The Week in Governance (Oct 11th, 2023)

Months ago, I used to put together a weekly newsletter updating readers on the various governance happenings crypto. This week, I want to expand my more recent forum coverage to include recent votes and other news regarding DAOs and crypto governance.

Important Votes

  • Osmosis continues to tinker with the fees on its platform. They are currently voting on setting the default taker fees to .1% instead of the previous proposed fee of .15%. The proposal thinks the lower fee level is essential as a .15% fee could reduce volume as it dramatically impacts multi-hop transactions.
  • Synthetix is currently voting on whether or not to deploy their token on Base through the Base Bridge. I find this compelling because Base is attracting more legitimate projects and growing its ecosystem. Base is shaping up to challenge incumbent Arbitrum and Optimism.
  • Uniswap passed an on-chain vote to launch V3 on the Filecoin FVM. Interestingly, the proposal specifies that the team at Axelar will be the ones to launch the app. Given that this started as an off-chain vote in June, I am surprised to see this executed, especially as deciding on Filecoin came as a surprise.

Forum Thread Of The Week

Lido’s Fancy New Staking Module

As readers know, decentralization has become a strategic goal for Lido. Last week, I highlighted Hasu’s lengthy three-year strategic plan for the DAO. The most crucial goal Hasu presented to Lido was further decentralizing their Node Operator set. Nodes operated by only a handful of large operators would be centralized and susceptible to influence and pressure from special interest groups. As Lido becomes more dominant and controls more and more of the stake for PoS chains, a centralized Node Operator set could become an attack vector, putting billions of value at risk.

To this end, KimonSh of Lido DAO has put forward a draft proposal outlining a Staking Router Module called Simple Distributed Validator Technology as a stop-gap measure before more robust and permissionless solutions emerge. The Simple DVT module will allow Lido to quickly add new Node Operators to their platform and test if this method is successful. Simple DVT uses Obol and SSV Networks to create clusters of Node Operators who operate validators in a distributed manner. After these clusters run successfully on the testnet, they will transition to the Mainnet, where further testing will occur.

This proposal is best thought of as a way for Lido to test how DVT technology will work in practice. As per the proposal, market-ready, permissionless DVT systems are still probably 8-18 months away. Despite the lead time of the DVT tech, however, Lido still needs to pursue decentralizing. Readers should follow how this program plays out and any further DVT experiments by Lido. Lido is now a systemically important protocol to Ethereum, and the success or failure of their decentralizing efforts is critical to the success of Ethereum.

Honorable Mentions

  • Aave is adding FXS to their V3.
  • Alchemix is officially launching on Arbitrum.
  • Synthetix is increasing the maximum market value of their MKR, FXS, GMX, and SOL markets.
Leave your comment...

Hmm it’s quiet here. Be the first to comment on this post!