Here are this week’s important forum threads:

The Frax Saving Rate

Frax Finance has published a proposal to create a system similar to MakerDAO’s DSR but instead for FRAX. If this proposal passes, FRAX holders can stake their FRAX tokens for sFRAX. SFRAX holders will earn interest on their deposited tokens. Like the DSR, sFRAX focuses on allowing users to earn passive income on their FRAX while encouraging supply growth. SFRAX tokens will also be fully transferable, opening some exciting possibilities for DeFi apps that leverage this new yield-bearing token.

As I am sure readers remember, MakerDAO’s creation of the Dai Saving Rate significantly increased DAI supply. Since the DSR’s creation, DAI supply has grown around 15%, from about 4.5B to 5.3 B. As a refresher, readers can check out the report we published stablecoins here. I am sure this proposal will pass – the DSR proved how popular something like this can be. But the big question for Frax Finance is now: Will the FSR have the same effects on FRAX and allow it to capture some of DAI’s market share?

Pocket Network Goes 3D

Pocket Network is revamping its governance process to solve friction around gaps, inertia, and representation—the new approach: 3D Governance. The proposer thinks the current governance process does not adequately represent stakeholders like builders and community members. As such, the proposal expands its ‘trophy’ categories into Citizens, Builders, and Stakers to encompass all stakeholders. The proposal also recommends that Pocket Network implement automated onboarding and offboarding of voters through MyGateway.xyz. Finally, the proposal proposes a process to balance power between the three categories to ensure the DAO doesn’t trend toward a plutocracy. To defend against Sybil attacks, the proposal also recommends that Pocket Network utilize Proof-of-Citizenship and Gitcoin Passports.

Decentralized Governance is complex, and as far as I am concerned, no one has figured out the perfect system – if possible. As such, I always recommend that people pay attention to governance process iterations and upgrades. Some new processes or upgrades could lead to a better, more effective model and even give the DAO a competitive edge in the market.

Honorable Mentions

• Aave proposes increasing AAVE, METIS, and DPI supply and borrowing caps for V3.
• The Arbitrum Incentives Working Group proposes a 75M ARB incentive program targeting active protocols on their chain.
• Chaos Labs presents a 6-month incentive plan for the launch of dYdX’s V4.
• Lido receives a proposal from Axelar and Hadron labs to bridge wstETH to Cosmos and grapples with how to set long-term goals in a decentralized system. 
• MakerDAO officially proposes winding down its GovALpha unit.