👨🔬 Governance Lab #051
Lab Report #051 - MakerDAO D3M Increase, Aave DAO DAI LTV Change, Arbitrum Stylus Activation, Meet GIGI, and more
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Welcome back to another weekly edition of the Governance Lab, your source for all things StableLab, DeFi, and DAO Governance.
Theme of the Week: DeFi Discourse. Tensions were high this week across DeFi as protocols balance innovation, growth, and risk management. How can we foster constructive conversations that address valid concerns while still pushing the boundaries of what's possible? It's a fine line for sure , especially with the increasing ways these protocols are interdependent. Let’s get into it.
P.S. Please welcome our newest team member, GIGI — an AI robot sidekick and brand mascot. More on them below. 🤖
At a Glance 👀
🏦 MakerDAO suggests increasing Morpo Spark DAI line up to $1B
🙃 Aave DAO proposes setting DAI LTV to 0
📝 Arbitrum DAO looks to activate Stylus
🤖 Meet GIGI our brand mascot and newest team member
Let’s dive in 🏊
1B Line
MakerDAO reviews Morpho Spark DAI vault performance and suggests increasing the credit line up to $1B
On Monday, BA Labs, risk service providers at MakerDAO published an update on the ongoing performance of the recently deployed Morpho Spark DAI vault. Among the notable findings was that the DAI vault saw strong demand, with users preferring USDe over sUSDe pools and higher leverage (86%+ LLTV).
The Morpho Spark DAI vault was initially deployed on March 29th with a 100M D3M line to Spark's sUSDe/DAI and USDe/DAI markets on Morpho Blue. The move by Maker intends to bring further diversity and improve yields for DAI.
The BA Labs post included a recommendation to increase the D3M credit line ceiling up to 1B DAI with a maximum allocation of 600M DAI total “for the time being” pending governance approval. This proposal sparked controversy and discussion across DeFi, with critics expressing concerns about the risks and aggressiveness of the move.
Let it DAI
Aave DAO proposes setting DAI LTV to 0% amid concerns over MakerDAO's D3M program
In response to MakerDAO's aggressive increase of its DAI credit line to facilitate collateralized loans backed by sUSDe, Aave DAO is considering a proposal to mitigate potential risks associated with using DAI as collateral. A proposal, authored by Marc Zeller, seeks to mitigate risks by implementing a 0% LTV risk parameter for DAI across all Aave versions and networks.
Community feedback suggests more moderate actions like excluding DAI from stablecoin E-mode, removing it from Merit, lowering LTV, or raising the reserve factor. The Aave community is now eagerly awaiting Chaos Labs' risk analysis and recommendations before proceeding with a Snapshot vote.
Stylus
Arbitrum proposes activating Stylus for next-gen WebAssembly smart contracts
Arbitrum DAO has received a governance proposal to enable Stylus, an advanced WebAssembly-based smart contract framework, on the Arbitrum network. Stylus is a “first-of-its-kind technology” that seeks to be a complementary and fully interoperable VM to the existing EVM. By activating Stylus, Arbitrum aims to position itself as a leader in L2 innovation, offering developers access to cutting-edge tools for building scalable and efficient dapps. The proposal will follow the AIP governance process, first as a Snapshot vote, followed by thorough testing on public testnets before an onchain vote to deploy the upgrade on Arbitrum One and Arbitrum Nova.
