This Week’s Forum Threads (June 28th)

Aave’s Shiny New Process

It is no secret that DAO governance processes are often opaque, convoluted, and confusing. Decentralized decision-making with distinct actors who each have their desires, end goals, motivations, and opinions is tricky. Decentralized bureaucratic systems with governance tokens add a layer of complexity on top of this. As such, any time protocols change their processes; I generally recommend people pay attention – misunderstanding a protocol’s governance could be costly if you misjudge how governance works.

Aave has just received a proposal that outlines comprehensive guidelines for the DAO on the difference between ARFC (Aave’s request for comments) and TEMP CHECKs. Temp checks gauge community sentiment, while ARFCs are precursors to Aave Improvement Proposals, where service providers are formally invited to provide feedback. This proposal presents templates that each proposal type can follow and should help clarify when to use each one. Importantly for readers, ARFCs generally denote a proposal farther along the pipeline and more likely to go to a vote.

Mantle’s LSD Play

Mantle, the BitDAO-created L2, proposes creating an extensive stETH reward system. The proposal has five steps. The first step is BitDAO allocating 40K ETH from their treasury to stETH. Secondly, Mantle would then use this stETH as a reward to bootstrap DEX liquidity and protocols for the L2. Thirdly, Mantle would create a revenue-sharing agreement between BitDAO and Lido DAO for 12 months. Finally, Mantle and Lido would partner to enable seamless and gasless bridging to Mantle for stETH (steps 4 and 5).

BitDAO has one of the largest treasuries in the space. Including BIT tokens, BitDAO’s treasury is around $3.1B, and without BIT tokens $800M. Within the treasury, they also have more than 260K ETH. These treasury funds automatically make BitDAO a protocol to follow to me. They have the potential to move markets with their treasury. BitDAO is betting heavily on their L2 Mantle – and they have the funds to create a vast incentive/grant program even without giving away their governance token. Most L2 incentive/grant programs give out their governance tokens – like ARB and OP. These tokens often face significant supply pressure, making the grants less attractive. BitDAO’s massive treasury means that their program instead could offer neutral assets like stETH or USDC, which could be a huge boon for their ecosystem.

Yearn’s New Token

Yearn has just published a new proposal in their forum to introduce a unique token for their protocol: oYFI. Yearn uses vote escrow for governance, where users lock their YFI for up to four years to receive voting power. Users receive veYFI when they lock their YFI. The proposed model adds some unique dynamics on top of this governance system with the addition of this new token. As I have mentioned, tokenomic changes can drastically change how a token performs, so I recommend you follow this proposal, which should be going to a vote soon.

At a high level, the oYFI token gives users a chance to purchase YFI at a discount. Yearn emits rewards to gauges where users stake the vault tokens they receive when using Yearns products. Additionally, if users hold enough veYFI, they can maximize their rewards in this gauge. Secondly, the new reward token, oYFI, allows users to purchase YFI at a discount determined by the proportion of veYFI locked in the protocol: the more veYFI, the less the discount, and vice versa. Proceeds from oYFI sales will go towards YFI buybacks, which users can purchase at a discount with oYFI rewards in the future.

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