Wintermute DeFi Governance Digest: July 2024 | Week 3
15 JULY 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Stride establishing a referral revenue share program, MakerDAO’s Spark subDAO hosting a $1b RWA competition, and Compound Finance ending Mainnet incentives; along with votes from Frax Finance to create a 100M FRAX Aave v3 AMO and change the veFXS revenue distribution token to FXB, and GMX listing PEPE, WIF, and SHIB.
Proposals
Stride (STRD)
Proposal: Launch the Stride Rewards Share Program
Author: RoboMcGobo
Summary: This proposal requests to create the Stride Rewards Share Program aimed at sharing a portion of protocol fees with applicants who onboard new stToken holders for stTIA, stDYDX, and stATOM.
Key Points:
- Stride currently earns ~$1.5M in revenue annually, making it one of the largest revenue-generating chains in the Cosmos Ecosystem.
- Historically, 85% of all protocol fees have accrued directly to STRD stakers creating a valuable proposition for the token.
- However, given Stride is still an early-stage protocol in a competitive market the revenue share does little to promote protocol growth.
- This proposal requests to create a Stride Rewards Share Program that consists of sharing a portion of protocol fees with selected applicants who onboard new stToken holders for stTIA, stDYDX, and stATOM.
- The program will be operated by a Reward Share Committee which will process applications, negotiate rewards share percentages, conduct oversight, and manage the day-to-day operations of the program.
- Prospective participants can be wallets, protocols, institutions, crypto services, neobanks, custody services, or any other types of participation with solutions capable of integrating stride.
- Approved applicants will receive a portion of the revenue generated from their referral code for the next 12-months from the time an individual token is staked.
Our Take: Such a program was relatively successful for Lido and we expect the same to happen for Stride.
MakerDAO (MKR)
Proposal: Spark Tokenization Grand Prix – Request for Proposal
Author: Steakhouse
Summary: This proposal is a call to action for prospective applicants to apply to participate in MakerDAO’s $1 billion RWA onboarding program.
Key Points:
- Spark SubDAO – a subDAO within MakerDAO, has announced that it will be hosting the Spark Tokenization Grand Prix; a competition aimed at onboarding up to $1b of tokenised assets.
- Tokenised asset issuers are invited to apply for the competition with applications opening on 12 August 2024.
*Incl. Collateral With Debt Ceiling > 0
- Asset exposure focus will be on short-duration US T-Bills and similar tokenised products.
- Applications will be evaluated based on:
–> Pricing: Competitive and transparent pricing models.
–> Liquidity: High liquidity to support seamless transactions.
–> Strategic Considerations: Alignment with SparkDAO’s long-term vision and strategic goals.
- Results will be presented to the Maker Governance for final decisions regarding potential onboarding.
- The goal is to make Spark Protocol the central hub for RWAs on Maker and Ethereum.
- Further details about the competition and proposal evaluation will be released in the coming weeks.
Our Take: This is a great initiative with potentially significant financial capital allocation for prospective applicants. Maker’s prior RWA efforts have been relatively successful for the protocol.
Compound Finance (COMP)
Proposal: Removing COMP Incentives from Mainnet Markets
Author: Sharp
Summary: This proposal requests to discontinue COMP incentives for Comet deployments on Ethereum Mainnet and repurposing them for L2s.
Key Points:
- Compound currently has 2 Comet deployments on Ethereum Mainnet – cWETHv3 and cUSDCv3, both of which are the largest deployments amongst other chains.
- Every week Compound distributes ~$30k in incentives on the ETH Comet to boost effective earn APR and reduce effective borrow APR.
- However, due to this expenditure, the protocol’s net profit on this deployment over the past few months has been significantly negative.
- This proposal requests to discontinue these rewards and repurpose them to grow Compound’s market share across various L2 Comet deployments, providing users with better earn and borrow rates.
Our Take: As more capital shifts towards L2s it makes sense for Compound to focus their incentives there.
Votes
Frax Finance (COMP)
Proposal: [FIP – 377] Change veFXS Reward Distribution Token
Status: Finished.
Created: Jul 10, 2024.
Ends: Jul 15, 2024.
Leading Consensus: For – 30M FXS (98.97% of total votes).
Summary: This proposal requests to change the underlying revenue distribution for veFXS stakers to FXB – Frax’s bond product. FXB is considered more productive for both the user and protocol, leading to a more optimal outcome.
Proposal: [FIP – 378] Aave AMO
Status: Live.
Created: Jul 15, 2024.
Ends: Jul 20, 2024.
Leading Consensus: For – 68k FXS (100% of total votes).
Summary: This proposal requests to activate an AMO that lends FRAX to Aave V3 with a maximum allocation of 100M FRAX.
GMX (GMX)
Proposal: Listing PEPE, SHIB, WIF
Status: Live.
Created: Jul 15, 2024.
Ends: Jul 17, 2024.
Leading Consensus: Create PEPE, SHIB, & WIF markets
Summary: This proposal requests to onboard markets for PEPE, SHIB, and WIF for GMX V2.