Wintermute DeFi Governance Digest: April 2024

Wintermute DeFi Governance Digest: April 2024 | Week 1

01 APR 2024 | RESEARCH | AUTHORED BY CALLEN

This week’s proposals include CoW Protocol introducing an MEV Blocker fee, Angle Protocol launching a USD stablecoin, Uniswap deploying V3 on Sei; along with votes from Cosmos to introduce Partial Set Security (PSS) and a Temperature Check from Uniswap to deploy a Treasury Working Group.

Proposals

CoW Protocol (COW)

Proposal: CIP-Draft: MEV Blocker fees

Author: AndreaC

Summary: This proposal introduces a 20% fee for MEV blocker transaction flow paid by block builders. 50% of the fee revenue will go to the CoW DAO, while the remaining 50% will go to MEV Blocker partners.

Key Points:

MEV Blocker was created by CoW DAO, Beaver Build, and Agnostic Relay to provide Ethereum users with guaranteed fast inclusion time, MEV protection, and backrunning rebates on their transactions.

Since its inception, MEV Blocker has had no source of revenue.

This proposal attempts to fix this to ensure the project’s longevity and fund its technical maintenance through a fee based on MEV Blocker transaction value.

All builders connected to MEV Blocker will pay a per-block won fee recomputed every month.

For every block won during a period, the block builder will pay a per-block fee calculated as a percentage of the average per-block value of exclusive MEV Blocker transactions during the previous period.

The fee will be initially set to 20% of the above value with the period length being monthly, however, these variables may be adjusted later.

The CoW DAO will receive 50% of the fees received and the remaining 50% will be forwarded to MEV Blocker partners.

Builders accessing MEV Blocker will be required to post a 10ETH bond in a separate smart contract managed by MEV Blocker to cover any late fees and potential MEV leaks.

In a competitive environment, it’s expected that the fee paid by block builders will be passed on to Ethereum validators.

Our Take: Their approach to introducing fees seems like a decent first attempt, we look forward to understanding if it introduces any unforeseen negative externalities.

Angle Protocol (ANGLE)

Proposal: AIP – 87: Launch a USD stablecoin

Author: Sogipec

Summary: This proposal requests to launch a USD stablecoin leveraging the same technology underpinning EURA.

Key Points:

Since its inception Angle’s focus has been on the creation and growth of a decentralized Euro-pegged stablecoin.

The technology built to achieve the above purpose can be generalized to many other pegged assets including gold, however, the team is suggesting to start their expansion with a USD stablecoin USDA.

USDA will come with a savings solution stUSD that will earn a portion of the yield generated by the protocol on its assets.

The Angle team will also focus on scaling up a deep Forex market for USDA and EURA allowing anyone to easily trade between a EUR and USD stablecoin.

In order to bootstrap the equity backstop of USDA, the Angle team will utilise 3M Euro worth of EURC along with some USDC from the protocol’s reserves.

Our Take: This is a great initiative by the Angle team, the USD stablecoin market is huge and we look forward to seeing how their underlying infrastructure handles both EURA and USDA once launched.

Uniswap (UNI)

Proposal: Deploy Uniswap v3 on Sei

Author: AbdullahUmar

Summary: This proposal requests to launch Uniswap V3 on Sei V2 which offers optimistic parallelization of transactions.

Key Points:

Sei will be releasing their V2 on mainnet in Q2 2024 which will provide optimistic parallelization of transactions, allowing for enhanced throughput and lower fees.

This proposal requests to launch Uniswap on Sei in anticipation of this upgrade which will be Uniswap’s first deployment in an alternative execution environment.

Importantly, there will be no smart contract changes needed as Sei V2 brings byte-code EVM compatibility.

The Sei Foundation has committed up to $1M of liquidity for bootstrapping Uniswap-specific pools with $400k being committed across 3 initial pools on day one (SEI/USDC, SEI/WETH, SEI/USDT), while the other $600k will be split into two tranches across 2 quarters based on Uniswap activity.

The Uniswap DAO will also vote on a growth package for Sei after the deployment has occurred.

GFX Labs will be responsible for the technical deployments of the contracts on Sei and Oku Trade will be available on day one as the initial frontend for users.

The deployment will utilize Wormhole as the cross-chain messaging solution.

Our Take: This is a very interesting and unique opportunity for Uniswap to test protocol dynamics in a different execution environment.

Votes

Cosmos (ATOM)

Proposal: Signaling Proposal – ICS 2.0: Partial Set Security

Status: Live.

Created: Mar 29, 2024.

Ends: Apr 12, 2024.

Leading Consensus: Yes – 44.3M ATOM (99.0% of total votes).

Summary: This is a signaling proposal to adopt Partial Set Security (PSS) which will act as ICS 2.0. PSS will allow a subset of the Cosmos Hub’s validator set to run consumer chains allowing every validator to opt-in to securing chains they deem profitable to support. It will also support a ‘Top-n’ consumer chain module which forces the top ‘n’ percent of Hub validators to automatically opt-in to supporting highly strategic and valuable consumer chains that require strong economic security.

Uniswap (UNI)

Proposal: [Temp Check] Mobilizing the Uniswap Treasury

Status: Finished.

Created: Mar 27, 2024.

Ends: Apr 1, 2024.

Leading Consensus: For – 20M UNI (75.97% of total votes).

Summary: This proposal requests to fund a Uniswap Treasury Working Group (UTWG) to explore treasury management strategies aimed at achieving sustainability and growth for the DAO. The working group will consist of 4 members for a total budget ask of 6k UNI.