Proposals

Lido (LDO)

Proposal: Lido on Cosmos Initial Deployment

Author: Spaydh

Summary: This proposal outlines the implementation and roadmap of bridging wstETH to the Cosmos ecosystem.

Key Points:

• There has been notable demand for bridging wstETH to the Cosmos ecosystem which if not coordinated correctly, could lead to long-term issues for wstETH and Lido on Cosmos.

Specifically,

• Canto bridging wstETH via a custom fork of the Gravity Bridge
• Injective looking to bridge wstETH via Wormhole
• Osmosis and Axelar are planning to bridge wstETH via Axelar
• Such uncoordinated efforts could lead to vendor lock-in, liquidity fragmentation, technical debt, and uneven security.

• To solve these issues, Lido contributors are working with Hadron Labs (a core contributor to Neutron) to propose a unified bridging solution for wstETH to Cosmos.
• The initial bridge mechanism will use Axelar and a “wrapper contract” to handle the bridging of wstETH in Cosmos.
• The “wrapper contract” will allow bridge providers to be added, removed, or replaced upon the request of the Lido DAO to adhere to its security criteria and long-term bridging vision while avoiding liquidity fragmentation and technical debt.
• A multisig of Cosmos ecosystem contributors will initially own the contract until the contract’s ownership can be transferred to the Lido DAO’s Arragon smart contracts on Ethereum.
• This will happen once cross-chain governance has been implemented.

Our Take: Ensuring there is a single recognized and supported version of wstETH across Cosmos is super important for security, user experience, reduction in technical debt, and effectiveness of growth efforts.

dYdX (DYDX)

Proposal: dYdX V4 Launch Incentives Proposal

Author: Chaos Labs

Summary: This proposal introduces a $20M 6-month trading rewards program for the launch of dYdX V4 to help migrate trading volume and users from V3.

Key Points:

• With the launch of dYdX V4 nearing, there is significant importance in successfully transitioning the V3 user base to V4 at inception.
• This proposal introduces a $20M DYDX 6-month trading rewards program for V4 to strategically spur protocol growth and bootstrap trading volume.
• Importantly, this program will run in addition to the V4 Rewards Program which is an adaptation of V3’s Trading Rewards program.

• Users will primarily earn DYDX based on their deposits to V4 and trading volume on V4, however, the exact rewards formula will not be disclosed to prevent manipulation.
• Chaos Labs will provide incentive distribution recommendations which will be publicly verifiable by a trading report and supporting data for the community. This will allow community members to verify that large recipients of DYDX incentives bring significant volume and fees to V4.
• A rewards leaderboard and risk portal will be launched in parallel, allowing further insight into the activity of wallets and overall market activity on V4.
• The 6-month period will be divided into epochs, where rewards will be distributed after each epoch following a successful governance vote.
• Specifically, Chaos Labs will provide distribution recommendations after each epoch which will then be discussed and voted on by the dYdX community.
• If the community approves this proposal, Chaos Labs will request funding from the dYdX Grants Program to fund all relevant research, engineering, development, and administrative tasks required for the program.

Our Take: This program introduces a large number of incentives over 6 months, however, we agree that there is a significant benefit to bootstrapping the early stages of V4 which should incentivize migration and the staking of DYDX, improving the economic security of the chain.

Arbitrum (ARB)

Proposal: Arbitrum’s Short-Term Incentive Program

Author: tnorm

Summary: The Arbitrum Incentives Working Group has proposed a one-time community-created program to distribute up to 75M ARB to active Arbitrum-based protocols.

Key Points:

• This proposal outlines a one-time, community-created program to distribute up to 75,000,000 ARB of DAO-funded incentives targeting active Arbitrum protocols.

The goals of the program are to:

• Support network growth.
• Experiment with incentive grants to understand what drives user engagement, volume, transactions, and liquidity on Arbitrum.
• Find new models for grants and developer support to increase activity on Arbitrum.
• Generate data on the efficacy of grant distributions to inform future incentive programs.
• Grants will be approved via a three-week process across two cycles, beginning with the Application Period (1 week), followed by a Review Period (1 week), and ending with a Voting Period (1 week).

• Cycle 1 is estimated to begin on Sep 15 and end on Oct 6 — where Cycle 2 will begin and last until Oct 27.
• Protocols can submit grant applications for amounts they feel appropriate with no maximum limit. However, the Arbitrum Working Group has provided some metrics for the community to utilize:

• All grant applications will need to pass a Snapshot vote with more than 50% majority votes and more than 71.51M ARB in favor of the application.
• Successful applications will be required to complete KYC with the Arbitrum Foundation.

