Wintermute DeFi Governance Digest: September 2024 | Week 4
25 SEPTEMBER 2024 | RESEARCH | AUTHORED BY CALLEN
This week’s proposals include Optimism’s community calling for true decentralisation, Aave discussing limiting their WBTC exposure, and Sky expanding to Solana via Wormhole; along with votes from Arbitrum to fund the Arbitrum Foundation with 250M ARB and create a $4.2M Delegate Incentive Program, and Aave onboarding cbBTC on Mainnet and Base.
Proposals
Optimism (OP)
Proposal: Accelerated Decentralization Proposal For Optimism
Author: GFX Labs
Summary: This proposal outlines a three-phase approach to transferring all system powers, resources, and access to governance from OP Labs and Foundation to OP token holders.
Key Points:
- Currently, neither the Token House nor the Citizens’ House can execute code or control its governance contract, meaning a lot of reliance is put on the Optimism Foundation to facilitate onchain governance.
- Optimism governance launched more than two years ago and has matured considerably with an increased capacity for decision-making and has employed robust checks and balances.
- This proposal requests to transfer all system powers, resources, and access to governance from the Foundation and OP Labs to OP Token Holders, pushing Optimism into a truly decentralized organization.
- The transition to decentralization will occur over three phases.
- Phase 1 (Immediate) will look to:
–> Transfer the ownership of the OP Token Contract to OP Token Holders
–> Transfer the ownership of the Governance Contract to OP Token Holders
–> Transfer the ownership of the Governance Fund to the Governance Contract
–> Transfer control of the ETH Collected on behalf of the Optimism Collective to the Governance Contract
- Phase 2 (concluding end of Q1 2025) will look to:
–> Transfer ownership of the Bridge L1 Escrow to Governance Control
–> Push for a plan to decentralize the Optimism mainnet sequencer before the end of March 2025
–> Revise and Re-Ratify the Law of Chains
- Phase 3 (concluding Q2 2025) will look to:
–>Complete full technical transfer of control over the Optimism protocol to Token House, Citizen’s House, and various governance-elected governing bodies
–>Request the publishing and disclosure of all past and ongoing grants made by the Optimism Foundation
–> Complete the decentralization of the Sequencer
Our Take: Optimism’s governance path is notably different to other Governance systems and the foundation has done a great job at ensuring its evolution and success. Albeit, we can certainly see the importance of empowering true decentralization through onchain governance.
Aave (AAVE)
Proposal: Adjusting WBTC Parameters to Address BitGO Transition Risks
Author: Llama Risk
Summary: Llama Risk recommends reducing WBTC Loan-To-Value (LTV) to 0 and lowering supply and borrowing caps on Aave markets due to concerns about BitGo’s custody transition for WBTC.
Key Points:
- Llama Risk – a Risk Service Provider to Aave, is requesting to take proactive measures to limit Aave’s exposure to WBTC due to BitGo’s custody transition for WBTC.
- Llama Risk states that with their previous analysis and ongoing discussion with BitGo, they remain unconvinced about the outlook regarding BitGo and BIT Global’s partnership and its implications for WBTC transparency standards.
- Thus, they are suggesting that Aave begin taking a controlled and cautious approach to begin mitigating additional exposure to WBTC during the transition period.
- Their proposal requests to:
–> Reduce WBTC Loan-To-Value to 0 on all V3 instances which prevents additional borrowing against WBTC collateral
–> Reduce supply & borrow caps to a level 5-10% higher than current utilization, limiting additional exposure to WBTC.
Our Take: Llama Risks’ proposal takes a precautionary measure given the heightened uncertainty during WBTC’s transition phase. Importantly, these changes do not materially affect Aave’s current exposure to WBTC and as such can be seen as relatively minor.
Sky (SKY)
Proposal: Sky on Solana short term crosschain strategy proposal
Author: Rune
Summary: This proposal requests to bring SKY, USDS, and sUSDS to Solana via Wormhole coupled with a short-term liquidity incentive program.
Key Points:
- Now that Sky and USDS are live on Ethereum, Rune is requesting to keep the momentum going by expanding to the Solana ecosystem.
- This will be a short-term program that utilises Wormhole as the cross-chain solution between Ethereum and Solana while Skylink – Sky’s native cross-chain implementation is still preparing for launch.
- Using Wormhole, SKY, USDS, and sUSDS can be bridged to Solana.
- To support their growth, an incentive program will be launched on Solana with 2M SKY tokens per week targeting DeFi integrators of USDS and SKY.
- There will also be a large focus on incentivizing USDS/USDC and USDS/sUSDS liquidity on Solana.
Our Take: Solana has an extremely strong ecosystem and is a perfect opportunity for Sky to access native Solana users, offering users their USDS savings rate with extremely low gas fees.
Votes
Arbitrum (ARB)
Proposal: Funds to Bolster Foundation’s Strategic Partnerships Budget
Status: Live.
Created: Sep 19, 2024.
Ends: Sep 26, 2024.
Leading Consensus: For – 81M ARB (98% of total votes).
Summary: The Arbitrum Foundation is requesting 250M ARB from the DAO Treasury to continue fostering key strategic partnerships and growth within the Arbitrum Ecosystem.
Arbitrum (ARB)
Proposal: Arbitrum DAO Delegate Incentive Program
Status: Live.
Created: Sep 20, 2024.
Ends: Sep 27, 2024.
Leading Consensus: FOR – DIP V1.5 – 42M ARB (73.0% of total votes).
Summary: This proposal requests to establish an Arbitrum Delegate Incentive Program with a $4.2M budget for up to 50 delegates. The vote currently offers 2 methods to track and validate delegates’ involvement in the DAO.
Aave (AAVE)
Proposal: Onboard cbBTC on Mainnet and Base
Status: Finished.
Created: Sep 18, 2024.
Ends: Sep 23, 2024.
Leading Consensus: For – 754k AAVE (100% of total votes).
Summary: This proposal creates cbBTC markets on Aave V3 Mainnet and Base. cbBTC is a new Bitcoin wrapper offering from Coinbase.