Wintermute DeFi Governance Digest: December 2024 | Week 3
18 DECEMBER 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include GMX outlining their development roadmap which focuses heavily on UX optimization, Polygon discussing the utilization of idle bridge assets in yield-generating activities, and Aura Finance proposing a $1M buyback of AURA; along with votes from dYdX to discontinue the Ethereum Mainnet bridge by July 2025, Instadapp rebranding their $INST token to $FLUID, and CoW DAO expanding their Solver rewards to Arbitrum One and Gnosis Chain.
Proposals
GMX (GMX)
Proposal: Gmx v2.2 + v2.3
Author: xdev_10
Summary: This proposal outlines the upcoming development plan for GMX which includes features such as gasless transactions, network cost subsidies, multichain, cross-collateral, etc.
Key Points:
- This proposal outlines the upcoming development roadmap for GMX dubbed GMX V2.2 and GMX V2.3.
- GMX V2.2 includes a myriad of changes and improvements such as:
–> Gasless transactions: Users will be able to sign a message via their wallet which will later be broadcast to Gelato’s keeper network. This reduces the need for wallets to be funded with native gas tokens, improving UX.
–> Network Cost Subsidies: To address high network costs during times of congestion a network fee pool will be created and funded using a portion of open/close fees and will subsidize gas casts for users.
–> Multichain: GMX will support virtual accounts allowing users from any supported chain to trade on GMX.
–> Cross-Collateral: Users will be able to use USDC as collateral to trade against single token pools e.g., ETH [WETH-WETH] pool.
Capped price impact for traders, reducing overall transaction costs.
- While GMX V2.3 will include:
–> Cross-margin
–> Market groups: Combining similar markets such as ETH/USD (WETH-USDC, WETH-WETH, USDC-USDC) based markets to improve overall liquidity.
Our Take: It’s great to see GMX V2.2 + V2.3 updates focus heavily on optimizing and improving user experience on the platform.
Polygon (POL)
Proposal: Polygon PoS Bridge Liquidity Program
Author: AllezLabs, Morpho Association, Yearn
Summary: This proposal requests to reallocate DAI, USDC, and USDT reserves from the Polygon PoS Portal Bridge into curated liquidity pools. Yield generated from these activities will be used as ecosystem incentives on Polygon PoS and the AggLayer.
Key Points:
- The Polygon PoS Bridge currently holds ~$1.3b of stablecoins, making it one of the largest holders of stablecoins onchain. However, these assets currently sit idle.
- This proposal requests to utilize and reallocate DAI, USDC, and USDT reserves from the bridge into curated Morpho Vaults.
- These Morpho Vaults will be curated and managed by Allez Labs and the yield generated from these activities will be used and managed by Yearn to grow the DeFi ecosystem of Polygon PoS and AggLayer.
- Specifically:
–> DAI will be swapped and held as Maker’s sUSDS.
–> USDC & USDT will be allocated to Morpho Vaults serving Superstate’s USTB, Maker’s sUSDS, and Angle’s stUSD markets.
- Based on current lending rates, this initiative is expected to generate ~$70M annually.
Our Take: While the opportunity cost of not initiating this program is high, this is a significant change for users who have stablecoin assets deposited on Polygon PoS as their underlying canonical asset is exposed to increased smart contract and counterparty risk.
Aura Finance (AURA)
Proposal: [AIP-72] Part 1: AURA Buy Backs
Author: Philjfry
Summary: This proposal requests to deploy a total of $1M worth of USDC and WETH to buy back AURA and lock it.
Key Points:
- The DeFi mid-cap market, including Aura, has experienced suboptimal price action despite the apparent onset of a bull market.
- Now with the launch of Balancer V3 which is expected to take over a significant share of the DEX market, there is growing interest from partners, particularly in voting markets.
- The DAO should not sit idle and instead be proactive in trying to capitalize on this upcoming momentum.
- Thus, this proposal requests to utilize $1M from the Aura treasury ($634k USDC and $366k WETH) to buy back AURA via CoW Swap.
- Limit orders will be placed at $0.45-$0.50.
- Purchased AURA will be locked weekly, reducing the circulating supply, but also diluting 4% of current vlAURA holders.
- Rewards from voting markets will be split between aUSDC and aWETH on Aave.
- Lastly, this proposal also requests to transition 50% of its $1.3M POL in the AURA/WETH 80/20 pool to the AURA/ETH 50/50 pool on Balancer to optimize liquidity.
Our Take: While the buyback signals optimism over the future of Aura, there is a notable dilution to existing vlAURA holders.
Votes
dYdX (DYDX)
Proposal: Cease Support for the wethDYDX Smart Contract (the Bridge) by June 2025.
Status: Finished.
Created: Dec 3, 2024.
Ends: Dec 7, 2024.
Leading Consensus: Yes – 123.9M DYDX (~91% of total votes).
Summary: This onchain vote seeks to discontinue support for the wethDYDX Smart Contract i.e., the bridge from Ethereum Mainnet to the DYDX Chain. If approved, the bridge will be officially closed by June 2025 when no more DYDX from Ethereum Mainnet can be bridged to the DYDX Chain.
Instadapp (INST)
Proposal: Transitioning $INST to $FLUID.
Status: Finished.
Created: Dec 14, 2024.
Ends: Dec 16, 2024.
Leading Consensus: For – 4.24M INST (100% of total votes).
Summary: This proposal requests to rebrand INST to FLUID to better align with the protocol’s vision. If passed, the INST token contract’s name and symbol will be changed to Fluid and FLUID, respectively.
CoW DAO (COW)
Proposal: CIP-57: Solver rewards on all chains
Status: Finished.
Created: Dec 10, 2024.
Ends: Dec 17, 2024.
Leading Consensus: For – 40.3M vCOW (100% of total votes).
Summary: This proposal requests to expand CoW DAO’s Solver rewards program to Gnosis Chain and Arbitrum One given its success on Ethereum Mainnet. It should help with incentivizing new Solvers to join the protocol while also improving competition amongst existing Solvers on these chains.