👨🔬 Governance Lab #034
Lab Report #034 - Aave DAO Budget, Arbitrum Coalition, wstETH Bridge, and more
gm frens welcome back to another edition of Governance Lab, your favorite source for all things StableLab, DeFi, and DAO Governance. I truly believe that 2023 marked the rise of DAO service providers, with 2024 setting up to be even bigger. Of course, for this to occur we will need many more DAOs to mature. Take a look at Arbitrum and the recent influx of SP proposals they’re experiencing. Is this the future? This week, across the board we saw budgeting, swapping, and spending. Enjoy!
P.S. Our team has grown. Please give a warm welcome to Raphael 🥳
At a Glance 👀
💸 Aave DAO outlines a 6-month budget
🛟 Arbitrum DAO discusses engagement with The Coalition
0️⃣ LayerZero announces wstETH deployment ahead of governance approval
🎙️ New StablePod episode w/ David Phelps
Let’s dive in 🏊
Hold the Budget
Aave DAO outlines a 6-month budget
Aave DAO is discussing a proposal to swap existing asset holdings for additional stablecoins to secure six months of operational costs. The proposal outlines the current DAO expenses, upcoming obligations, and updated budget for each scope. The proposal aims to equip Aave with ~$6M in stablecoin holdings denominated in various assets including aEthUSDT, aEthDAI, GHO, and aEthUSDC.
Proposed Aave DAO Budget:
Security Service Providers: Certora & Sigma $1.5M (6-months)
Bug Bounty Program: Immunefi $1M
Risk Service Providers: Gauntlet & Chaos Labs $2.5M (12-months)
Voting Service Providers: Orbit Program $360K (12-months)
Financial Service Providers: TBD $400K (6-months)
Marketing Service Provider: Aave Companies $550k (3-months)
GHO Liquidity Committee: $450K (3-months)
Growth Service Provider: ACI $375K (6-months)
Deployment Service Provider: BGD Labs <$630K + <2K AAVE (6-months)
Grants Service Provider: AGD $616K GHO + 400K ARB (6-months)
Safety Module: TBD
Join the Coalition
Arbitrum DAO discusses engagement with The Coalition
Blockworks Research, Trail of Bits, and Gauntlet have submitted a joint proposal to establish themselves as a multifaceted resource to the Arbitrum DAO. Formally known as "The Arbitrum Coalition," the group’s mandate is to empower delegates by providing them with the necessary information to make well-informed decisions.
According to the proposal, the three members of the Coalition plan to offer stakeholders expertise in areas such as code review, tech review, and risk assessment. An additional role known as “The Advocate” (L2BEAT) will liaise and facilitate discussions between the Coalition and the DAO.
The Coalition plans to offer services such as forum proposal review, onchain proposal code review, just-in-time quantitative review, deployment of an Arbitrum Ecosystem Risk Dashboard, creation of a Service Provider Onboarding Framework, and project management service. In total, the proposal will cost the DAO approximately 2.2M ARB for the proposed 12-month engagement
Feedback from the Arbitrum community has been mixed with some members requesting more defined KPIs and success metrics for such a comprehensive engagement.
Check the Bridge
LayerZero announces wstETH deployment ahead of governance approval
LayerZero sparked some controversy this week when it promoted its wstETH deployment as official, before Lido DAO approval. The original proposal, submitted on October 25th, proposed LZ transfer ownership of the wstETH bridges on Avalanche, BNB Chain, and Scroll over to Lido DAO.
However, issues arose when LZ and the involved chains began to promote this not-yet official deployment as “official”. Lido community members have since commented on the proposal asking for further risk assessment of the deployment.
The proposal has been updated by the LZ core team to exclude Scroll and clarify the premature announcement.
