Wintermute DeFi Governance Digest: May 2024 | Week 2

13 MAY 2024 | RESEARCH | AUTHORED BY CALLEN

This week’s proposals include GMX granting license rights to an aligned GMX Solana deployment, Lido Finance realigning on their strategic focuses, Aave establishing the cross-chain strategy launch of GHO; along with votes from Uniswap trailing a delegate reward program, and Arbitrum establishing an M&A Pilot program.

Proposals

GMX (GMX)

Proposal: GMSOL: Bringing GMX V2 to Solana and realizing the trinity of decentralized leverage trading

Author: Gmsolq

Summary: This proposal requests the GMX DAO to cover the audit fees of GMSOL – a Solana-based GMX deployment, and grant the GMSOL team a license for the replication, use, and front-end code of GMX assets.

Key Points:

• GMSOL is an independent launch of GMX based on Solana that intends to be fully aligned with the GMX community, token, and core contributors.


• GMSOL aims to offer easy-to-create markets and pools, advanced trading strategies for users, and democratised liquidity provision.

• GMSOL ensure that all value measurements will continue to accrue and be controlled by the GMX token.


• They will achieve this by allocating a portion of protocol fees towards GMX buybacks and bootstrapping a protocol treasury, controlled by the GMX DAO.


• Lastly, a GMSOL Points program will be introduced, rewarding users who positively contribute to the GMSOL protocol.


• GMSOL Points will be backed by the GMSOL Treasury.

Our Take: This is an exciting ‘franchise’ for the GMX DAO that could allow the protocol to tap into the large Solana user base.

Lido Finance (LDO)

Proposal: ReGOOSE: Updated goals for Lido in the light of MVI and restaking

Author: Hasu

Summary: This proposal provides updated goals for Lido community to work towards, with a heavy focus on security, decentalisation, and the restaking market.

Key Points:

• GOOSE was introduced in October 2023 which provided the DAO with a strategic focus on future goals and intended developments.


• GOOSE has been successful in establishing a dual governance design for the DAO, the launch of Simple DVT, improved client diversity, and increased stETH adoption.

• This proposal provides an update to GOOSE dubbed ReGOOSE in light of recent changes to the DeFi and Ethereum landscape.


• reGOOSE calls for the DAO and its contributors to focus on:

–> Security and decentralisation

–> Participating in Ethereum staking roadmap research

–> Reaffirm that stETH should stay as an LST and not become an LRT

–> Support Ethereum-aligned validator services

–> Make stETH the #1 collateral in the restaking market

• The Ethereum community is currently debating whether or not to impose restrictions on ETH staking to avoid having too much ETH being staked which is comprised of LSTs effectively creating a governance wrapper around Ethereum.


• However, by capping ETH staked, there could be a full market capture by centralised providers with cost/scale advantages.


• Given Lido’s LST dominance, the protocol should continue to focus on safety and decentralisation in order to protect against such concerns.


• Furthermore, the proposal is requesting to create Lido Research tasked with contributing to the future vision of staking in Ethereum.


• With the significant growth in the LRT market which is largely attributed to Eigenlayer, reGOOSE requests to focus on maintaining stETH as the most secure and decentralised LST token, foregoing expansion into the LRT market which will introduce additional risks to the token.


• However, capitalising on the LRT market growth is still possible by creating an opt-in model that allows stakers to the option to earn additional rewards in exchange for higher risks (such as slashing) by allowing restaking.

Our Take: Hasu’s reGOOSE vision provides much-needed clarity surrounding Lido’s future as a protocol. We support the proposed goals and agree with their rationale.

Aave (AAVE)

Proposal: [ARFC] GHO Cross-Chain Launch

Author: AaveLabs

Summary: This proposal provides a cross-chain strategy launch for GHO, beginning with an initial expansion to the Arbitrum network. The expansion will use Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

Key Points:

• Currently, GHO is only accessible through minting on Ethereum Mainnet or via secondary markets. This significantly limits its potential reach and utility within DeFi.


• As a result, Aave Labs has put forward a proposal highlighting a cross-chain strategy for GHO using Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

• This will allow cheap and easy transfers of GHO to other chains, making it more accessible to gas-sensitive users.


• Using CCIP, GHO bridged from Ethereum to chain XYZ will result in GHO being locked on Ethereum Mainnet and subsequently minted on the XYZ chain. When GHO is bridged back to Ethereum Mainnet, GHO is burnt on the XYZ chain and released on Ethereum Mainnet.


• For transfers that don’t involve Ethereum Mainnet, a simple mint and burn mechanism will be used while the amount of GHO locked on Ethereum Mainnet stays the same.


• Each new chain hosting GHO will have a canonical version of the stablecoin, governed by Aave Governance.


• Each chain will also be assigned a bridge credit limit by governance which can limit the amount of canonical GHO available to be minted on the respective chain.


• The first new GHO chain deployment will be Arbitrum which will coincide with Aave’s recent 750k ARB grant from Arbitrum’s LTIPP.


• GHO will also be listed as a borrowable asset on Aave’s Arbitrum V3 deployment.

Our Take: We’ve been super excited about GHO’s expansion into other chains in order to begin serving gas-sensitive users of Aave. Arbitrum is a great first choice.

Votes

Uniswap (UNI)

Proposal: [Temp Check] Uniswap Delegate Reward -3 Months-Cycle 1

Status: Live.

Created: May 9, 2024.

Ends: May 14, 2024.

Leading Consensus: Yes, Proceed – 31M UNI (99.84% of total votes).

Summary: This proposal requests to trial a 3-month incentive program for Uniswap Delegates. Up to 11 eligible candidates could receive a maximum of $6k USD in UNI per month. Users are judged according to their voting participation, number of successfully authored proposals, and attendance across Uniswap Gov Workshops and community calls.

Arbitrum (ARB)

Proposal: Pilot Phase: M&A for Arbitrum DAO

Status: Live.

Created: May 9, 2024.

Ends: May 16, 2024.

Leading Consensus: For – 31M ARB (99.57% of total votes).

Summary: This proposal requests to run an 8-week M&A pilot program, allowing the DAO to create an M&A Unit focused on identifying and executing on acquisition opportunities. The Pilot will provide the DAO with an analysis of M&A value upside, development of strategic areas, and analyses of target examples.