Our Take: This is a significant amount of ARB incentives to be distributed to the Arbitrum ecosystem. We look forward to seeing its effect on developer activity, volume, liquidity, and user count; alongside the valuable data that comes from such incentive schemes.

MakerDAO (MKR)

Proposal One: Proposed Spark Pre-farming Airdrop Formula

Author: PhoenixLabs

Summary: This proposal introduces the formula and timeline for a pre-farming airdrop of $SPK.

Key Points:

• Following the discussion from Rune’s post outlining the SPK pre-farming airdrop of SparkDAO, Phoenix Labs has published a formula on how the airdrop will be calculated.
• The goal of the airdrop is to give users and borrow-arbers a reason to keep using Spark Protocol despite changes to the EDSR, where using Spark Protocol might not be as profitable as other lending protocols.

• Furthermore, this airdrop is intended to build the market’s trust in Spark Protocol and bootstrap a community of users and DAO participants that are aligned with the mission and potential of SparkDAO.

The proposed pre-farming airdrop formula is:

• Airdrop = 80% DAI Borrows in USD + 20% ETH Supplies in USD
• The airdrop start date commenced on August 20, 2023, which is when the EDSR adjustment change was made.
• The airdrop will run until either the start of the Spark subDAO token farming or May 20 2024, whichever comes first.
• 30m SPK tokens (2% of the total supply at year 4) will be allocated to the airdrop.
• The airdropped tokens will be vested over 4 years.

Our Take: Liquidity mining efforts have typically been successful in retaining a certain amount of activity for a protocol. It will be interesting to compare Spark Protocol’s activity in relation to other lending protocols if rates become less favorable on Spark.

Proposal Two: Explore a fork of the Solana codebase for NewChain

Author: Rune

Summary: This proposal invites discussion to begin exploring a fork of Solana’s codebase for NewChain — the final phase of MakerDAO’s endgame.

Key Points:

• Rune is proposing to explore a fork of Solana’s codebase to serve as a stand-alone blockchain (NewChain) for Maker Protocol.
• This is considered the 5th and final phase of Endgame and is expected to be a long-term project that will take at least 3 years, if not longer.

• The most important reason why NewChain is needed is that it will allow the ecosystem to use hard forks to gracefully recover from the most severe form of governance attacks or technical failures.
• All components of the protocol can be purposefully rebuilt for their exact role in the final, permanent Endgame technical design.
• NewChain will mostly contain the backend of the Maker Protocol and SubDAOs — all user-facing products and systems will be untouched and will remain on Ethereum, L2s, or larger blockchains.

The 3 main reasons for choosing Solana are:

• The technical quality of Solana’s codebase — it is highly optimized for the purpose of operating a singular, highly efficient blockchain, which is what NewChain requires.
• Robustness — The Solana ecosystem has proven its resilience by having gone through the FTX blowup. There is still a thriving developer community, meaning it likely has a significant lindy effect.
• Existing forks — There already exist examples of the Solana codebase being forked and adapted to act as appchains. Most notable is the Pyth Network.
• NewChain would also be able to tap into large amounts of developer talent already available within the Solana ecosystem.
• NewChain would employ a Two-Stage Gravity Bridge that will be connected to Solana alongside Ethereum. This will give Solana access to native Maker DeFi features and capital.
• Cosmos was considered to be the other main contender, however, Cosmos is not built around efficiency at its core the same way Solana is.

Our Take: This is a major feat to be undertaken by Maker that involves a lot of uncertainties. However, if successful, it could encourage more app chains to be built from Solana’s codebase.

Votes

Aave (AAVE)

Proposal: Increase GHO’s Borrow Rate

Status: Finished.

Created: Aug 31, 2023.

Ends: Sep 3, 2023.

Leading Consensus: YAE — 721k AAVE (100% of total votes).

Summary: This proposal requests to increase the GHO borrow rate to 2.5% from 1.5% to help with the short-term peg pressure of GHO. Aave stakers will receive a rate of 1.75% after their 30% discount.

dYdX (DYDX)

Proposal: V4 Adoption & DYDX Token Migration to dYdX Chain

Status: Finished.

Created: Aug 29, 2023.

Ends: Sep 2, 2023.

Leading Consensus: Yes — 36M DYDX (100% of total votes).

Summary: This Snapshot ratifies the adoption of the dYdX V4 open-source software as the next version of the dYdX protocol and adopts DYDX as the L1 token of the dYdX Chain.