Wintermute DeFi Governance Digest: Novemebr 2024 | Week 1
6 NOVEMBER 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Sky/MakerDAO deciding on deflationary tokenomics and Synthetix looking to acquire Kwenta; along with votes from Sky/MakerDAO launching their SkyLink USDS bridge to Base and ENS funding ENS Labs for the development of ENSv2.
Proposals
Sky/MakerDAO (SKY/MKR)
Author: Rune
Summary: Following Rune’s recent proposal requesting the community’s decision to keep Sky or recenter the Maker brand, Rune is now proposing to introduce deflationary tokenomics regardless of the winning outcome.
Key Points:
- Due to community criticism and confusion around MakerDAO’s rebranding, Rune recently put forward a proposal to the community requesting whether or not the DAO should continue with Sky or recenter the Maker brand.
- Regardless of the outcome, this proposal aims to clarify tokenomics and other key questions.
- Specifically, introducing strictly deflationary tokenomics where no token emissions would ever be able to occur in normal conditions and the total supply would only be able to go down over time (due to the burn engine).
- The only exception to the above point would be in the case of a collateral shortfall that puts USDS and DAI at risk of insolvency.
- Furthermore, MKR or SKY will continue to earn Star Token Rewards such as Spark SPK through Activation, and governance participants using the Seal Engine will earn additional USDS rewards on top of Star Token Rewards.
- SKY token rewards will continue until the launch of SPK Token Rewards.
- If SKY wins, MKR will be renamed to Wrapped 24k Sky Tokens (SKY24K), effectively migrating all MKR holders and reducing confusion around the 2-token model.
- If Maker wins, Sky will be renamed to OLD_SKY which will be permanently convertible back to MKR at a fixed 1:24,000 ratio. SKY will then govern sky.money and the Star ecosystem which will attempt to drive demand to USDS.
Our Take: Consolidating Maker/Sky’s brand while eliminating future inflationary pressures should certainly help with ongoing issues the DAO is facing.
Synthetix (SNX)
Proposal: SIP-411: Acquire Kwenta and relaunch Synthetix Exchange
Author: Fenway & Cav
Summary: This proposal requests to acquire Kwenta, the leading Synthetix front end, and relaunch Synthetix Exchange.
Key Points:
- Kwenta is a multichain perpetual trading marketplace on Optimism, Base, and Arbitrum, operating as a front-end for perpetual protocols including Synthetix.
- This proposal requests to acquire Kwenta, making it the official front-end for Synthetix.
- Synthetix has not operated a front-end for its perpetual trading features since 2020 when it divested its Synthetix.exchange front-end.
- The acquisition will be done via a token exchange with the following terms:
–> 1 $KWENTA <> 17 $SNX (~$13.2m valuation)
–> $SNX received from the token exchange will be subject to a 3-month lock-up and a 9-month linear vest
- To fund the acquisition, Synthetix will issue up to 9,050,375 new SNX tokens, representing a 2.8% increase in supply over 1 year.
- The acquisition for Synthetix will enhance branding and market positioning, realign development priorities between both teams, merge communities, and increase fee revenue opportunities.
- Lastly, the merging of tokens will allow the Kwenta community to receive a token that is listed across many large exchanges with much better liquidity than KWENTA.
Our Take: Kwenta is a great acquisition for Synthetix from both a business and community perspective.
Votes
Sky/MakerDAO (SKY/MKR)
Status: Live.
Created: October 31, 2024.
Ends: Nov 30, 2024.
Leading Consensus: For – 45.6k MKR
Summary: This onchain vote introduces a SkyLink bridge for Base allowing the bridging of USDS and sUSDS from Mainnet to Base. Furthermore, it initializes the Star Allocation system for Spark with a maximum debt ceiling of 10M USDS and a fee of 5.2%.
ENS (ENS)
Proposal: ENSv2 Development Funding
Status: Live.
Created: Nov 1, 2024.
Ends: Nov 7, 2024.
Leading Consensus: For – 996.3k ENS (73.71% of total votes).
Summary: ENS Labs is requesting $9.7M USDC to develop ENS V2 and a one-time grant for future security audits of ENS V2. ENS V2 will be a major upgrade that will enhance decentralization, flexibility, and scalability by leveraging Layer 2 solutions and redesigning the ENS protocol from the ground up.