DeFi Governance Digest: 15 Jul 2024

Proposals

Stride (STRD)

Proposal: Launch the Stride Rewards Share Program

Author: RoboMcGobo

Summary: This proposal requests to create the Stride Rewards Share Program aimed at sharing a portion of protocol fees with applicants who onboard new stToken holders for stTIA, stDYDX, and stATOM.

Key Points:

Stride currently earns ~$1.5M in revenue annually, making it one of the largest revenue-generating chains in the Cosmos Ecosystem.
Historically, 85% of all protocol fees have accrued directly to STRD stakers creating a valuable proposition for the token.

However, given Stride is still an early-stage protocol in a competitive market the revenue share does little to promote protocol growth.
This proposal requests to create a Stride Rewards Share Program that consists of sharing a portion of protocol fees with selected applicants who onboard new stToken holders for stTIA, stDYDX, and stATOM.
The program will be operated by a Reward Share Committee which will process applications, negotiate rewards share percentages, conduct oversight, and manage the day-to-day operations of the program.
Prospective participants can be wallets, protocols, institutions, crypto services, neobanks, custody services, or any other types of participation with solutions capable of integrating stride.
Approved applicants will receive a portion of the revenue generated from their referral code for the next 12-months from the time an individual token is staked.

Our Take: Such a program was relatively successful for Lido and we expect the same to happen for Stride.

MakerDAO (MKR)

Proposal: Spark Tokenization Grand Prix – Request for Proposal

Author: Steakhouse

Summary: This proposal is a call to action for prospective applicants to apply to participate in MakerDAO’s $1 billion RWA onboarding program.

Key Points:

Spark SubDAO – a subDAO within MakerDAO, has announced that it will be hosting the Spark Tokenization Grand Prix; a competition aimed at onboarding up to $1b of tokenised assets.
Tokenised asset issuers are invited to apply for the competition with applications opening on 12 August 2024.

*Incl. Collateral With Debt Ceiling > 0

Asset exposure focus will be on short-duration US T-Bills and similar tokenised products.
Applications will be evaluated based on:
- Pricing: Competitive and transparent pricing models.
- Liquidity: High liquidity to support seamless transactions.
- Strategic Considerations: Alignment with SparkDAO’s long-term vision and strategic goals.
Results will be presented to the Maker Governance for final decisions regarding potential onboarding.
The goal is to make Spark Protocol the central hub for RWAs on Maker and Ethereum.
Further details about the competition and proposal evaluation will be released in the coming weeks.

Our Take: This is a great initiative with potentially significant financial capital allocation for prospective applicants. Maker’s prior RWA efforts have been relatively successful for the protocol.

Compound Finance (COMP)

Proposal: Removing COMP Incentives from Mainnet Markets

Author: Sharp

Summary: This proposal requests to discontinue COMP incentives for Comet deployments on Ethereum Mainnet and repurposing them for L2s.

Key Points:

Compound currently has 2 Comet deployments on Ethereum Mainnet – cWETHv3 and cUSDCv3, both of which are the largest deployments amongst other chains.
Every week Compound distributes ~$30k in incentives on the ETH Comet to boost effective earn APR and reduce effective borrow APR.

However, due to this expenditure, the protocol’s net profit on this deployment over the past few months has been significantly negative.
This proposal requests to discontinue these rewards and repurpose them to grow Compound’s market share across various L2 Comet deployments, providing users with better earn and borrow rates.

Our Take: As more capital shifts towards L2s it makes sense for Compound to focus their incentives there.

Votes

Frax Finance (FRAX)

Proposal One: [FIP – 377] Change veFXS Reward Distribution Token

Status: Finished.

Created: Jul 10, 2024.

Ends: Jul 15, 2024.

Leading Consensus: For – 30M FXS (98.97% of total votes).

Summary: This proposal requests to change the underlying revenue distribution for veFXS stakers to FXB – Frax’s bond product. FXB is considered more productive for both the user and protocol, leading to a more optimal outcome.

Proposal Two: [FIP – 378] Aave AMO

Status: Live.

Created: Jul 15, 2024.

Ends: Jul 20, 2024.

Leading Consensus: For – 68k FXS (100% of total votes).

Summary: This proposal requests to activate an AMO that lends FRAX to Aave V3 with a maximum allocation of 100M FRAX.