Wintermute DeFi Governance Digest: January 2025 | Week 4
22 JANUARY 2025 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Compound Finance launching a Delegate Compensation Program, Aave using idle GSM assets to generate yield, and Euler Finance appointing Gauntlet as a risk service provider for DAO-governed vaults; along with votes from ApeCoin DAO launching their onchain governance system and Threshold DAO funding tLabs to continue development and growth of the Threshold Network.
Proposals
Compound Finance (COMP)
Proposal:Delegate Compensation Program for Compound
Author: Doo_StableLab
Summary: This proposal requests to introduce a 6-month Pilot Delegate Compensation Program, rewarding up to 10 top-performing delegates with $5k/month in compensation.
Key Points:
- Delegates are essential to Compound’s governance, yet the clear lack of compensation or incentives impacts participation and retention.
- Despite a significant increase in monthly proposals over the past year, voter count and participation have decreased or remained stagnant at times.
- This proposal requests to establish a Pilot Delegate Compensation Program to incentivize active participation, enhance accountability, and support sustainable governance.
- The Pilot will run for 6 months with a total budget of $300k, allocating $50k/month for up to 10 delegates.
- There will be a 2-week application process allowing delegates to apply for the Pilot.
- Delegates will be assessed based on COMP delegated, voting participation, and community participation.
Our Take: Delegate Compensation programs are becoming more normalized across major DAOs. We support its addition to Compound and look forward to assessing its effects on participation.
Aave (AAVE)
Proposal: Deploy stataUSDC and stataUSDT GSMs on Ethereum
Author: TokenLogic
Summary: This proposal requests to deploy new GHO Stability Modules (GSMs) using an ERC4626 implementation to replace the existing USDC and USDT GSMs. This will allow Aave DAO to earn yield on idle GSM assets.
Key Points:
- Currently, Aave’s GHO Stability Modules passively hold USDC and USDT ensuring there is liquidity available for users wanting to swap in and out of GHO.
- The GSM reserves are currently 1.5M USDC and 10.1M USDT.
- This proposal requests the implementation of two new ERC4626-based GSMs to replace the current GSMs.
- This will allow idle reserves to be lent out within Aave, earning yield in the process.
- Based on the 6-month average deposit rates (7.12% for USDC and 5.88% for USDT) on Aave V3 Core, the Aave DAO could generate an estimated $593k in annual revenue.
Our Take: This is a great use of idle funds – earning the DAO revenue while still facilitating peg stability for GHO.
Euler Finance (EUL)
Proposal: Optimistic risk management via time-locked risk stewards and limited rapid response
Author: Euler Labs
Summary: This proposal requests to implement a risk steward role for Euler DAO-governed vaults, managed by Gauntlet with Euler Labs acting as a Guardian.
Key Points:
- Euler’s governed vaults enable risk managers to tune a vault’s risk parameter in accordance with ongoing market conditions. Thus, Euler DAO-governed vaults are managed by the DAO.
- For DAO-governed vaults, this proposal requests to introduce a risk steward role which will granted to Gauntlet.
- This will allow Gauntlet to manage risk parameters across DAO-governed vaults.
- Gauntlet’s proposed risk parameters changes will occur in an optimistic manner starting from a forum post and immediately followed by an onchain proposal that will be under a 48hr Timelock.
- During the Timelock, Euler Labs has the ability to cancel the proposal if it is rejected by the community or incorrectly formatted.
- Lastly, an emergency control contract will also be installed which allows both Euler Labs and Gauntlet to respond immediately to any adverse market conditions that could be harmful to the protocol by adjusting LTVs, supply/borrow caps, and freezing markets.
Our Take: These security measures seem appropriate given the current growth phase of Euler while also not introducing unnecessary governance fatigue.
Votes
ApeCoin DAO (APE)
Proposal: AIP-582: ApeChain, On-chain – ApeCoin DAO Governance Revamp
Status: Live.
Created: Jan 17, 2025.
Ends: Jan 30, 2025.
Leading Consensus: For – 11.1M APE (96.45% of total votes).
Summary: This proposal ratifies the launch of ApeCoin’s DAO onchain. Specifically, the DAO will now have an onchain treasury and ApeChain Protocol updates managed by Governor Bravo contracts. There will also be a Security Council.
Threshold DAO (T)
Proposal: TIP-098: The Future of Threshold
Status: Live.
Created: Jan 18, 2025.
Ends: Jan 25, 2025.
Leading Consensus: For 1.6B – T (99.72% of total votes).
Summary:This vote requests to mint ~1.12b new T tokens (10% dilution on current supply) to fund tLabs who will be responsible for the growth and development of the Threshold protocol and dApp. Development goals include new tokenomics, integrations of BitVM2 for better bridging, and the Threshold App Chain which will allow native tBTC minting outside of just Ethereum Mainnet.