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👨🔬 Governance Lab #023
Lab Report #023 - EDSR Changes, Aave CRV Derisk, Nouns DAO V3, and more
gm frens welcome back to the Governance Lab, your weekly source for all things StableLab, DeFi, and the drama-filled world of Governance. Another week in the books. It definitely feels like an onchain summer, so let’s keep the momentum. The weather here in LA is climbing, and so is activity: EDSR changes, SubDAO token farming, RWA expansions, token swaps, smart contract upgrades, and much more. Enjoy🍦
At a Glance 👀
💎 Rune proposes EDSR change
👨🚒 Aave DAO continues CRV derisk
🍴 NounsDAO votes to upgrade its contracts
🗳️ Paladin DAO holds Meta-governance elections
Let’s dive in 🏊
Cap it at 5
Rune proposes lowering the EDSR to 5%
Rune Christensen has submitted a new proposal to modify the Enhanced DAI Savings Rate (EDSR) based on observed behavior since the experiment’s implementation
According to the post, the EDSR has primarily benefitted large-scale ETH and staked ETH whales, crowding out regular DAI users who are the intended audience.
Proposed changes include reducing the maximum value of the EDSR to 5%, adjusting the utilization rate for each tier, and increasing crypto borrow rates to limit arbitrage opportunities.
The post also mentions plans to introduce a Spark Protocol retroactive token airdrop as a reward for early participation and contribution.
In a separate forum post, Rune provides further context regarding SPK farming and other SubDAO token farming.
Steady, As CRV Goes
Aave DAO continues to derisk CRV exposure
Aave DAO has been actively discussing and approving proposals to reduce their exposure to CRV after the recent exploit on Curve Finance.
Here is a recap of the proposals:
1. Gauntlet: A proposal was executed on August 9th based on Gauntlet's recommendation. It suggests reducing CRV LT, LTV, and debt ceiling on V3 Ethereum and Polygon. More details about this proposal here.
3. Marc Zeller: A proposal to strategically purchase CRV in an OTC Deal to enter the Cruve Wars. Voting Ends Aug 11th.
Additionally, the two service providers have proposed a longer-term plan to gradually phase out the CRV market on V2 by reducing LT over several weeks.
Fork or Chopsticks?
Nouns DAO votes to upgrade its contracts
Nouns DAO is currently voting on an onchain proposal to upgrade its smart contracts adding new functionality to modernize and streamline its governance and decision-making processes.
Changes in the upgrade include the ability to edit proposals, the option to pool vote power for submitting a proposal, the implementation of an objection-only period, the adjustment of vote snapshots after the voting delay, and the introduction of a controversial Nouns Fork feature.
To implement these changes, the proposal is divided into multiple transactions. Initially, a new Treasury contract would need to be deployed, followed by a series of asset transfers. The proposed transactions have been fully audited.
After a year of controversy and infighting within the NFT community, Nouns DAO may finally have a fork mechanism much to the delight of opportunistic arbitrageurs.
❲ Links ❳
🚀 Launches & Deployments
L2 Base Mainnet is live
Trader Joe live on Mainnet
Introducing Liquid Restaked Token
Announcing SEAL 911
📑 Insights & Reports
Expanding on Proof of Governance: The Future of Rollup Governance
DAO Treasury Reports by Karpatkey
Lido is the Most Liquid Staking Protocol
The Key Elements of Maker’s Endgame Plan
Intro to AMM Incentives
A Comprehensive Guide of The Security Council Elections at Arbitrum DAO
🧗 Milestones & Updates
Gauntlet Shares a Post Mortem on Aave’s Curve Risk
Lido Monthly Report July 2023
Latest Curve Metrics Post-Exploit
🔒 Security & Hacks
Steadefi hacked for $1.4M
Aave <> Sigma Prime Budget Extension
Aave Treasury Proposal for RWA Allocation
Proposal to onboard sDAI to Aave V3
Proposal to create a Compound Growth Program
Another Optimism Governance Dune Dashboard
Saddle Finance Proposal to Wind Down Operations
DUP-001 Extend DAO Voting Period
📺 Podcasts & Listens
The Role of Governance in Lending Markets - Twitter Space
Crosschain Governance and Messaging with Chainlink and QiDao @ Stable Summit
❲ Proposal Tracker ❳
Summary: This proposal aims to amend the current engagement between Risk Service Provider Chaos Labs and the Aave DAO. The proposal requests a formal expansion of Chaos Labs' scope to include all of Aave, including V2 and GHO. A compensation increase of $400K is being requested, which would bring the total annual compensation paid to Chaos to $1.5M.
