At the intersection of mechanism design and governance, Butter is pioneering new approaches to how protocols make decisions. Co-founder and CEO Vaughn shares his vision for a post-CFM future and better incentive mechanisms in governance.
How did you first get into crypto?
My first real exposure to crypto was reading about digital currency in David Wolman's 'The End of Money’ while I was studying for a career in investment banking. The book led me to the bitcoin forums and Bitcoin. It was the first time I’d truly considered how money itself worked. When Ethereum launched I saw a record of ownership beyond digital cash, a way to define novel blockchain property rights.
What was your first project in the DeFi space?
I started my first project in 2016, working on tokenization of IP. The thinking was: if you can use a distributed ledger to record ownership of bitcoins, the same should be true for other types of property.
We originally started with video but found traction in music. It was probably foolish and definitely early - this was three years ahead of NFTs. The project worked well while it lasted, but we ended up shutting down the company in 2019. After that, I found myself combing DAO forums in 2020, and met my cofounder at an ETHGlobal hackathon soon after.
Can you explain what Butter does?
We describe our approach as Mechgov - the application of mechanism design to governance problems. Mechanism design is the practice of reverse-engineering game theory to arrive at outcomes you want, rather than those you don’t. We started with a well-known problem in protocol governance—capture by private interests—and worked backwards to produce a governance mechanism that ensures decision-makers’ incentives align with the goals of the protocol’s stakeholders.
What challenges have you faced building something so new?
Honestly, though Futarchy isn’t a new concept, there are very few implementations. It’s a real challenge because we have to be cautious - design choices we make now might come back to bite us later.
The other big challenge is coordination. We're building something that someone else uses to fund someone else. With so many moving parts and little precedent on how they fit together, it really is a collaborative effort.
How did your partnership with the Uniswap Foundation come about?
It started in 2023 after meeting Erin, UF’s Head of Governance, through the team at Radical. We’d been talking about taking a new approach to governance using mechanism design, and, after we participated in GovSwap, we proposed running a governance hacker house together at Edge Esmeralda called GG (Governance Games).
The Uniswap Foundation really made that event happen - their funding and brand helped us build a strong speaker list and ultimately legitimized the whole concept. Earlier this year, the Uniswap Foundation and Optimism Foundation announced a joint grant to Butter to test futarchy as a governance mechanism.
What gets you personally excited about this work?
When you look at crypto as a whole, you can see that people's natural incentives don’t always drive things in the right direction. I’m reminded of that experiment where they gave rats access to a pleasure button and they kept pressing it until they died. That's memecoins - we’ve started speculating on speculation itself. Speculation isn’t itself bad, but it isn’t inherently unproductive.
What excites me is the opportunity to fix this, to put speculation to good use, starting with Conditional Funding Markets. By taking this step, they’re marking a significant step forward in decentralized decision-making. It’s an important moment for our ecosystem.
What's your vision for Butter's future?
In the next year, we’ll spread across DeFi and L2s. Beyond that, we're building a protocol to coordinate funding decisions across multiple protocols, similar to how Protocol Guild works with Ethereum. We have a bigger vision about how we allocate money. Think about it - in DeFi, we have so many resources available, but we're not great at directing them toward what the community actually wants or needs. Our goal isn't just to have people run one-off markets off the shelf.
We want to create a network of markets that routes capital wherever in the network it can be put to best use. It's about building something that can consistently make better choices than our current systems.
Note: The views expressed herein may not reflect the views of the Uniswap Foundation. This interview is provided for informational purposes only and does not constitute legal, financial, or professional advice.