❲ Links ❳
🚀 Launches & Deployments
dYdX Chain v1.0 is live
Paladin launches Quest V2
Polygon deploys POL, its new native token on Mainnet
📑 Insights & Reports
Arbitrum DAO STIP Results
Temporal Governance: Pioneering Cross-Chain Protocol Governance
Optimism: A Holistic Research Report
LST-Backed Stablecoins and their Impact on DeFi
🧗 Milestones & Updates
Introducing PRISMA: The Prisma DAO governance token
Balancer DAO Q3 Financial Report and Year 2/3 Funding Impact Analysis
🔒 Security, Risk, & Hacks
Synthetify Protocol Governance Exploit
🗞️ Miscellaneous
Yearn overhauls YFI tokenomics
Uniswap Deployments Accountability Committee 6-month Report
❲ Proposal Tracker ❳
MakerDAO - Aave Revenue Share Calculation & Payment #1 [Q3 2023]
Summary: This proposal seeks approval from Maker governance to transfer 2,889 DAI from the Surplus Buffer to a smart contract controlled by the Aave DAO. Per the Spark Lend Profit Share agreement between Spark and Aave, this marks the initial payment to the DAO for the utilization of Aave’s codebase. According to that agreement, Spark must pay 10% of its income to Aave DAO, but only when revenue exceeds 1M DAI per year. Subsequent payments will be made quarterly based on the payment amount formula outlined in the proposal. This agreement will be active for 2 years and will expire on September 25, 2025.
Aave - Chaos Labs Risk Management and Platform Proposal
Summary: This proposal aims to extend the partnership between Aave DAO and Chaos Labs for an additional 12 months. Since November 2022, Chaos Labs has committed to providing a comprehensive range of risk management products and services to the Aave DAO, encompassing V2, V3, and GHO. The proposal outlines various focus areas including Risk Parameter Optimization, Risk Monitoring and Alerting, V2 Deprecation and V3 Migration, Protocol Growth, GHO Safety, Chaos Team Support, and Communications. The proposal requests a total of $1.6M in aUSDC or GHO, distributed linearly throughout the one-year engagement.
Aave - Governance v2.5 Activation
Summary: Here, BGD Labs proposes the activation of an interim Aave Governance v2.5 as a partial upgrade to the larger v3 update. This new approach addresses certain component issues, ensuring a more secure deployment process. While the full implementation undergoes additional verification and auditing, this proposal introduces essential components for the upgrade, including a.DI, the v3 execution layer, and Robot. However, it does not encompass the new voting mechanisms and asset upgrades.
dYdX - v4 Social Mitigation Strategy for MEV
Summary: This proposal seeks to establish an MEV Committee for dYdX v4, dedicated to monitoring and mitigating the issue of MEV. Currently, v4 is scheduled to launch without a robust built-in solution for MEV, which negatively impacts the overall user experience. To address this, the proposal introduces the concept of social slashing through governance proposals and outlines plans to develop further methods to implement this functionality directly into the protocol. The MEV Slashing Committee will comprise seven individuals serving for a term of six months, with a total budget of $84k. Committee members include Thomas Cintra, Udit Vera, Apriori, Nitesh Nath, Michael Neuder, Craig Le Riche, and Reverie.
From the Lab
Welcome to the team Raphael!! 🥳
We're super excited to announce our newest team member, Raphael Spannocchi. Raphael joins the StableLab team as our new Governance Lead. He brings a wealth of governance experience having previously contributed to MakerDAO and the Flipside Governance team. We're thrilled to have him on board!
StablePod - Designing Governance Games 🎙️
On the latest episode of StablePod, we chat with David Phelps Co-founder of jokerace. In our conversation, we discuss the launch of jokerace v3, why gamifying governance works, where AI can help DAO governance, and much more.
❲ Our Proposals ❳
🦄 Delegation of UNI to Active but Underrepresented Delegates
Protocol: Uniswap
Author: Doo
Summary: Here, we request the Uniswap Foundation delegate 2.5M UNI to each of three active but underrepresented delegates selected based on the criteria outlined in the proposal. Previous delegate and governance activation events have fallen short of producing a more proactive governance culture within Uniswap. Some delegates have even failed to engage at all within governance. To address this and promote delegate diversity, we propose an election period with a set of requirements that would further grant voting power to delegates who have demonstrated consistent engagement, while introducing accountability via undelegation.
Status: 💬 Forum Discussion
❲ Our Voting ❳
📆 October 20th → October 26th | 🗳️ Total Votes: 27
See our full vote history and detailed rationale HERE.
Meme
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