Wintermute DeFi Governance Digest: July 2024 | Week 1
3 JULY 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Arbitrum capturing MEV through Timeboost and Uniswap deploying an incentive package for the Gnosis Chain; along with votes from Pyth to deploy Express Relay on Ethereum Mainnet, Lido launching a Mellow vault, and Hashflow deploying on Base.
Proposals
Arbitrum (ARB)
Proposal: Constitutional AIP: Proposal to adopt Timeboost, a new transaction ordering policy
Author: Arbitrum Foundation
Summary: This proposal requests to introduce Timeboost, a new transaction ordering policy for Arbitrum One and Nova that allows the ArbitrumDAO to capture additional revenue through priority auctions.
Key Points:
- Arbitrum chains currently order transactions on a First-Come First-Served basis (FCFS), a simple framework replicating typical Web2 UX.
- However, FCFS is not an ideal long-term solution due to arbitrage opportunities which result in MEV Searchers spamming the network in a race to get their transaction through.
- This results in MEV Searchers wastefully investing in faster hardware and none of the MEV generated is captured by the chain.
- Timeboost attempts to solve this by enabling auctions for the rights to an express lane, giving the winner an advantage for transaction inclusion and allowing them to capture arbitrage and backrunning opportunities.
- In addition to the express lane, there will be a normal path for regular transaction submissions which will experience a short delay (200ms) which functions similarly to the current setup.
- Access to the express lane will be auctioned off in one-minute rounds, with the auction happening 15 seconds before the round begins.
- Bids are kept private and the auction winner will pay the same price as the second-highest bid.
- The ArbitrumDAO can decide whether to collect bids in ETH or ARB, with ETH bid proceeds going to the DAO treasury while ARB bids will result in the ARB being burnt.
- 3% of auction proceeds will be left aside for the Arbitrum Developer Guild which will fund core Arbitrum development.
Our Take: Timeboost is a great mechanism for the DAO to begin benefiting from the value its chain generates, we look forward to assessing its results if approved by governance.
Uniswap (UNI)
Proposal: Onboarding Package for Gnosis Chain
Author: Karpatkey
Summary: This proposal requests a retroactive UNI incentive onboarding package for Uni V3 on Gnosis Chain with options ranging from $250k to $1M in UNI.
Key Points:
- Gnosis Chain is a community-owned, EVM-compatible network with over $300M in TVL.
- Gnosis Chain’s DeFi sector includes the likes of Spark, Aave, Balancer, Curve, CoW Swap, 1inch and Connext among others.
- While Uniswap has already been deployed on the Gnosis Chain, the DAO has yet to capitalize on the chain’s growth.
- This proposal requests to retroactively deploy a Uniswap incentive onboarding package for Gnosis Chain with options: $250k, $500k, $750k, $1M, or do not fund.
- Rewards will be used to incentivize liquidity on core blue-chip asset pools.
Our Take: Gnosis Chain has seen a resurgence in DeFi activity, considering Balancer is the leading DEX with a substantial amount of TVL it makes sense for Uniswap to increase its presence and market share.
Votes
Pyth Network (PYTH)
Proposal: Release of the Express Relay on mainnet
Status: Live.
Created: Jun 27, 2024.
Ends: Jul 4, 2024.
Leading Consensus: Yes – 770M PYTH (98.7% of total votes).
Summary: This proposal implements the first instance of the Express Relay on Ethereum Mainnet allowing DeFi protocols to earn revenue from the MEV opportunities they produce. Pyth DAO will earn 26% of the revenue collected, 4% will go to infrastructure providers, and 70% will be allocated to the DeFi protocols using Express Relay.
Lido Finance (LDO)
Proposal: The Decentralized Validator Vault
Status: Live.
Created: Jul 27, 2024.
Ends: Jul 5, 2024.
Leading Consensus: Implement the vault strategy – 41M LDO (100% of total votes).
Summary: The proposal requests to implement a Mellow vault that will serve as the focal point for users to stake ETH/WETH via Lido’s DVT. 90% of potential future Obol contributions and SSV mainnet incentives will be allocated to the vault with the remaining 10% allocated to Node Operators.
Hashflow (HFT)
Proposal: Deploy Hashflow and Aggregator+ on Base
Status: Live.
Created: Jun 29, 2024.
Ends: Jul 2, 2024.
Leading Consensus: Yes – 239k veHFT
Summary: This vote requests to deploy the Hashflow protocol and Aggregator+ on Base. Base has emerged as a top-5 chain by Trading Volume and a Top-10 chain by TVL.