Wintermute DeFi Governance Digest: July 2024 | Week 4

22 JULY 2024 | RESEARCH | AUTHORED BY CALLEN

This week’s proposals include MakerDAO adding changes to NewGovToken, CoW DAO extending their fee testing period for an additional 6 months, Euler DAO launching a large-scale Euler V2 Capture The Flag security competition, and Lido launching an incentivized delegate program; along with votes from Arbitrum to ban Furucombo from the DAO, Aave to deploy an Ethena V3 instance, and ApeCoin DAO to launch a ventures fund.

Proposals

MakerDAO (MKR)

Proposal: NewGovToken Activation: new feature and other changes

Author: Rune

Summary: Rune outlines several changes to the launch of NewGovToken including incentives and a new staking mechanism.

Key Points:

• NewGovToken is MakerDAO’s upcoming MKR token rebrand, which has yet to be named.


• This proposal introduces new changes to NewGovToken including an ‘activation’ feature and updated incentives.

• NewGovToken ‘activation’ allows token holders to activate/deactivate their NewGovToken at any time with no restrictions, cost, or additional risk, allowing them to participate in Governance.


• For activated NewGovTokens, users can choose to receive 10% of the total Protocol Stablecoin Surplus or 15% of the Token Reward supply for each SubDAO.


• NewGovToken Activation will become available at Spark launch.


• Additionally, there will be a ‘Sealed Activation’ mechanism allowing NewGovToken holders to activate their tokens and seal it behind an exit fee.


• The exit fee starts at 5% at launch and will increase by 1% every 6 months until it reaches a long-term value of 15%.


• In exchange for being exposed to an exit fee, users will receive 25% of the total Protocol Stablecoin Surplus or 15% of the Token Reward supply emissions for each SubDAO.


• Lastly, when the Spark SubDAO launches SPK there will be an SPK Activation feature at launch which allows SPK Activated users to receive NewGovToken rewards (80M NewGovTokens per year).

Our Take: It’ll be interesting to see the difference between Activated and Sealed Activated NewGovTokens over time. We’d expect a large inflow of Sealed Activated tokens due to the slow increase in exit fee penalty.

CoW DAO (COW)

Proposal: Extending the Revenue Model Testing Period for CoW Protocol

Author: Marshy

Summary: This proposal requests to extend CoW DAO’s revenue testing period for an additional 6 months to further explore fee capture models.

Key Points:

• Originally outlined in CIP 34 the CoW DAO approved the testing of various fee capture models to be carried out by the core team for 6 months.


• In the 6 months, the core team tested:

–> Surplus fees on out-of-market limit orders

–> Quote improvement fees on market orders

–> Volume fees on Gnosis Chain orders (excluding stable-to-stable pairs)

• Surplus fees on out-of-market limit orders generated 273 ETH with the team observing an increase in limit order usage while user retention stayed flat.


• Quote improvement fees on market orders generated 467 ETH with the team observing a slight dip in market share (which rebounded) and a drop in user churn rate from 10% to 6%.


• Volume fees on Gnosis Chain have generated ~$5.2k in revenue so far with the team observing a small increase in user retention and product loyalty, however, testing has only been going for 4 weeks.


• The core team is now requesting to extend the fee testing period for an additional 6 months to continue testing other fee models and specifically the volume fee on the Gnosis Chain.

Our Take: The core team has proven to diligently test various fee capture models that are aligned with users. We think it makes sense to continue testing to provide the DAO with a highly informed approach to capturing fees.

Euler Finance (EUL)

Proposal: Euler V2 “Capture The Flag” Competition

Author: Erik

Summary: This proposal requests to create an Euler V2 Capture The Flag security competition using 575 ETH and 2M USDC from the Euler DAO treasury prior to the public launch of V2.

Key Points:

• With Euler V2’s launch coming up, Euler Labs is proposing to run a Capture The Flag (CTF) Security competition using 575 ETH and 2M USDC from the DAO’s treasury.


• The CTF competition will be the final stress test before the public launch of V2, given a large amount of funding it should attract a significant amount of participants.

• All remaining funds after the CTF competition has concluded will be used to seed the first Euler V2 vaults.


• Any issues identified from the CTF competition will be addressed before full deployment.

Our Take: This is a substantial amount of money to be used from the treasury, however, given prior audit competitions there is a good chance that most funds will be transitioned to seeding Euler V2’s first vaults.

Lido Finance (LDO)

Proposal: Establish a Public Delegate Platform and Delegate Incentivization Program

Author: Jenya_k

Summary: This proposal requests to establish a public Delegate Platform and Delegate Incentivization program to improve voting participation and proposal discussion and feedback.

Key Points:

• Users will be able to publicly submit their Delegate Platforms via the Lido forum highlighting their motivations and decision-making approach.


• Public delegates are expected to maintain a voting participation rate above 70% to keep their listing and inform the community on decisions regarding their votes.
  

• Public delegates with greater than 0.1% of the total token supply will be eligible for gas reimbursements and potential participation in the Delegate Incentivisation program.


• The Delegate Incentivisation program is targeted towards attracting top-tier professionals with specialized skills.


• $150k in LDO will be used to pay delegates over a 6-month timeframe for their participation in the DAO with no delegate receiving more than $15k worth of LDO for any three months.


• The Delegate Program will be managed by an oversight committee made of Lido DAO Contributors and members from Agora.

Our Take: Lido’s delegate program should lead to a substantial increase in active delegates. We look forward to seeing its results and the effectiveness of the oversight committee.

Votes

Arbitrum (ARB)

Proposal: Furucombo’s Misuse of Funds

Status: Live.

Created: Jul 19, 2024.

Ends: Jul 26, 2024.

Leading Consensus: For – Ban Furucombo from the ArbitrumDAO – 45M ARB (99.96% of total votes).

Summary: This vote requests to ban Furucombo from the ArbitrumDAO due to their alleged misuse of STIP funds and lack of a final STIP report. If approved, Furucombo will no longer be able to apply for DAO-affiliated grant programs.

Aave (AAVE)

Proposal: [TEMP CHECK] Deploy an Ethena Aave v3 Instance

Status: Live.

Created: Jul 20, 2024.

Ends: Jul 23, 2024.

Leading Consensus: YAE – 531K AAVE (100% of total votes).

Summary: This proposal requests to deploy an Aave V3 instance focused on providing liquidity for sUSDE and USDe holders to borrow stablecoins.

ApeCoin (APE)

Proposal: AIP-438: ApeCoin Ventures

Status: Live.

Created: Jul 19, 2024.

Ends: Aug 1, 2024.

Leading Consensus: For – 1.7M APE (83.81% of total votes).

Summary: This vote requests to establish a $5M Apecoin Ventures fund controlled by Animoca Brands. Animoca will match 1:1 with the ApeCoin DAO creating a total fund size of $10M USD targeting Seed and Series A stage start-ups that prioritise the integration of ApeCoin into their ecosystem.