Wintermute DeFi Governance Digest: June 2024 | Week 4
25 JUNE 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Pyth discussing a staking mechanism to improve the security of its price feeds, EtherFi buying back ETHFI with protocol revenue, Synthetix deploying segregated long-tail asset pools and perp markets, Arbitrum launching a staking mechanism to improve governance with sequencer revenue; along with votes from Aave to list sUSDe on Ethereum and CoW DAO establishing a strategic partnership with Balancer to launch LVR-resistant AMM pools.
Proposals
Pyth (PYTH)
Proposal: Community Proposal for the Design of the Community Integrity Pool (CIP)
Author: CMS
Summary: This proposal requests to introduce a PYTH staking mechanism with slashing controls to improve the security of Pyth’s price feeds.
Key Points:
Our Take: The proposed staking mechanism is well thought out and creates strong alignment between publishers, tokenholders, and the robustness of the Pyth network.
EtherFi (ETHFI)
Proposal: ETHFI Buyback and Liquidity Pool Seeding
Author: Etherfi.admin
Summary: This proposal requests to purchase ETHFI on the open market with up to 50% of protocol revenue.
Key Points:
Our Take: This is arguably a good use of funds and something similar to MakerDAO’s buyback model where they increase MKR’s onchain liquidity.
Arbitrum (ARB)
Proposal: ARB Staking: Use Surplus Fees to Align Governance
Author: Frisson
Summary: This proposal requests to implement an ARB staking mechanism that uses 50% of future surplus sequencer fees to reward ARB holders who stake and delegate their governance power to active governance participants.
Key Points:
Our Take: This is an interesting proposal that has a lot of good properties, however, given Arbitrum’s consistent ongoing costs and lack of treasury diversification we are unsure if allocating such a large amount of revenue to ARB staking is most optimal. Furthermore, there are other vectors to defend against governance attacks that don’t require staking rewards.
Synthetix (SNX)
Proposal: SIP-393: Launch Degenthetix on Base
Author: Westie
Summary: This proposal requests to add a new Pool and Perps market to V3 on Base to allow for experimentation with long-tail assets for perps trading.
Key Points:
Our Take: Memcoins have proven to generate a significant amount of trading volume across various exchanges, thus, they would be a great addition to Synthetix.
Votes
EtherFi (ETHFI)
Proposal: ETHFI DAO Proposal: ETHFI Buyback and Liquidity Pool Seeding
Status: Live.
Created: Jun 20, 2024.
Ends: Jun 25, 2024.
Leading Consensus: For – 2M ETHFI (99.85% of total votes).
Summary: This proposal requests to direct up to 50% of protocol revenue towards buying back ETHFI on the open market and seeding liquidity on Curve Finance.
Aave (AAVE)
Proposal: Onboard sUSDe to Aave V3 on Ethereum
Status: Live.
Created: Jun 23, 2024.
Ends: Jun 27, 2024.
Leading Consensus: For – 145 AAVE (81% of total votes).
Summary: This vote ratifies adding sUSDe to Aave V3 on Ethereum as collateral with a supply cap of 85M sUSDe.
CoW DAO (COW)
Proposal: CIP-45: Balancer & Cow Protocol Strategic Partnership – Launching CoWAMM Pools
Status: Live.
Created: Jun 18, 2024.
Ends: Jun 25, 2024.
Leading Consensus: For – 46M vCOW (98.71% of total votes).
Summary: This vote ratifies a partnership between Balancer and CoW Protocol to create Balancer liquidity pools (CoWAMM) that are LVR resistant. This will force arbitrageurs to bid for the right to swap on balancer pools, closing the arbitrage gap and returning a portion of this surplus to liquidity providers.