Here are some of the governance threads I recommend you stay abreast of:

Arbitrum’s Incentivized Governance

Arbitrum has proposed an experimental incentive system for delegates. Incentivizing governance participation is a hot topic in governance circles. Some think it creates inauthentic engagement and low-value contribution. Others point out that politicians and other governance actors are all paid for their time, and expecting people to govern protocols for free is unreasonable. Regardless, protocols must do more work regarding governance participation because it is miserably low, and expecting things to change while changing nothing will not work.

Arbitrum’s incentive plan is remarkably straightforward. Arbitrum will pay up to thirty delegates for their time for six months. The proposal has spread incentives into three separate tiers based on the delegate’s governance power. The proposal scales the incentives based on the delegates’ voting power – the more votes a delegate has, the higher the incentives. Incentives range from 2K – 6K USD monthly, paid in ARB tokens. The program has earmarked a budget of 1.08M ARB tokens. There is also an optional second part of the proposal where Arbitrum will run the incentive program using tools from Karma, a DAO tooling protocol. But Arbitrum can run the incentive experiment without Karma. If you are interested in governance, I recommend following this proposal and incentive program to see if incentives affect governance.

Goldfinch’s Defaults

For those who follow DeFi lending, under collateralized or uncollateralized lending is a holy grail of those protocols. Most lending in DeFi is heavily collateralized, requiring users to lock some form of collateral that the protocol can liquidate if they fail to repay their loan. However, the LTV ratios are so high that lending is not capital efficient. As such, a handful of protocols have emerged that are experimenting with under-collateralized lending. One of these protocols, Goldfinch, has recently experienced an issue where one of their borrowers has defaulted, causing a loss to lenders. The defaulter, the motorcycle taxi financing company Tugende, defaulted on a $5M loan and broke covenants of their agreement back in February.

Goldfinch is proposing to use $1M of its treasury funds to compensate for losses caused by the Tugende loan. I find this an interesting proposal because it seems to be the antithesis of the protocol’s goal. In under collateralized lending, lenders take more risk, and defaults are a part of that. Goldfinch covering losses for Tugende could set a bad precedent for the protocol. If another borrower defaults, why should those lenders eat the loss? Of course, this is a complex situation, and I don’t know the ins and outs of everything that has gone on there. But if you are interested in the challenges surrounding lending protocols like Goldfinch or Maple Finance, I recommend reading through this forum thread.

Honorable mentions

• Aave proposes transitioning their stablecoin treasury assets to GHO and considers governance calls for their protocol.
• ApeDAO is considering shrinking its special council from five to three.
• Compound receives a proposal to create the Compound Growth Program – an ambitious plan to secure individuals dedicated to business development and protocol growth. 
• GMX is considering delegating its ARB tokens so GMX can participate in Arbitrum’s governance.
• In a lengthy proposal, Sushiswap asks Arbitrum to implement an ARB bond program managed by Sushi.
• ZkSync asks that MakerDAO deploy Spark Lend on their Era Mainnet.