👨🔬 Governance Lab #103
Lab Report #103 - Aave's Chaos Labs Early Renewal, Arbitrum's Entropy Advisors Renewal Proposal, LayerZero's Fee Switch Referendum #2, and more
gm frens 👋
Welcome back to the Governance Lab, your weekly source for all things StableLab, DeFi, and DAO Governance.
At a Glance 👀
👻 Aave DAO discusses Chaos Labs early renewal proposal
🔵 Arbitrum DAO debates Entropy Advisors 2-year renewal
⚫ LayerZero launches Fee Switch Referendum #2 with dynamic quorum model
Let’s dive in 🏊
Aave Governance
Chaos Labs proposes $3M early renewal with expanded Edge Risk Oracle infrastructure
Chaos Labs has submitted an early renewal proposal for their risk management partnership with Aave DAO, requesting a 12-month extension starting July 13, 2025, through July 12, 2026, with an annual contract value of $3M USD. The proposal is an evolution from their current $2M flat renewal, reflecting the expansion in scope and deliverables achieved during the current term while Aave's TVL doubled from $12B to $24B and generated over $71.5M in protocol revenue.
The team has completed 64 asset listing analyses in the past 7 months compared to 46 in the entire previous year. Over 1,100 risk parameter updates have been executed, including 226 supply cap adjustments, 203 borrow cap modifications, and 572 interest rate curve updates through Risk Stewards.
The proposal's central component is the continued development of Aave's Edge Risk Oracle infrastructure, which currently secures over $5B in deposits through automated, governance-bounded updates. The WETH Interest Rate Curve Oracle manages $548M in deposits, while the Supply & Borrow Cap Oracles cover $3.4B across V3 deployments.
The proposal is currently under discussion in the Aave governance forum, with community members invited to provide feedback before the formal voting period begins.
Arbitrum Governance
Entropy Advisors requests 2-year exclusive partnership extension with $6M base plus 15M ARB equity
Entropy Advisors has submitted a proposal for a 2-year exclusive partnership extension with Arbitrum DAO, running from September 1, 2025, through August 31, 2027. The proposal requests $3M annual base pay plus a 15M ARB vested allocation to support Arbitrum's treasury strategy, incentives design, data analytics, and special projects.
During Year 1, the team expanded from 2 founders to 7 full-time employees plus 1 intern, achieving top ARB delegate status by voting power. The team passed strategic proposals including the OpCo framework, DRIP incentives program, and Stylus Sprint. They developed Dune dashboards that became the primary resource for Arbitrum ecosystem insights and supported business development efforts that helped secure Ethena's decision to deploy Converge on Arbitrum.
The proposal outlines four key deliverable areas. Financial Planning and Capital Deployment would focus on revenue tracking, financial modeling, and cross-functional coordination with AAEs. Incentives Design and Optimization would implement data-driven program management. Ecosystem Data Expansion would develop dapp-specific dashboards, institutional analytics services, and custom Arbitrum-branded infrastructure. Special Projects would provide strategic support for high-impact initiatives, external protocol negotiations, and conference representation. The proposal acknowledges past communication challenges and scope clarity issues, with the team committing to improved stakeholder relationships and more focused execution.
The proposal is currently under discussion in the Arbitrum governance forum.
LayerZero Governance
LayerZero votes on Fee Switch Referendum #2 with dynamic quorum adjustment
LayerZero Foundation has announced the second fee switch referendum, scheduled for June 20, 2025. The referendum presents a single question: "Turn the protocol fee switch on?" with collected fees designated for ZRO buybacks and burns, creating a direct link between network usage and token supply reduction.
As of June 2025, the protocol has processed over $100B in historical value transferred across chains and supports 130+ blockchains including Ethereum, L2s, Solana, and Aptos. The system has processed 150+ million historical messages and currently accounts for 70% of cross-chain message volume in 2025. Asset transfers drive $5 billion monthly volume through the OFT standard, while supporting 250+ assets as Omnichain Fungible Tokens.
The referendum introduces a dynamic quorum model following the failure of Referendum #1 in December 2024, which achieved 96% "Yes" support but only 11% participation against a 60% quorum requirement. The new formula sets quorum at 50.40% of circulating ZRO. The model incorporates a Turnout Factor that would adjust future thresholds based on participation patterns and an Alignment Factor that would modify requirements based on consensus strength. Governance-bounded parameters establish a 20% floor and 60% ceiling for quorum requirements.
