Proposals

Uniswap (UNI)

Proposal: Making Protocol Fees Operation

Author: GFX Labs

Summary: GFX Labs is proposing to implement a ⅕ protocol fee across all Uniswap V3 Pools (with annualized fees over $10k) and turn on the fee switch for Uniswap V2. All fees will accrue to the DAO’s treasury which UNI holders will control.

Key Points:

• If approved by the community, Uniswap V3 Polygon will be the initial deployment to implement the ⅕ protocol fee. Following successful implementation, further proposals for Ethereum and other deployments will be made.
• Based on historical data it’s estimated that in the past 6 months, Uniswap would have generated ~$52M in revenue with a ⅕ protocol fee across all Uniswap V3 deployments.
• However, this discounts the effects of the fee switch on liquidity and swap volume.

• Currently, Uniswap V2 pools have a 30bps swap fee that is entirely paid to liquidity providers (LP) in the pool. Once the fee switch is enabled, 5 bps from each swap will be retained as an LP position and accrue to an address controlled by the DAO.
• As fees accrue to the DAO, the protocol should claim and sell these tokens to minimize its exposure to the assets it’s earning.
• GFX Labs is proposing to allow anyone to pay the gas and collect the fees, sell the tokens automatically via the Uniswap auto-router, and then send the proceeds to the protocol treasury.

Our Take: The idea of implementing Uniswap’s fee switch has been an ongoing discussion for many months now. Many proposals have been put forward that introduce the protocol to different trade-offs, however, the community has struggled to come to a consensus on what is ‘right’. We believe that Uniswap is in a good position to begin experimenting with the fee switch, but must remain vigilant in monitoring its effects on swap volume and liquidity.

Optimism (OP)

Proposal: Treasury Appropriation Proposal: Foundation Year 2 Budget

Author: Optimism Foundation

Summary: The proposal put forward by the Optimism Foundation is more symbolic in nature and aims to highlight the process of future funding requests. Specifically, the Foundation is requesting 1 OP for their 2023–2024 operating budget due to only using 5.21% of their 2022–2023 budget (Year 1).

Key Points:

• The Optimism Foundation’s future operating budget of OP is subject to governance by the Token House. Each year, the foundation can put forth a budget proposal for the community to approve or reject.
• In Year 1, the Optimism Foundation has only spent 5.21% of its allocated budget for Year 1. Therefore, they are only requesting 1 OP for their Year 2 budget.

• The Foundation’s operating budget is used to further the Collective’s goals which are focused on rewarding public goods and building a sustainable future for Ethereum.
• In April 2024, the Foundation may submit a new budget proposal for the Token House to review.

Our Take: The Optimism Foundation and community have continued to iterate their OP distribution channels to further Collective’s goals. Despite only a small amount of the operating budget used, Optimism has seen a wide range of community and developer activities with many protocols launching on Optimism.

Paraswap (PSP)

Proposal: Increasing fee capture & adjust DAO / Stakers split

Author: Lup

Summary: This proposal requests to make changes to Paraswap’s fee structure smart contract to reduce gas for users swapping via Paraswap. It’s expected that the reduction in gas costs should positively increase trading volume and DAO revenue through the change in fee sharing.

Key Points:

• Paraswap has processed $47B in trading volume, $37.7M in total fees, and $7.6M in revenue since its inception.

Currently, there are 3 ways Paraswap captures fees:

• Partner/Integrator Fee Sharing: When a partner sets a fee on top of Paraswap, Paraswap receives 15% of it.
• Performance Fee Sharing: When a transaction generates positive slippage 50% is returned to the protocol.
• Partner Surplus Monetisation: If a partner sets a fee below 0.5%, the Protocol automatically captures half of the surplus on top of the fee split.

However, due to the fee system being enforced on-chain, each swap costs users a bit of gas to check the fee conditions above resulting in higher transaction costs.

To reduce gas costs and make the system more efficient, this proposal requests to introduce the following changes:

• Partner Surplus Monetisation: Remove the 0.5% minimum fee rule to simplify the on-chain checks.
• Performance Fee Sharing: Change the default surplus to 100% instead of 50% unless specified otherwise (such as protocols that opt for surplus monetization instead of partner fee) — this will once again reduce on-chain check complexity while also leading to a higher default treasury revenue. Partners will have to choose between capturing 50% surplus or Partner Fees, but not both at the same time.

As a result, these changes are expected to increase volume on Paraswap and subsequently, DAO revenue.

Our Take: Optimising for gas-efficient code is extremely important for the adoption of a protocol. In the case of Dexes, high gas costs for swaps price out gas-sensitive users and reduce competitiveness amongst aggregator platforms. This proposal is a simple but important step to improving UX on Paraswap.

Votes

Compound Finance (COMP)

Proposal: Initialize cUSDCv3 on Arbitrum

Status: Finished.

Created: May 8th, 2023.

Ends: May 15th, 2023.

Leading Consensus: For — 490,143 COMP (100% of total votes).

Summary: This proposal ratified the launch of Compound III USDC market on Atbitrum. Launch assets will consist of WETH, WBTC, ARB, and GMX.

Uniswap (UNI)

Proposal: Deploy Uniswap V3 on Moonbeam

Status: Live.

Created: May 10th, 2023.

Ends: May 17th, 2023.

Leading Consensus: For — 12,240,828 UNI (99.99% of total votes).

Summary: Michigan Blockchain is proposing to reinstate the deployment of Uniswap V3 on Moonbeam. A proposal was previously passed for this deployment, however, Nomad was the designated contract deployer and cross-chain messaging solution for this deployment but suffered an exploit. Therefore, the deployment was never finished. This new deployment will instead use Wormhole as its cross-chain messaging solution.

ENS (ENS)

Proposal: Election of new ENS Foundation director

Status: Finished.

Created: May 1st, 2023.

Ends: May 6th, 2023.

Leading Consensus: Alex Van de Sande — 1.7M ENS (88.05% of total votes).

Summary: Due to the resignation of ENS Foundation’s current director — Brantly Millegan, the ENS DAO has voted on electing Alex Van de Sande as the Foundation’s new director.