Wintermute DeFi Governance Digest: August 2024 | Week 3


19 AUGUST 2024 | RESEARCH | AUTHORED BY CALLEN



This week’s proposals include dYdX launching a new 6-month $20M incentive program for the launch of dYdX Unlimited, Frax Core Team requesting a 13M FRAX budget for the next year of operations and development of the Frax ecosystem, and Optimism upgrading their Fraud Proof Architecture after audit findings; along with votes from Jito allocating 1M JTO to a bug bounty program, Arbitrum launching a 250M ARB treasury diversification program, and Uniswap enabling new fee tiers on Base.


Proposals


dYdX (DYDX)


Proposal: [DRC] Launch Incentive Program Re-launch Proposal


Author: Chaos Labs


Summary: Chaos Labs is requesting an additional $20M in DYDX rewards to rerun a new 6-month incentive program with the launch of dYdX Unlimited.


Key Points:



  • Chaos Labs previously designed and ran a 6-month Launch Incentives Program to help bootstrap dYdX V4, following a relatively successful program, the community also approved an extension for an additional $10M in DYDX rewards.

  • The extension is now coming to an end on August 28, however, dYdX recently announced dYdX Unlimited which allows:


–> Permissionless market listings

–> MegaVault liquidity

–> Affiliates program

–> Permissioned keys




  • Thus, Chaos Labs is requesting to rerun a new 6-month $20M incentive program to retain and attract users to ensure a successful launch of dYdX Unlimited.

  • In the 9-months of Chaos Labs’ current incentive program, dYdX V4 has seen:


–> Over $206bn in trading volume across 116 markets

–> Over $34M in net fees while distributing $25M in incentives

–> Over 14,000 active traders and 30 different market makers

–> A weekly trader retention rate of 50% to 80%


Our Take: Chaos Labs’ prior incentive program has successfully retained traders and market makers in a competitive market. A new incentive program aligned with bootstrapping dYdX Unlimited is important to continue attracting new users.


Frax Finance (FRAX)


Proposal: Frax Finance Annual Budget Request (2024 – 2025)


Author: Amirnader, Frax Core Team


Summary: The Frax Core Team are requesting 13M FRAX for the next year of development. The budget is focused on 6 key areas: Development and Operations, Security, Grants, Reserve Emergency Fund, Legal & Compliance, and Fraxtal Growth.


Key Points:



  • The Frax Core Team is requesting a 13M FRAX budget for the next year of growing and developing the Frax Ecosystem.

  • Frax is entering a new era with the launch of Fraxtal which will be the main focus of growth and development under this budget.

  • Notably, the 13M FRAX is a maximum cap on expenditure and the Frax Core Team only spent ~7M FRAX out of their 9M FRAX budget for the prior year.

  • The proposed budget breakdown:



Our Take: The proposed budget seems reasonable, clear, and in line with other large DeFi protocols.


Optimism (OP)


Proposal: Upgrade Proposal #10: Granite Network Upgrade


Author: Mofi


Summary: This proposal is an upgrade in response to security vulnerabilities identified during a series of third-party security audits regarding Optimism’s Fault Proof architecture.


Key Points:



  • During a series of third-party audits conducted by Spearbit, Cantina, and Code4rena; 2 high, 3 medium, and 7 low severity issues were identified involving Optimism’s Fraud Proofs architecture.

  • While none of the vulnerabilities have been exploited and users’ assets are not and were never at risk, this proposal requests to upgrade a series of smart contracts related to Optimism’s Fraud Proof architecture and invoke a hard fork to address certain issues found from the audit.

  • If this vote passes, the Granite upgrade will be scheduled for execution on September 10th at 16:00:01 UTC starting with a pre-state update, followed by the Hardfork, and lastly, updating L1 smart contracts to the new versions that contain the audit fixes.


Our Take: This is great work by the Optimism team, auditors, and contributors, bringing Optimism closer to a highly secure Stage 1 L2.


Votes



Jito (JTO)


Proposal: JIP-5: Bug Bounty Program


Status: Live.


Created: Aug 15, 2024.


Ends: Aug 20, 2024.


Leading Consensus: Yes – 10.64M JTO (100% of total votes).


Summary: This proposal requests to send 1M JTO to a Jito Foundation-controlled address for payouts related to a bug bounty program.



Uniswap (UNI)


Proposal: [Temp Check] Activate 2, 3, 4 bps fee tiers on Uniswap v3 on Base


Status: Finished.


Created: Aug 15, 2024.


Ends: Aug 18, 2024.


Leading Consensus: Yes, activate additional tiers – 19M UNI (88.21% of total votes).


Summary: Uniswap V3’s volume market share on Base has seen a noticeable decrease as a result of Aerodrome introducing lower fee tiers on major pools. As a result, Uniswap is considering activating 2, 3, and 4 bps fee tiers to begin experimenting and potentially win back market share.



Arbitrum (ARB)


Proposal: Strategic Treasury Management on Arbitrum


Status: Live.


Created: Aug 16, 2024.


Ends: Aug 23, 2024.


Leading Consensus: For – 30M ARB (55.85% of total votes).


Summary: This vote aims to establish the Arbitrum Strategic Treasury Management Group tasked with allocating and diversifying 250M ARB from the DAO’s treasury to ensure long-term sustainability & ecosystem growth.