Wintermute DeFi Governance Digest: July 2024 | Week 5
31 JULY 2024 | RESEARCH | AUTHORED BY IGOR
This week’s proposals include the ArbitrumDAO planning to take a break from incentive programs and Aave initial discussions around the AAVEnomics update; along with votes from Compound for seeding goldCOMP, Safe funding a credible account module, and Arbitrum Orbit expansions to other chains than Ethereum.
Proposals
Arbitrum (ARB)
Proposal: [RFC] Incentives Detox Proposal
Author: Sinkas (L2BEAT)
Summary: This proposal requests a 3-month break from incentive programs to analyze the results of the past ones. This pause is important for structuring a perpetual incentive program based on learned lessons.
Key Points:
- Arbitrum has already launched a short-term incentive program with a bridge round, as well as a long-term incentive program.
- The DAO distributed 116.21M ARB ($83M) through these programs since October last year to help ecosystem projects.
- At a time when new L2s and L3s are launched almost every day, providing additional incentives to users of Arbitrum projects is extremely useful.
- According to Defillama, Arbitrum currently has the largest TVL across all L2s but has fewer daily active addresses than Base.
- OpenBlock shed some light on the metrics of protocols that received the STIP funding and showed that incentives worked better for some projects than others.
- It’s difficult to say if the current proposal is good enough to go live, but that’s a good starting point to improve Arbitrum incentive programs.
Our Take: We’re keen to look at more data and its interpretation from current programs to find a better form for the following grant programs.
Aave (AAVE)
Proposal: [TEMP CHECK] AAVEnomics update
Author: MarcZeller
Summary: This proposal collects the feedback for the roadmap to the “fee switch” after the successful activation of the Safety Module Umbrella update.
Key Points:
- Currently, AAVE grants the borrower an APR discount and staking rewards in exchange for backing up possible bad debt.
- The issue is that in the case of bad debt, AAVE should be sold for other assets, which creates selling pressure.
- The Umbrella update makes the way to backstop the protocol bad debt much more efficient without the usage of AAVE at all.
- On the other side of things, the excess revenue could be used to buyback AAVE from secondary markets and its distribution to stkAAVE holders.
- The discount mechanism for the GHO minting will be sunsetted and changed to another system, plus the LEND -> AAVE migration will be terminated.
Our Take: The whole concept of the Umbrella update feels like a breath of fresh air, and having the AAVEnomics proposal on top of it is mindblowing. We found this set of updates is an important step to cement the market position of Aave.
Votes
Compound (COMP)
Proposal: Trust Setup for DAO investment into GoldCOMP
Status: Finished.
Created: Jul 24, 2024.
Ends: Jul 28, 2024.
Leading Consensus: For – 682,191 COMP (51.8% of total votes).
Summary: This proposal granted 499,999 COMP to Golden Boys for seeding single-side liquidity for the goldCOMP-WETH pool on Balancer. These COMP tokens will be also delegated to the Golden Boys multisig which will make it the largest Compound delegate. Previously, the GOLD founder – Humpy, acquired a bunch of COMP to pass this proposal and his true intentions remain unknown.
SafeDAO (SAFE)
Proposal: [SEP 34] [OBRA] Resource Lock Module – Cometh & Gnosis Guild & OneBalance
Status: Live.
Created: Jul 24, 2024.
Ends: Aug 5, 2024.
Leading Consensus: Accept – 734k SAFE (78.58% of total votes).
Summary: The Frontier Research team started to lead this initiative to improve the cross-chain UX by building credible accounts. The new Safe module could potentially unlock new opportunities and improve the quality of life of Safe users if will be implemented.
Arbitrum (ARB)
Proposal: Change Arbitrum Expansion Program to allow deployments of new Orbit chains on any blockchain
Status: Live.
Created: Jul 24, 2024.
Ends: Jul 31, 2024.
Leading Consensus: FOR: Any blockchain network – 105M ARB (80.56% of total votes)
Summary: Currently Orbit chains could be launched only on chains that derive their security from Ethereum. This approach obviously limits some rollup designs and their attempts to acquire non-Ethereum native users. In the case when Arbitrum Orbits could be deployed to any chains, the only prerequisite will be a multisig, as well as bridge to transfer the revenue share to the Arbitrum DAO’s treasury.