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👨‍🔬 Governance Lab #025

Lab Report #025 - dYdX 4 Adoption, Balancer Vulnerability, Uniswap V2, and more

Aug 24, 2023

gm frens welcome back to the Governance Lab, your weekly source for all things StableLab, DeFi, and the drama-filled world of Governance. SocialFi and more specifically friend.tech is having a moment, Base is booming with DeFi protocol deployments, Balancer Pools had a quick scare, Drama at dYdX, Aave debates RWAs. All this and more below. Enjoy :)

At a Glance 👀
🪐 dYdX DAO looks to approve V4 adoption
🫣 Balancer discloses vulnerability
✌️ Uniswap DAO debates deploying V2 on all chains with V3

Let’s dive in 🏊

Bridge to Cosmos

Wintermute seeks community approval for the adoption of dYdX v4

In preparation for the full mainnet launch of dYdX Chain, Wintermute has put forth a proposal to secure community consensus regarding some of the forthcoming changes.
The post seeks approval on the following:
- Adopt v4 as the next version of the protocol
- Adopt DYDX as the L1 token of the dYdX Chain
- Adopt the Ethereum Smart Contract as the one-way bridge for the DYDX token to be migrated
- Validators should reference the Ethereum Smart Contract when distributing DYDX on the dYdX Chain
- Give wethDYDX the same governance and token utility as ethDYDX
A Snapshot vote is expected in the coming days with an onchain vote to follow.

Everyone out of the Pool

Balancer discloses a vulnerability in V2 pools

Balancer had a scare this week when it was reported its V2 pools had a vulnerability.
Balancer Labs and the Emergency subDAO, a 4-of-7 multisig of entrusted individuals tasked with “killing” pools and gauges in the event of a malicious attack, mobilized to enable users to exit the affected pools. The full list of pools can be found here.
After the initial vulnerability announcement, Balancer LPs quickly withdrew more than 98% of liquidity from the susceptible pools. Approximately $11.8M, equivalent to 1.4% of the protocol's Total Value Locked (TVL), was exposed. In the latest update, the amount at risk stood at $2.8M, or only 0.42% of the TVL. The vulnerability looks to be mostly neutralized.

Is it Canon?

Uniswap debates deploying V2 on all chains with V3

Uniswap DAO is considering a proposal to deploy a canonical version of the V2 AMM across all chains where V3 is deployed.
A "canonical version" in this context refers to an unmodified instance that is owned and controlled by Uniswap governance. Currently, only one canonical version of V2 exists and it’s on Ethereum.
The proposal claims there are three main benefits to this deployment: 1) provide demand for V2-style AMMs on non-Ethereum chains 2) protect users from using modified and forked versions 3) improve execution for small volume wrappers on the Universal Router.
Once the proposal has been passed on-chain, Uniswap Labs will proceed with the deployment of V2, aligning it with the already approved V3 canonical deployments.

❲ Links ❳

🚀 Launches & Deployments

Aave V3 Live on Base
Introducing Hedgey V2
LiFi launches MMA, Cross-chain Messaging for Governance
Stader Labs launches rsETH

📑 Insights & Reports

🧗 Milestones & Updates

🔒 Security & Hacks

Quantstamp launches Flash Loan Detector Tool

💸 Raises

Maple Finance Raises $5M

Summary: This proposal seeks to extend the existing dYdX Grants Program for an additional six months. The proposal introduces two new roles, the Grantor and Operator, and splits funding between Strategic Initiatives (Reverie) and Community Initiatives (RoboMcGobo). Other changes include the removal and appointment of a new batch of Trustees and Enforcers.

Aura Finance - Reducing Minimum Voting Weight

Summary: This proposal aims to lower the minimum voting requirement for vlAURA holders to receive gauge rewards from 0.2% to 0.1%. The proposal argues that this change is necessary to increase the number of participants who can engage in protocol gauge voting, promote inclusivity for smaller stakeholder groups, and support the overall expansion and decentralization of Aura Finance.

Aave - CRV LT Deduction 21-08-23

Summary: Here, as part of their CRV V2 Deprecation Plan, Chaos Labs and Gauntlet have jointly recommended reducing the Liquidation Threshold for CRV on Aave V2 Ethereum from 49% to 47%.

Aave - Increase GHO Borrow Rate

Summary: Marc Zeller proposes raising the borrow rate of GHO from 1.5% to 2.5%. Several factors have influenced this decision, including the current deviation of the stablecoin's peg, the comparatively lower borrowing rate of GHO in relation to the market, and the inability to utilize GHO as collateral.

Stargate Finance - Renewed Liquidity Incentivization Mandate

Summary: This proposal suggests swapping Stargate’s accumulated rewards into ETH on a monthly basis. As part of Stargate’s current liquidity incentive program, the protocol earns various token rewards such as yCRV, AURA, VELO., etc. The proposal hopes to mitigate token price risk from these positions and instead accumulate useful POL in the form of ETH. Additionally, the proposal recommends allocating up to 10M STG per annum to be used for incentivization purposes.

Maverick Protocol - Fund Maverick Warrior Program S2

Summary: This proposal aims to extend the current season of the Warrior Program at Maverick Protocol. The Maverick Warrior Program is designed to source and reward contributors who actively participate in community-building and content initiatives. The proposal outlines a few changes for Season 2, including moving certain operations off-chain and the adoption of third-party web3 tooling to ensure the fulfillment of deliverables. A total of 15K USDC is being requested to support Season 2 along with other projects, such as the MAV Alert Twitter Bot and future proposals.

From the Lab

❲ Our Proposals ❳

🗳️ Active Proposals

🎠 [1IP-40] StableLab Grant Request for developing a 1inch DAO Constitution
- Protocol: 1inch
- Status: ⚡️ LIVE on Snapshot
- Current Results: 87% ‘Yes’ Quorum: 5M / 10M
- Voting Ends: August 27th

❲ Our Voting ❳

📆 August 19th → August 24th | 🗳️ Total Votes: 18

See our full vote history and rationale here.

Lab Reports 📓

In our most recent blog post, we delve into the diverse preventive measures for on-chain governance attacks. From implementing address whitelisting to introducing execution delays, DAOs possess a range of strategies to combat malicious proposals.

» READ the full report «

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