Links
🚀 Launches, Deployments, Partnerships, and M&A
DELV shuts down
Ink Foundation to Launch INK Token
Introducing EigenCloud
Introducing the Token Transparency Framework
📑 Reads, Insights, and Reports
Understanding Aave V4’s Architecture
The Ethereum Foundation’s Treasury Policy
Governance in Season 8: The Next Phase
The Return of Uncollateralised Lending in Crypto
How institutions and $4bn crypto-native asset managers are shaping DeFi: report
🧗 Milestones & Updates
Aave DAO - June 2025 - Funding Update
Arbitrum DAO - Entropy Advisors Transparency Report May 2025
Optimism Collective - Season 8 Intent
🔒 Security, Risk, & Hacks
🗞️ Everything Else
Optimism Collective - Evolution of Retro Funding in Season 8
📺 Podcasts, Presentations, & Listens
Sam MacPherson: Spark Isn’t A Bank, It’s So Much Bigger on The Edge Podcast
Paul Frambot: How Morpho Is Redefining Money Markets on Bell Curve
Proposal Tracker™️
⚡ VOTING UNDERWAY | Compound DAO - Proposal to Create the Compound Foundation
Summary: This proposal establishes the Compound Foundation as a non-profit entity to provide strategic leadership and operational support for the Compound protocol, requesting $9M in COMP tokens over an 18-month period from July 1, 2025 through December 31, 2026 at $6M annually. Aaron Schnarch, former COO of Anchorage Digital and CEO of Coinbase Custody, is designated as Executive Director to lead the Foundation's mission of promoting mainstream DeFi adoption with Compound at the forefront of lending protocols.
💬 DISCUSSION | Compound DAO - Authorizing the CGWG to Facilitate RFPs
Summary: This proposal formally authorizes the Compound Governance Working Group (CGWG) to facilitate Request for Proposal (RFP) processes for DAO governance matters, addressing the increasing community demand for structured evaluation of competing initiatives. The CGWG has previously coordinated ad-hoc RFPs for Staked COMP mechanisms involving AlphaGrowth and Gauntlet proposals, Oracle Extractable Value solutions from API3, Chainlink, and RedStone providers, and Voting Service Provider evaluations.
💬 DISCUSSION | ENS DAO - Should the DAO have Tally as a Dedicated Governance Service Provider?
Summary: This proposal requests approval for Tally to become a formal enterprise-level governance service provider, leveraging their position as the de-facto interface handling approximately 70% of all token-weighted votes in ENS governance. The service agreement encompasses customizable proposal webhooks providing real-time notifications for governance events including draft publication, on-chain proposals, quorum achievement, and execution milestones, ENS integration and distribution features including priority Namechain rollout support, CCIP-Read and wildcard sub-registry indexing for domains like *.cb.id and *.fcast.id, and low-code proposal builders for updating ENS records directly from governance proposals. Total costs span $180,000 in Year 1 ($100,000 USD plus $80,000 ENS tokens) and $60,000 recurring annually ($40,000 USD plus $20,000 ENS tokens).
From the Lab
Blog - Vote Gauges, Lockers & incentive Design with Ivan Fartunov
We're continuing our Interview Series—a collection of sessions with industry leaders sharing one big idea with our team. For Session 005, we explore vote gauges, lockers, and incentive design with Ivan Fartunov, Tokenomics Lead at Aragon. Ivan breaks down how vote gauges create sustainable incentive systems, the mechanics behind vote lockers and their impact on governance participation, and practical design considerations for protocols looking to implement these mechanisms.
▶︎ READ the blog post
Meet Mel at Monetarium 2
This week we’re in Washington DC for Monetarium 2 by Reserve Protocol! 🇺🇸
Find Mel, our Governance Researcher, at the event. If you want to chat delegation, incentive mechanisms, or the practical side of governance, reach out!
📆 June 19–21
📍 InterContinental at The Wharf
❲ Our Voting ❳
📆 June 13th → June 18th | 🗳️ Total Votes: 10
See our full vote history and detailed rationale HERE.
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