Balancer, Beethoven X, and Aura Moving on OP
Beethoven X, Balancer’s friendly fork on Optimism, has proposed Balancer modify its protocol fee and core pool framework to better leverage Aura’s upcoming Optimism launch in a bid to become the dominant dex ecosystem on the L2. Beethoven X and Balancer split pool fees 50/50, with Beethoven X splitting their portion of the fees between protocol revenue and matching OP incentives for their pool. However, Beethoven X is proposing an amendment to this program.
Beethoven X received an OP token grant, which they have used as an incentive for their liquidity pools. With the upcoming launch of Aura – which provides a Convex-like app for Balancer liquidity pools – on Optimism, Beethoven X is recommending that they stream their OP grant as Aura gauge vote incentives instead. Additionally, the proposal requests Balancer modify its core pool framework for Optimism by distributing incentives to core pools based on the protocol fees each pool generates rather than its TVL.
By TVL, Beethoven is the 4th largest dex on Optimism with $25M in the protocol – far behind the leader Velodromes $227M. However, Curve-war mechanics can prove popular with farmers and drive an uptick in TVL and volume. This proposal is Balancer and Beethoven X’s attempt to bring similar dynamics to their protocol deployments on Optimism, so we recommend readers be aware of this proposal.
Osmosis is debating what to do with all the past and future revenue the protocol has earned from the ProtoRev module. This proposal recommends that Osmosis send non-OSMO revenue tokens to the Community Pool and burn any OSMO tokens it makes through revenue. The proposer submitted this proposal concurrently with a proposal to distribute OSMO tokens to OSMO stakers instead of burning them. Whichever proposal receives more votes will be the winning proposal. The community is currently voting on the distribution proposal.
ProtoRev Earnings
ProtoRev is a module that automatically rebalances arbitrage opportunities between liquidity pools. The module has consistently earned around $1250 per day since going live three months prior and generally earns three OSMO for every non-OSMO token. Annualizing these numbers means that if the community adopts this proposal, the ProtoRev module will burn around $350K of OSMO per year at the current earnings level. The projected burn is not significant given the size of Osmosis. Still, if ProtoRev earnings take off from an increase in trading on Osmosis, the burn could become much more significant, and readers should be aware of which direction Osmosis chooses to take here.
The Rocket Pool pDAO Replacement
Over the weekend, a Lido DAO community member posted some concerning findings regarding their competitor Rocket Pool. In a short Twitter post, Dmitriy Gusakov pointed out that the Rocket Pool core team can change any parameters and call any method on Rocket Pools pDAO governance contracts. This thread started a minor stir on Twitter, with many voicing concern about centralized risks in the decentralized staking protocol. Currently, the Rocket Pool team uses their control over the pDAO to enact the will of token holders as expressed in off-chain voting – a stop-gap method until they deploy a more decentralized process.
Responding quickly, though, the Rocket Pool community has posted a proposal to research the best way to replace the current pDAO model. The proposal recommends moving to on-chain governance, with delegation and an elected security council that can pause the protocol in the event of an incident. But moving to on-chain governance is not as simple for Rocket Pool due to the nuances of their governance process. Usually, DAOs simply equate voting power to token amounts. Rocket Pool, however, equates voting power to effective RPL stake – which requires node operators to run validators for the proposal to count. The effective RPL stake nuance means Rocket Pool has to research and discuss the best way to move to on-chain governance and community control before they can take any actions, but this is a step in the right direction. I recommend watching how this plays out if you use the LSD space.
