Wintermute DeFi Governance Digest: February 2025 | Week 2
11 FEBRUARY 2025 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Euler extending incentives for 6 months with a 1M EUL and 300k USDC budget and UMA reducing their network emissions over 3 cuts starting with a 14% decrease; along with votes from Mantle who aim to create a BTC, ETH, SOL, and USD index fund, and GnosisDAO deciding whether or not Karpatkey should spin-off into their own DAO and launch the KPK token.
Proposals
Euler (EUL)
Proposal: Ecosystem Initiatives Renewal
Author: Euler Foundation
Summary: This proposal requests to extend the ‘Ecosystem Initiatives Proposal’ with an additional 1M EUL and 300k USDC for the next 6 months.
Key Points:
- With the relaunch of Euler V2 proving successful, the Euler Foundation is requesting to extend the incentives program to capitalise on the momentum gained.
- The rEUL program which incentives users with EUL tokens that vest over time has proven to be largely successful gaining $245 in TVL growth for every $1 spent on emissions.
- The protocol has now reached over $250M in TVL resulting in a significant increase in fees, increased user adoption, and enhanced visibility.
- To capitalise on this momentum, the Euler Foundation is requesting 1M EUL and 300k USDC for an additional 6 months of incentives targeting:
> Liquidity provision & user growth
> Integrations & grants
> Distribution partnerships with major wallets and platforms (CEXs, OKX Waller, Binance Wallet, Coinbase Wallet)
Our Take: Euler V2 has seen notable growth since its relaunch and their rEUL campaign has proven to be highly successful. We expect such trends to continue with an extension in incentives.
UMA (UMA)
Proposal: UMA Emissions Reduction
Author: Lee Poettcker, Chase Colemon, Dylan O’Reilly
Summary: This proposal requests to cut UMA emissions by 14% to be more in line with current market conditions while still maintaining robust protocol security.
Key Points:
- The current emissions rate is providing UMA stakers with an APY of ~27%, far exceeding market rates around ETH and Stables (5% and 15%, respectively).
- This equates to an annual inflation rate of 6.7%.
- Furthermore, the network only has:
> 280 Voters (30D Average)
> 18.4M UMA Total Voting Power (30D)
> Leading to an overall Participation Rate of 22%
- These stats indicate that the network might be overpaying network participants.
- As a result, this proposal requests to lower the emission rate over 3 separate cuts.
- Each cut will be followed by an analysis period to ensure there is no drastic decrease in voters, with changes being reverted if the 7-day moving average attrition rate is >20%.
- The initial cut will reduce emissions by 14%, lowering the APR from ~26.3% to ~22.6%.
Our Take: This is a good experiment for UMA & its protocol, guided by a reasonable emissions policy that can be reverted if the 14% cut is too adverse for the security of the network.
Votes
Mantle (MNT)
Proposal: MIP-32: Mantle Enhanced Index Fund
Status: Live.
Created: Feb 7, 2025.
Ends: Feb 14, 2025.
Leading Consensus: Yes – 113M MNT (100% of total votes).
Summary: This proposal requests to establish an ‘Enhanced Index Fund’ designed to provide exposure to BTC, ETH, SOL, and USD, but through yield-generating assets such as mETH, bbSOL, and sUSDe. The fund will be held in institutional-grade custody and be open to qualified investors.
GnosisDAO
Proposal: GIP-92: GIP-92: Should Gnosis DAO spin-off karpatkey DAO and deploy the KPK Token?
Status: Live.
Created: Feb 9, 2025.
Ends: Feb 16, 2025.
Leading Consensus: Against – 31.2k GNO (98.66% of total votes).
Summary: This proposal requests Karpatkey to launch a DAO spin-off and governance token (KPK) from GnosisDAO. 5% of the KPK token will be airdropped to the GnosisDAO. KPK Token holders can vote on key decisions, such as treasury management, budget allocation, and strategic initiatives.