’t feel the scenario is as you depict (yet).

But an important thing to mention, is that not all projects get NF. On the config they need to request it (neuron_fund: true) and once they do, at least on the side of Dfinity (and suspect also Synapse Vote and a few other Known Neurons), they raise the bar on how meaningful the code being offered is and how transparent the process is being. So the deal is always there.

Actually Fuel EV got rejected on their first attempt (think the code wasn’t as meaningful). They kept working on the code and it’s business for months. This second attempt was much better and it not only got the green light at the proposal stage, it also attracted many investors (probably from the same network of investors as you mentioned).

So calling it as “scamming”, seems a bit exaggerated. What do you know that reviewers at Dfinity, Synapse Vote, and the several investors (maybe even qualified and trained) did not know or seen?

I am not endorsing investing, but am not in favor of outright “banning” investment altogether. There is for sure high risk involved, but the position has been:

  • ensure all info is out there. Allow time for community to look through and ask for clarifications.
  • If project respects the “openess and meaningful” requirements, then go for the launch.
  • then it’s up to the investors to gauge their risk and decide if they want to invest or not.

So, ICTO/Canistore failed, because they failed to previously (and during the sale) to convince an investors network. While others, did it and succeeded. The NF just “match funded” with other investors that also wanted to risk.

Only the future will tell. You are clearly very pessimistic on them, so it’s fair for you to pass (just untick the box before the proposal is submitted as Wenzel mentioned. You can “watch first” the governance sub topic :wink:), but others want to invest and unless there is any clear sign of false information or inexistent/meaningful or dangerous code, then investors should be allowed the freedom to invest.

Hope this more longer version can help in any way.

5 Likes
10

Its simple,massive corruption

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I don’t think completely removing the NF contributions is the right move, it will definitely discourage legit projects from going through the SNS process. Instead, the community needs to be more diligent with what they approve for the launchpad. The s curve mechanism dfinity introduced is definitely a much better system than what we had originally, and there’s a lot less room for abuse with it, particularly if we only vote on launching legit projects with a track record…

If there is no neuron fund, it would incentivise projects to just raise funds traditionally, or launch a token on other networks with more liquidity, similar to DMAIL. Why would projects go through the additional legal, compliance and technical headache of creating a governance token?

3 Likes
12

I believe it is appropriate to post a link to a defense offered on Twitter today by the FuelEV dev team to the accusations of nefarious actions that they received over the weekend on Twitter and other ICP socials, which likely inspired this forum post as well as NNS proposal 135318. It seems like a very civilized and measured response given the strong language of the accusations made against them. While I haven’t studied the FuelEV SNS whitepaper nor did I participate in the SNS launch, I was certainly a witness to many of the historical events that they outlined in this post. They have remained civilized throughout both SNS attempts and have worked diligently to ensure that they understood and responded appropriately to the SNS guidelines. As far as I can tell, they seem like a stand up team that deserves a higher degree of respect from the ICP community.

2 Likes
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As civilized and measured as their response might be, it doesn’t address the issue of them faking SNS participation with funds spread over multiple wallets in order to game the system and get 90k ICP out of the NF.

‘’’ The decentralization of voting power ensures a rug pull is not possible.‘’’

This is where I actually laughed and stopped reading.

14

There is no hard evidence that they manipulated the launch. We have followed their first NNS and could see there was considerable changes. Investments are often in the eye of the beholder, no one understood both Airbnb and Uber at the beginning and yet they just worked. Was following similar topics on twitter and to be honest there are many racial comments which were upsetting, I hope this has nothing to do with them being from India or the developing world. If there is a form of KYC-KYB it would make things a lot easier.

Side note, regarding the bigger accounts with no previous participation, as a venture fund we often send our LPs and investors nns launches and they invest on their own, a lot of people like the idea of easy access on nns that’s why I don’t view it as scam, it’s investment opportunities

15

It has nothing to do with their country. It doesn’t matter if they are Swedes, Indians or Chinese.

Do not derail the topic and steer it toward baseless accusations of racism.

This SNS (and others) have been frauded by teams faking participation with their own funds spread across multiple wallets in order to suck free money out of the Neuron Fund.

They haven’t answered the biggest concern - regarding the fake top 20 wallets that are owned by the team/friends/insiders.

‘No one understood Uber at the beginning’ - Give me an actual reason for why an electric car rental service in Mumbai (with ONE car in their fleet) needs to be ‘on ICP’. There’s nothing revolutionary about it, there’s hundreds of car rental services in the world.

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I actually hope to be proven wrong and will gladly support them publicly if this project still exists or delivers something one year from now on. Allow me to be very skeptical until then. I’ve seen my share of things in this eco.

1 Like
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As I understand the more traffic they get, more cycles gets burned, more mass adoption. India has a huge population to support mass adoption, I don’t understand why that would be an issue. If anything their business model is understandable than a bunch of other projects who do not know where they are earning yield. If this is a funding round, then by all means, their friends should invest as angel investors, if you can not convince people closer to you, then it’s idiotic. Why would a blog need to be on ICP, why would Uber be on ICP, ICP offers an alternative internet. If you get all the car rentals apps on ICP, then it’s great news right? If it starts with one that’s a good start. We deal with investors who are 40 plus and actually a project like that resonates with them, not a game that would need 1000 devs or some other far fetched projects. With every venture there is risk especially in startups, most fail, let’s hope more succeed than fail :crossed_fingers:always do your own research

18

It appears the original poster was correct about FuelEv. They stopped reporting revenue on their website (which i have doubts ever existed,) as soon as they sns launched. Their “booking” in the web app goes to nothing. Glad i did not participate in this fairly blatant grabbing of neurons funds.