👨🔬 Governance Lab #036
Lab Report #036 - Aave v2 Vulnerability, dYdX Chain Beta Phase, Compound Growth Program, and more
Welcome back to the Governance Lab, your weekly source for all things StableLab, DeFi, and DAO Governance. Everyone seems to have a strong opinion on how vendors should service DAOs. This playbook is actively being written with inspiration from the web2 SLA-esque process being brought over to web3. But the truth is, servicing these types of organizations is complicated. I’d love to hear more perspectives on this and how we can further improve this process. Some of my favorite takes this week are here and here. What do you think?
At a Glance 👀
🥶 Aave reports v2 vulnerability
⛓️ dYdX votes to enter Beta Phase
💹 Compound considers Growth Program
🎙️ New StablePod episode w/ Charles St. Louis (DELV)
Let’s dive in 🏊
Vulnerability Report
Aave disables markets amidst vulnerability report
Over the weekend, a critical vulnerability was reported on Aave v2. To ensure no funds were at risk, the Aave Guardian mechanism immediately paused Aave v2 Ethereum markets, paused certain assets on v2 Avalanche, and froze assets on Aave v3 on Polygon, Arbitrum, and Optimism. That same day, BGD Labs submitted an on-chain proposal to disable stable rate mode on all assets and unfreeze the previously frozen assets.
On Monday, BGD Labs shed additional light on the situation and outlined a plan to address the issue. In their post, assets across v3 instances were to be immediately paused out of an abundance of caution. In addition, two on-chain proposals were submitted to help prevent and protect against similar vulnerabilities: Multichain Stable Debt Token Upgrades and Liquidations Grace Sentinel Activation. BGD has provided a timeline for the fix and plans to have Aave fully operational once the proposal is executed and the timelock queue expires on November 12th.
Chain Gang
dYdX votes for Chain Beta Phase
Callen, a member of the Wintermute team and a dYdX delegate, has put forward a proposal to transition the dYdX Chain into its Beta Phase. Since its initial launch on October 26th, the dYdX Chain has been operating in the Alpha Phase, facilitating bridging and staking activities for validators. During this phase, its markets have been functioning in a 'Post-Only' mode. At the time of writing the proposal, a total of 136M ethDYDX had been sent to the wethDYDX smart contract, with 3.7M DYDX staked to chain validators.
Callen's proposal aims to secure formal governance approval to enter the Beta Phase. During this stage, a front-end and indexer will be deployed, introducing trading functionality on the dYdX Chain. An on-chain proposal will follow shortly. This rollout of the dYdX Chain will continue to be actively assessed and tested in a phased process to ensure reliability and functionality. This is crucial before enabling 'Full Trading', which will also require a governance vote.
Growth At All Costs
Compound considers introducing a Growth Program
The Compound community is deliberating on a proposal to adopt a community-driven growth program aimed at facilitating business development, integrations, and marketing campaigns. AlphaGrowth, an advisory firm specializing in BD for protocols, has authored the proposal and seeks to oversee the trial program for four months. Some of the activities the program will facilitate include driving v3 awareness and demand generation, migrating existing pools & increasing integrations, integrating Compound onto wallets & exchanges, and more. The proposal requests a budget of 7770 COMP for the program.
❲ Links ❳
🚀 Launches & Deployments
Aave V3 live on Gnosis Chain
Lido Goes to Base
Introducing Definitive
📑 Insights & Reports
What are veTOKENs?
The Pivotal Role of Restaking Services
Open Problems in DAOs
DAO Decentralization: Voting-Bloc Entropy, Bribery, and Dark DAOs
Reflections on the Past and Future of Real-World Assets from MakerDAO
Wintermute DeFi Governance November Digest
🤝 Integrations, Partnerships, & Raises
Llama raises $6M to build a governance access control platform
Block Analitica x B.Protocol at Morpho
Steakhouse Financial at Morpho
🧗 Milestones & Updates
MakerDAO Protocol Economics Report Sep 2023
Balancer October Treasury Report
🗞️ Miscellaneous
Aave: Increase Stablecoin Optimal Borrow Rate
Aave: Treasury Management - vlAURA
CowSwap: Testing Fee Models for CoW Protocol
Prisma Finance: Debt IR Increase from 1% to 2%
Redacted Cartel: Launch Prisma Finance X Hidden Hand Market
Compound: Listing OUSG on Compound v3
SafeDAO: Outcomes Based Resource Allocation Framework REVISED
DeFi Committee Launch at Starknet
The Upcoming PrismaWars
Gearbox Protocol v3
Another STIP Tracker Dashboard
📺 Podcasts & Listens
Rune Christensen: Solana Breakpoint 2023
❲ Proposal Tracker ❳
⚡ LIVE | Arbitrum - The Arbitrum Coalition
Current Results: 41.7% ‘Fund the Coalition’
Voting Ends: Nov 10th
💬 Aave - Gauntlet Renewal
Summary: This proposal seeks to renew the ongoing service provider engagement between Aave DAO and Gauntlet. In addition to the existing risk management coverage on Aave v2, and v3, the proposal expands Gauntlet’s scope to include GHO. The following elements are included in this scope: GHO Peg Stability Framework and Research, Parameter Recommendations, Facilitatory Analysis, and more. The proposal requests the same as last year’s engagement $2M to be paid 40% in GHO and 60% in aUSDC.
