Wintermute DeFi Governance Digest: April 2024 | Week 5

30 APR 2024 | RESEARCH | AUTHORED BY IGOR

This week’s proposals include Mantle exploring the next phase of mETH, Nexus Mutual adding USDC as an asset within the Capital Pool, Sushi Swap proposing new governance framework; along with votes from Synthetix to deploy v3 and Perps on Arbitrum, the post-merger tokenomics revamp from Origin Protocol, and the compensation for liquidated ezETH traders on Gearbox.

Proposals

Mantle (MNT)

Proposal: [Proposal] Exploring the next Phase of mETH

Author: cateatpeanut

Summary: This proposal targets a spinout of Mantle LSP with additional features to manage restaking strategies.

Key Points:

• mETH became a top-4 Ethereum LST in a short period of time, as well as was adopted as one of the primary assets on Mantle L2.


• Currently, mETH is the top-3 LST on EigenLayer with 164k tokens restaked, but it’s more limited than LRT in terms of restaking strategies.

• To fix the issue mentioned, separate product teams and create more incentives for users a spinout is needed.


• An important part of this proposal is a new token to govern this protocol.


• The technical details are out of the scope of this proposal with only high-level details shared yet.

Our Take: The current generation of LSTs is not flexible enough for restaking strategies, so 66% of Eigenlayer TVL is natively restaked, mostly through LRTs. We’re looking forward to this Mantle spinout that should make the mETH ecosystem more competitive.

Nexus Mutual (NXM)

Proposal: ​​NMPIP 215: Add USDC as an asset within the Capital Pool

Author: BraveNewDeFi

Summary: For the first time since the launch, Nexus Mutual plans to add support for a new asset to sell covers – USDC.

Key Points:

• On-chain insurance was a hot topic in the previous bull market, and Nexus Mutual is the leader in this DeFi sector.


• Originally, only ETH and DAI were supported, but the space changed drastically in 5 years.

• Currently, USDC is the top-2 USD stablecoin and is used as collateral for DAI and other stablecoins like USDA.


• Previously, Aave criticized MakerDAO for adding USDe to the collateral basket and decreased DAI LTV.


• Having USDC support could help with the creation of new coverage against DAI depeg.

Our Take: Adding USDC to fulfill users’ demand, hedge possible MakerDAO incidents, and potentially increase the TVL, seems like a reasonable strategy.

SushiSwap (SUSHI)

Proposal: Proposal for Decentralized Governance Structure: Intro of Sushi Councils [RFC]

Author: Jared Grey

Summary: Jared proposed a new governance framework for SushiSwap based on elected councils.

Key Points:

• This proposal is part of the SushiSwap reorganization already mentioned in one of the previous proposals.


• The core idea is to establish three councils: High Kitchen, Treasury Council, and Grants Council.


• High Kitchen should manage treasury, tokenomics with SUSHI emissions, and protocol safety.


• Treasury Council will provide proposals to High Kitchen, manage POL, and draft budgeting.


• Grants Council would lead everything around the grants program to make it effective and successful.

Our Take: The council model originally implemented by Synthetix has become more popular nowadays. We are watching with caution if this approach will help SushiSwap navigate through the turbulence.

Votes

Synthetix (SNX)

Proposal: SIP-367: Synthetix V3 Deployment to Arbitrum

Status: Live.

Created: Apr 24, 2024.

Ends: May 1, 2024.

Leading Consensus: sYES – 5 SNX-SCT (83.33% of total votes).

Summary: This proposal approves the deployment plan for Synthetix v3 and Synthetix Perps on Arbitrum as part of the cross-chain strategy. Although this proposal was previously concluded in favor, the current version includes potential challenges based on the feedback from Arbitrum delegates.

Origin Protocol (OGN)

Proposal: OGN Tokenomics

Status: Live.

Created: Apr 25, 2024.

Ends: May 2, 2024.

Leading Consensus: YES – 29M OGN (100% of total votes).

Summary: This proposal updates OGN tokenomics after the merge with OGV, resulting in almost 410M OGN being minted. The team doesn’t expect a sharp increase in the circulating supply, mostly because the majority of OGV is not circulating. Part of the new tokenomics is a vote-escrowed contract with one-year lockups and an opportunity for ‘early exit’.

Gearbox Protocol (GEAR)

Proposal: [GIP-127] Partial Compensation for ezETH Borrowers Liquidated during Emergency Pause

Status: Live.

Created: Apr 29, 2024.

Ends: May 2, 2024.

Leading Consensus: YES – 178M OGN (92% of total votes).

Summary: This proposal approves the ~20% compensation of users who were liquidated on Gearbox after the ezETH depeg and the activation of an emergency pause. The team will share funds collected by running a liquidation bot during the event. Users should not consider this a precedent and expect similar refunds in the future.