Summary: This proposal requests approval to onboard Financial Reserves and Asset Exploration Inc (FinresPBC) as the official off-chain partner and custodian for Frax Finance. The partnership aims to help Frax engage with and expand into Real World Assets (RWA). FinresPBC offers off-chain transactions for the protocol, such as holding USD deposits in FDIC savings accounts to earn yield, minting/redeeming USDP stablecoins, minting/redeeming USDC, and more.
Summary: This proposal seeks approval to swap 1M ARB tokens for ETH. Synapse DAO was previously granted 1,030,161 ARB tokens by Arbitrum to support the protocol's deployment on Arbitrum. The proposal suggests exchanging this token allocation for ETH and utilizing it as POL in their own ETH pools on Arbitrum.
PoolTogether - Upgrading the Governor Contract
Summary: The proposal aims to upgrade the current Governor Smart Contract at PoolTogether DAO. The DAO currently uses Governor Alpha, an outdated contract, as its on-chain governance implementation and argues that an upgrade is needed to protect itself from risks and downsides. The proposal requests adopting an OpenZeppelin governance contract to have more governance flexibility.
Redacted Cartel - Swap between Redacted DAO and Olympus DAO
Summary: Here, Redacted DAO and Olympus DAO formally terminate their current token swap agreement, including the cessation of vested token streams and the repurchase of the existing token allocation that has already been swapped between them. A similar proposal is also being discussed in OlympusDAO governance to end this partnership. The proposal states that the motivation behind it is the lack of "strategic alignment" between the projects since the initial agreement was approved.
Summary: This proposal aims to introduce Lyra V2 and establish the Lyra Foundation. In Lyra V2, the options protocol looks to expand and launch Lyra Chain, Lyra Protocol, and the Lyra Matcher. Lyra Chain is an OP stack rollup for options trading. Lyra Protocol v2 introduces a new modular design with three main components: subaccounts, managers, and assets. The proposal also introduces the Lyra Foundation, a legal entity responsible for supporting the growth and full decentralization of the Lyra Protocol.
From the Lab
Paladin Meta-Gov Elections
Vote for StableLab! We are running to become a meta-governance representative at Aave DAO on behalf of Paladin. With a growing treasury of governance tokens, the Paladin community aims to enhance its participation and influence across the ecosystem at protocols such as Aave, Aura, and Convex.
As active delegates at both protocols, we’re excited at the opportunity to foster new synergies and help each project grow. The proposal is now live on Snapshot!
❲ Our Proposals ❳
🗳️ Active Proposals
Status: ⚡️ LIVE on Snapshot
Current Results: 51.05% ‘Abstain’ Quorum: 4.5M / 10M
Voting Ends: August 12th
✅ Proposals Passed
Results: 61.68% YAE
❲ Our Voting ❳
📆 August 4th → August 10th | 🗳️ Total Votes: 21
See our full vote history and rationale here.
Lab Reports 📓
In our latest blog post, we explore the scrutiny that DAO Founders often face as the leaders and faces of decentralized communities, protocols, and organizations. With the full transparency of blockchain, every move they make is tracked and criticized. So, what gives?
I’d love to hear from you! Drop me a DM on Twitter with your thoughts, feedback, or any comments you may have about the newsletter. I write for you, the reader :)
That’s it for this week. As always thanks for reading and subscribing to the Governance Lab