❲ Links ❳
🚀 Launches & Deployments
W Launch Roadmap
Uniswap live on Blast
Frax live on Blast
📑 Insights & Reports
Money View of the MakerDAO/Morpho/Ethena drama
Wintermute DeFi Governance Digest: April 2024 | Week 1
RWA Q1 Market Analysis
🧗 Milestones & Updates
Arbitrum LTIPP Screening Period Results
Frax reactivates Fee Switch
🔒 Security, Risk, & Hacks
Introducing Aave's Chaos Labs Risk Oracles
Prisma Finance Incident - Post-Mortem Report
🗞️ Miscellaneous
Conic Finance: Conic v2.1
Aave: Enabling decentralisation through Distribute voting weight
Balancer: Update Snapshot Parameters with Core Contributor Author Set
📺 Podcasts & Listens
Maker DAO's $1bn Bet on Ethena, Aave Strikes Back on Leviathan News
❲ Proposal Tracker ❳
💬 DISCUSSION | Aave - OEV Exploration Framework
Summary: Here, Areta suggests creating a framework to explore and design solutions that capture Oracle Extractable Value (OEV) for the Aave DAO. The goal is to provide the DAO with resources to capture this value going to MEV searchers, block builders, and validators instead of Aave during liquidations. The proposed framework includes creating a five-member community working group elected by the community, a 12-week Discovery Phase to define requirements and analyze solutions, a Solution Submission Window, a Solution Review & Discussion Window, Solution Selection by the Working Group, and ongoing monitoring during development and implementation. The proposed timeline spans approximately 6 months. The cost to the Aave DAO is not yet determined.
💬 DISCUSSION | Prisma - Unpausing Prisma Protocol
Summary: This proposal aims to safely unpause the Prisma Protocol and re-enable borrowing after a recent security incident. The proposal outlines safety precautions, a migration process to new V2 vaults, and a specification for closing vulnerable troves via redemption. The proposal will lower collateral exposure for vulnerable troves and cause a temporary imbalance in the DAO fee receiver's mkUSD and collateral holdings.
💬 DISCUSSION | Arbitrum - Onboarding Working Group Experiment
Summary: This proposal outlines a 3-month experiment to address Arbitrum DAO's challenges with contributor onboarding and retention. The solution includes an onboarding hub to consolidate information, a dedicated team to work with potential contributors, and weekly onboarding calls. The goal is to increase participation, understanding of governance, community bonds, and internal DAO organization. The team received a Questbook grant for funding.
💬 DISCUSSION | Frax - Frax Singularity Roadmap Part 1
Summary: This proposal is Part 1 of the "Frax Singularity Roadmap", which aims to unify the vision and roadmap for the Frax ecosystem. With the launch of Fraxtal and achieving 100% Collateralization Ratio (CR), Frax is focusing on larger opportunities, paradigm-shifting products, and issuing native Frax Assets across crypto. Fraxtal is described as the "home of Frax Nation & the Fraxtal Network State", with plans for Layer 3 (L3) sub-communities and innovative features to make it the most developer-friendly L2 on Ethereum. The roadmap targets 23 L3s in the next 365 days, with incentives for users and developers.
From the Lab
Welcome GIGI
Introducing GIGI our brand mascot and newest StableLab team member. 🤖🩶
CODENAME: GIGI (Guiding Intelligence for Governance Initiatives) is an AI robot here to assist us in our mission to scale protocols through effective governance.
As part of GIGI’s first project, they’ve been hard at work helping us revamp our website. Say hello to GIGI and explore the new look website HERE.
GIGI’s Lore and Origins
Get to know GIGI’s backstory, origins, and role as our newest member. Emerging from the depths of DeFi Summer, GIGI's story is one of sorrow turned into hope.
▶️ Read GIGI’s Lore HERE
Announcing StableLab x Reserve Protocol
We're happy to announce that StableLab has been onboarded as the Governance Facilitator for the Reserve Protocol. In this role, we will focus on supporting the Reserve community by creating governance processes that enable Reserve Tokens to reach their desired goals.
▶️ Read the full announcement HERE
Check out our latest post where we delve into the recent Uniswap DAO proposal to activate fee mechanism rewards for UNI token holders. We examine how governance proposals can impact token value, specifically focusing on the effects observed on UNI price.
▶️ Read the full post HERE
❲ Our Voting ❳
📆 March 29 → April 4 | 🗳️ Total Votes: 31
▶️ See our full vote history and detailed rationale HERE
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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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