Wintermute DeFi Governance Digest: November 2024 | Week 4
27 NOVEMBER 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Aave investing $4M into Instadapp ($INST), EtherFi allocating ~$8.7M ETHFI tokens to Season 4 of their reward program, and Jito adding JTO to their TipRouter NCN; along with votes from Lido sunsetting stMATIC and Arbitrum establishing a Treasury Management program.
Proposals
Aave (AAVE)
Proposal: Fluid Alignment with $INST Purchase
Author: ACI
Summary: This proposal requests to establish a strategic partnership between Aave DAO and Instadapp through a $4M investment in $INST tokens ($350M FDV).
Key Points:
- Instadapp has been a long-standing partner in the Aave ecosystem, providing valuable infrastructure and user interfaces.
- Specifically, Instadapp currently offers 4 applications:
–> Instadapp Pro: Offering easy access and advanced strategies to DeFi
–> Instadapp Lite: 1-click access to optimized DeFi yields
–> Avocado: A multichain account abstracted Web3 wallet
–> Fluid: Combines lending/borrowing with a DEX to offer smart collateral and debt positions, earning users higher yields on their assets within a highly capital-efficient DEX pool.
- Instadapp’s upcoming tokenomics reform and rebranding presents an opportunity for deeper strategic alignment with Aave DAO. Specifically,
–> Strengthened relationship
–> Supporting GHO adoption through Fluid integration
–> Ensuring priority support for Aave protocol integrations
–> Creating mutual value through governance participation
- To establish this partnership, this proposal requests to buy $4M worth of $INST at a 350M FDV (~1% of the total supply).
- ⅓ of these acquired tokens will be used to support GHO pairs on Fluid markets while the remaining ⅔ will be set to a one-year vesting period and delegated to Aave Protocol Embassy for active participation in Fluid governance.
- In return, Aave DAO will become a launch partner for Instadapp’s new tokenomics and rebranding, provision support and promotion of Instadapp products that leverage Aave, and provide free flashloans to the Instadapp protocol.
Our Take: Aave DAO’s acquisition of INST creates a mutually beneficial relationship between two of the largest DeFi protocols. Aave’s GHO will benefit from Fluid’s DEX infrastructure while Instadapp gains free flashloans and increased GHO TVL.
EtherFi (ETHFI)
Proposal: Season 4 ETHFI allocation
Author: EtherFi Admin
Summary: This proposal requests to allocate 4M ETHFI tokens (~$8.7M) for use in Season 4 of EtherFi’s incentive program. Season 4 will focus on new promotions and deposits.
Key Points:
- Part of EtherFi’s growth strategy relies on aligning community incentives with the platform’s long-term objectives.
- Previous seasons have demonstrated that well-targeted promotional efforts can significantly increase participation and deposit growth.
- Season 4 aims to continue the success seen in Seasons 1-3 by allocating up to 4M ETHFI tokens (~$8.7M) to various promotional activities.
- Specifically,
–> Marketing and promotional campaigns targeting new users
–> Rewarding new deposits
–> Retention campaigns to encourage sustained staking for existing stakers
- All rewards will be paid out at the end of the current season.
Our Take: EtherFi has done a great job at retaining and growing new deposits, stakers, and users. We expect Season 4 to continue down this path.
Jito (JTO)
Proposal: Decision Market on Whether to Adopt JTO in the TipRouter NCN (Protocol Development)
Author: Metaproph3t
Summary: This proposal requests to add JTO as a staking asset within Jito’s TipRouter NCN allowing retakers to earn rewards from MEV tips.
Key Points:
- Jito’s TipRouter Node Consensus Network (NCN) is responsible for the programmatic distribution of MEV tips generated from the Jito Tip Distribution protocol.
- Its creation and authorization were recently approved in JIP-8 alongside the routing of 3% of all MEV tips collected to flow towards the DAO treasury and NCN network participants.
- To secure the TipRouter NCN network Jito (Re)staking was enabled with Solana LSTs as collateral, primarily JitoSOL.
- However, since JIP-8, the value of MEV tips has increased substantially requiring additional economic security within the NCN.
- For example, monthly tips at the time JIP-8 was posted were ~$93M. Fast forward to today, monthly tips are sitting at ~$194M.
- Thus, this proposal requests to add JTO as a restaked asset within the TipRouter NCN to help secure the programmatic distribution of MEV tips.
- In return for helping secure the TipRouter NCN, JTO restakers will earn 15bps of the total 3% fee that is collected on all MEV tips.
- Lastly, MetaDAO is proposing to create a decision market based on this proposal where users can bet whether or not this proposal is good for the protocol.
Our Take: Adding JTO as a restaked asset within the TipRouter NCN certainly improves the NCN’s robustness, however, it’s also possible to simply increase deposit caps for Solana LSTs which are already accepted.
Votes
Lido (LDO)
Proposal: Reevaluation of Lido on Polygon state
Status: Live.
Created: Nov 22, 2024.
Ends: Nov 29, 2024.
Leading Consensus: Sunset Lido on Polygon – 37M LDO (99.78% of total votes).
Summary: This proposal requests to reevaluate the economic viability of Lido’s stMATIC product in light of stagnating growth and ongoing costs. If the DAO decides to sunset Lido on Polygon, the product will be wound down and officially concluded by mid-2025.
Arbitrum (ARB)
Proposal: Treasury Management v1.2
Status: Finished.
Created: Nov 15, 2024.
Ends: Nov 22, 2024.
Leading Consensus: For – 102M ARB (72.6% of total votes).
Summary: This proposal requests to establish a Treasury Council tasked with generating passive yield via ARB-only onchain strategies and creating a cash-like reserve. As well as a Growth Council that will focus on reinvesting the DAO’s 7,500 ETH into ETH-backed strategies to generate yield.