Proposals

Frax Finance (FXS)

Proposal: sFrax Governance Proposal

Author: Amirnader

Summary: The Frax Core Team are proposing to introduce Staked FRAX (sFRAX), allowing users to deposit FRAX stablecoins into a smart contract (Standard ERC-4626) and earn interest on their holding.

Key Points:

• sFRAX is similar to the Dai Savings Rate concept and focuses on addressing the near-zero duration yield curve of FRAX.
• The sFRAX contract will allow users to deposit their FRAX stablecoins to earn an APR on their deposited FRAX through earning newly minted FRAX stablecoins.

• Given that sFRAX will be ERC4626 compliant, sFRAX will be an interest-bearing token that can be easily integrated into other protocols, bridges, cross-chain applications, etc.
• The source of yield for sFRAX is not static nor guaranteed to be from a single strategy.
• The protocol will allocate a part of the revenue it earns from balance sheet deployment in AMOs and RWA strategies to supply sFRAX yield to set the “Frax Staking Rate”.
• The Frax Staking Rate will attempt to softly target (but not guarantee) the Federal Reserve Interest on Reserve Deposit Rate (IORB) at all times.
• If the protocol cannot return as much yield as the IORB, it will attempt to keep the FRAX stablecoin fully collateralized, and then return excess balance sheet revenues to sFRAX.

Our Take: In the absence of a bull market, it is pretty challenging to maintain the same demand for decentralized stablecoins as before. In order not to lose market share, stablecoin protocols are beginning to incentivize demand through native APR, which we saw in the previous cycle. Given the innovations available, it will be interesting to see how this strategy works now.

Compound Finance (COMP)

Proposal: Aera Pilot for Compound v2 Reserves

Author: dtalwar

Summary: This proposal requests to utilize a portion of Compound’s V2 reserves to pilot a 3-month treasury management program using Aera.

Key Points:

• Aera is a non-custodial, on-chain, autonomous treasury management protocol for DAOs to help maintain runway, cover liabilities and benefit from market growth.
• Aera consists of vaults that are specific to each protocol and can hold a combination of stablecoins, native tokens, and other cryptocurrencies, which in combination fulfil a portfolio strategy determined by the DAO.

• The Compound V2 market on Ethereum has accumulated over $45m USD in reserves, which consist of $22.2M DAI, $14.1M USDC, $3.7M USDT, $3.1M WBTC, $1.3M ETH, $597K BAT, and $305K 0x.
• Currently, these reserves are static and expose Compound to long-tail assets such as BAT and 0x.
• Therefore, a 3-month Aera pilot program is proposed using $500k of BAT or 0x from Compound’s reserves.
• The Pilot will swap the BAT or 0x for USDC and wstETH within the Aera vault and continuously rebalance itself based on market conditions and the portfolio strategy.
• The portfolio strategy will target a portfolio volatility level of 15% to manage portfolio risk and capture gains during periods of market strength and protect against losses during downturns.
• The vault’s performance can be publicly tracked via a dashboard.

Our Take: This is an interesting pilot for Compound, allowing the DAO to passively manage their reserves without needing constant governance votes. Furthermore, it reduces the DAO’s exposure to long-tail assets such as BAT and 0x.

Lido Finance (LDO)

Proposal: Lido on Solana Funding Proposal

Author: mediakov (P2P)

Summary: The P2P team are requesting funding to continue the development and marketing of stSOL, alternatively, if funding is not approved by the DAO they will plan to sunset the service.

Key Points:

• The P2P team have been working on the Lido on Solana project since March 2022 after acquiring ownership from Chorus One.
• However, to continue development and take Lido on Solana to the next level, they are seeking financial support from the Lido DAO.

• From 2022 to now, TVL has grown from 954k SOL to 4.1M SOL; market share has increased from 0.53% to 1%; DeFi protocol integrations have increased from 4 to 22; stSOL has been listed in 12 major wallets; and the referral program attracted 192k SOL over 5 months.
• Furthermore, P2P carried out several product development and marketing activities.
• In 2022–2023, P2P invested ~$700k in development and support while only receiving ~$220k in revenue, resulting in a loss of $484k.
• In order to continue their operations on Solana for 2023–2024, P2P is requesting a total of $1.5M USD for the next 12 months.
• Development Retainer: $200k/quarter to cover development expenses.
• Marketing Budget: $600k annually for establishing steady and reasonable marketing channels.
• Customer Support: $100k annually to set up customer support that meets industry standards.
• In return, P2P expects to grow and gain a market share of more than 1% for Solana staking products; develop and implement new features; create consistent and rational marketing initiatives and dependable customer support service.
• If funding is not approved by the Lido DAO, P2P will begin sunsetting Lido on Solana (i.e., stSOL) similar to Lido on Polkadot and Kusama.

Our Take: The FTX blowup has greatly affected Solana in TVL and activity. Given the Lido DAO’s treasury balance, we think the funding request for the next year of development and maintenance is fair given the potential long-term benefits of remaining a key player in the Solana staking ecosystem.

Votes

dYdX (DYDX)

Proposal: GovernanceStrategy Smart Contract Upgrade

Status: Pending.

Created: Sep 13, 2023.

Ends: Sep 23, 2023.

Leading Consensus: Pending.

Summary: This vote will upgrade dYdX’s GovernanceStrategy Smart Contract to GovernanceStrategyV2 which will give wethDYDX the same utility and functionality as ethDYDX.

Aave (AAVE)

Proposal: [ARFC] Aave Treasury Proposal for RWA Allocation

Status: Live.

Created: Sep 14, 2023.

Ends: Sep 17, 2023.

Leading Consensus: YAE — 169 AAVE (99.91% of total votes).

Summary: This proposal requests to allocate 1M USDC to the Anemoy LTF — a short-duration US treasury bill pool on Centrifuge. The proposal also brings on Centrifuge as a service provider to the Aave DAO alongside setting up legal structures to support Aave’s RWA investments.

Arbitrum (ARB)

Proposal: Arbitrum Short-term incentive Program

Status: Live.

Created: Sep 11, 2023.

Ends: Sep 18, 2023.

Leading Consensus: Up to 25M ARB through Jan 2024–39M ARB (68.84% of total votes).

Summary: This proposal requests to distribute ARB incentives through a one-time, community-created incentive program. The program plans to allocate DAO-owned ARB towards supporting network growth and grant experimentation.