Wintermute DeFi Governance Digest: September 2024 | Week 3
18 SEPTEMBER 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Pyth launching their staking for data integrity program, Arbitrum Foundation requesting 250M ARB in funding, Aave discussing a V3 instance for Crypto.com, and EtherFi launching Season 4 of their rewards program; along with votes from MakerDAO initialising their Launch Season and new tokens, Arbitrum adopting Timeboost, and Aave activating V3 on zkSync.
Proposals
Pyth (PYTH)
Proposal: CO-PIP5: Upgrade Staking Program in Mainnet to add Staking for data integrity
Author: Jayant
Summary: This proposal introduces an onchain staking program for the Pyth Network that rewards data publishers and stakers for maintaining high-quality data feeds while punishing low-quality data feeds via slashing.
Key Points:
- CMS published a proposal in June earlier this year highlighting a potential staking program for the Pyth Network to begin rewarding data publishers and stakers for providing secure price feeds.
- This proposal now provides the onchain implementation for data publishers and PYTH stakers.
- Specifically,
–> Each data publisher will be assigned a staking pool where they can self-stake and to which PYTH token holders can stake and delegate their tokens.
–> The staking pool assigned to each data publisher covers all price feeds to which the publisher contributes data.
–> Each staking pool has a soft cap that determines a limit on the amount eligible PYTH that can earn rewards for a publisher and their delegates.
–> Any PYTH staked above the soft cap will not earn rewards.
–> A publisher’s soft cap can be increased by increasing the number of symbols they provide price feeds for and/or contributing price feeds to symbols that don’t have a lot of publishers.
–> Publishers will also earn 20% of their delegator’s rewards, charged as a delegation fee.
–> Publishers and their delegates can be slashed up to 5% for providing bad price feeds.
Our Take: This is a significant upgrade for the Pyth Network that creates alignment between stakeholders in efforts to ensure Pyth continues to publish high-quality price feeds.
Arbitrum (ARB)
Proposal: [Non-Constitutional] Funds to Bolster Foundation’s Strategic Partnerships Budget
Author: Arbitrum
Summary: The Arbitrum Foundation is requesting 250M ARB from the DAO to further foster key strategic partnerships as they are currently constrained by their small operating budget.
Key Points:
- A key role of the Arbitrum Foundation is to foster ecosystem growth through strategic partnerships. All agreements are designed to support projects that can grow the Arbitrum ecosystem and provide value to the ArbitrumDAO.
- This is achieved by two funding programs: the Arbitrum Foundation Grant Program and the Strategic Partnerships Program.
- Both programs invite applicants from the ecosystem while actively pursuing new opportunities by participating in competitive bids to prospective partners. In both cases, The Arbitrum Foundation signs milestone-based agreements with the recipient that are often multi-year contractual commitments
- To date, agreements for our strategic partnerships program typically exceed 2M ARB with an average duration of 2.1 years.
- To date, the Arbitrum Foundation has spent or committed $108.5M (~76M ARB) to grants, strategic partnerships and infrastructure service providers.
Capital Commitments to Grants, Strategic Partnerships and Infrastructure Service Providers
1 Actual spend in the first half of 2024 including payments made in ARB converted to USD using the ARB spot price at the time of paymen
2 Numbers include both confidential and non-confidential grants. Details of non-confidential grantees are publicly available here
3 “Other” category includes items that fall outside the scope of Fintech & DeFi, Gaming, Infra Service Providers, and NFTs
- However, the Arbitrum Foundation was only allocated 7.5% of the total ARB supply which is currently being vested and thus, they have only had access to 1.8%.
- This puts the Arbitrum Foundation at a significant competitive disadvantage compared to competitors who were allocated 20-25% of their native token’s total supply.
- Subsequently, the Arbitrum Foundation are now requesting 250M ARB from the DAO to continue supporting strategic partnerships to grow the Arbitrum ecosystem.
Our Take: We are supportive of the Arbitrum Foundation’s funding request. They’ve done a fantastic job thus far despite a tight budget.
Aave (AAVE)
Proposal: [TEMP CHECK] Deploy a Crypto.com Aave v3 Instance
Author: ACI
Summary: This proposal requests to create an Aave V3 instance in partnership with Crypto.com which will be used for their Earn product for assets WETH and cdcETH.
Key Points:
- Crypto.com is one of the world’s largest exchanges, currently listed as number 6 on DeFiLlama in terms of total assets.
- Alongside their exchange, they offer a staked ETH product called cdcETH with over $80M TVL.
- This proposal requests to create a Crypto.com Aave V3 instance which will be used for their Earn product.
- By utilising Aave for their Earn product, users will be able to leverage loop their cdcETH via emode.
- It’s expected that stablecoins will also be added in the future.
Our Take: Aave’s V3 instances for specific use cases/protocols have proven successful. Furthermore, the integration with a centralised exchange allows Aave to access a much wider user base.
EtherFi (ETHFI)
Proposal: Seasonal Rewards and LRT²
Author: EtherFi Admin
Summary: This proposal requests to continue EtherFi’s seasonal reward program with the introduction of Season 4 which will continue focusing on LRT adoption, partnerships, and building out the EtherFi community.
Key Points:
- Season 4 will start on Sep 15, 2024, with loyalty points accruing at a rate of 10k per ETH per day, subject to boosts and multipliers for DeFi partners.
- Season 4 rewards will consist of ETHFI tokens, partner tokens, and LRT² governance tokens, with up to 2M ETHFI tokens up for grabs.
- Reward allocations will be based on accumulated loyalty points.
- LRT² is a new protocol for the distribution of LRT rewards, making it easier and cheaper for users.
- The purpose of LRT² is to wrap rewards distribution from a large number of AVSs and other restaking-related rewards into a single rewards token and create an industry-standard
- LRT² will consist of a reward token that wraps all restaking rewards and a governance token that governs reward whitelisting, parameters, and treasury management.
- The initial set of protocols participating in LRT² are Puffer, Swell, Renzo, EtherFi, and Kelp.
- Seasons 4+ airdrop distribution would follow the same vesting schedule of previous Seasons
Our Take: LRT² is an interesting & collaborative protocol that should once again boost yield for restaking tokens. As a result, we will likely see the LRT market continue to expand.
Votes
MakerDAO (MKR)/p>
Status: Finished.
Created: Sep 13, 2024.
Ends: Sep 17, 2024.
Leading Consensus: For – 109,427 MKR
Summary: This onchain vote initiates Sky’s Launch Season by initialising USDS, sUSDS, and SKY, upgrading the Smart Burn Engine to support USDS and SKY, and launching farming rewards for USDS.
Arbitrum (ARB)/p>
Proposal: Constitutional AIP: Proposal to adopt Timeboost, a new transaction ordering policy
Status: Live.
Created: Sep 12, 2024.
Ends: Sep 19, 2024.
Leading Consensus: Collect bids in ETH to treasury – 14M ARB (80.13% of total votes).
Summary: This proposal proposes the adoption of Timeboost a new transaction ordering policy for Arbitrum One and Nova. It introduces a fast lane where users who want to compete for transaction ordering bid via an auction, with the winning bid being collected by the DAO.
Aave (AAVE)
Proposal: Aave v3 zkSync Activation
Status: Pending Voting Period.
Created: Sep 15, 2024.
Ends: Sep 20, 2024.
Leading Consensus: n/a
Summary: This onchain vote activates Aave V3 on zkSync with the assets USDC, USDT, WETH, wstETH, and ZK according to parameters recommended by Aave’s Risk Service Providers.