💬 Aave - TokenLogic Retrospective Funding Proposal
Summary: Here, TokenLogic requests retroactive payment for their past contributions to Aave DAO. The proposal stems from the potential upcoming changes in how financial service providers are engaged and compensated. TL has requested a payment of $115K in GHO for their previous work. Their proposal highlights notable achievements, including the submission of 15 AIPs, 8-9 additional AIPs in progress, and the GHO Analytics Dashboard.
💬 dYdX - Community Grants Program through Delegated Domain Capital Allocation Model
Summary: Here, Questbook proposes launching a community grants program at dYdX to attract and retain top-tier contributors and support initiatives crucial for the successful v4 launch. The proposal recommends a two-quarter pilot program with a budget of $1M, allocated across four domains: Protocol Infrastructure, Trading Solutions & Tooling, New Asset Listings, and Community-Run Initiatives for Ecosystem Growth & Engagement. Additionally, the proposal argues in support of exploring a pluralistic approach to grant funding at dYdX, taking into account the existing dYdX Grants Program.
💬 Venus - Deploy Venus Protocol on Ethereum Mainnnet
Summary: This proposal aims to deploy Venus Protocol on Ethereum Mainnet and introduce crvUSD and CRV as collateral. Venus Protocol is a lending platform and synthetic stablecoin protocol built on BNB Chain. The proposal suggests deploying an instance of the Venus protocol on Ethereum to tap into the most liquid and capital-rich market. Additionally, it proposes enabling crvUSD and CRV as collateral and borrowable assets, establishing isolated pools for these assets, incentivizing CRV liquidity mining, and creating pools for XVS and VAI on Curve.
💬 MakerDAO - Spark Lend on Scroll
Summary: This proposal seeks approval to deploy SparkLend on Scroll, a zkEVM rollup. According to the proposal, Scroll aims to utilize this deployment to generate demand for sDAI within the Scroll ecosystem while also helping Spark expand its multi-chain deployment strategy. The proposal outlines the initial collateral assets for the launch, which include WETH, DAI, rETH, and wstETH. If approved, Scroll has offered to provide initial liquidity to the deployment until the Allocator system is fully implemented.
From the Lab
StablePod - Building the Factory for DeFi 🎙️
On the latest episode of StablePod, we chat with Charles St. Louis, CEO at DELV. As the former governance architect at MakerDAO, Charles has been at the forefront of governance experimentation and development. In our conversation, we dive into the ongoing development of Hyperdrive, DELV’s next-gen AMM, why he’s a proponent of governance minimization, the challenges of collateral onboarding in DeFi, and much more!
Uniswap-Arbitrum Grant Program is LIVE 🩶
The UAGP has officially kicked off. On Wednesday, its council members joined an X Space hosted by the lovely team at Gitcoin to discuss the program. Listen back to the space here.
For more information on the program and how to apply click here.
❲ Our Proposals ❳
👻 Create an Aave Financial Management Working Group
Protocol: Aave
Author: Kene
Summary: Our proposal seeks to establish a new working group within Aave DAO. This group will be entrusted with oversight of key financial areas, including Financial Reporting and Auditing, GHO Stablecoin Management, Treasury Management, Safety Module Management, and Project Management & Accountability. To address these scopes, we will implement an RFP process to identify capable and qualified service providers who can handle each of these domains.
Status: ⚡ LIVE on Snapshot
🟡 RRC-13: Delegation Incentives Program
Protocol: Rari DAO
Author: Matt
Summary: Our proposal seeks to introduce an incentives program at Rari DAO, aimed at fostering delegation of veRARI. The proposal requests 40K RARI, with 30K allocated for rewarding delegators who entrust their RARI tokens. The proposal is driven by the desire to enhance voter participation, expand delegation, augment the utility of the RARI token, and more. Should the proposal be approved, the program will run from Nov 21 - Dec 15.
Status: 💬 Forum Discussion
❲ Our Voting ❳
📆 November 3rd → November 9th | 🗳️ Total Votes: 36
See our full vote history and detailed rationale HERE.
Meme
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 :)
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