veBAL Lockups, Governance House, & ThorChain's Revival

APR 12, 2022 • 7 Min Read

Joo Kian + 2 others

DISCLOSURE: DELPHI VENTURES HAS INVESTED IN RUNE AND TERRA. MEMBERS OF OUR TEAM ALSO HOLD BAL. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE ANY TOKEN. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.

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Chart of The Day: Balancer’s veBAL Driving Lockups

  • Balancer recently launched the veBAL governance system. VeBAL is a unique ve-derivative where instead of locking BAL tokens, holders can lock up LP or Balancer Pool Tokens (BPT) to receive veBAL. More specifically, they need to lock their BPT in the 80BAL/20WETH pool (80% BAL Tokens paired with 20% WETH Tokens).
  • Having these BPT tokens locked will create liquidity depth for BAL as more of its BPTs are taken out of circulation. VeBAL can be locked for a duration of 1 week up to 1 year. This is a sharp contrast to Curve’s veCRV max lock of 4 years.
  • Within two weeks of its introduction, 30% of BPTs (80BAL/20WETH pool) are now locked and have boosted the supply of BPTs from 2.82M to 3.11M representing a 9.3% increase.
  • However, this means that BAL token holders will not receive voting power unless they deposit into the BPT pool, which subjects veBAL holders to impermanent loss. To counteract I.L. and token dilution from emissions, 10% of liquidity rewards will be allocated to the veBAL gauge.
  • On top of the liquidity incentives, veBAL holders are also allocated 75% of all protocol revenue. In addition, they will start and distribute liquidity mining rewards on Ethereum Mainnet (56% of rewards), but also on Polygon (16%) and Arbitrum (7%). This will make cross-chain veBAL wars possible and Polygon/Arbitrum native protocols will be able to participate.
  • For more on ve-tokenomics design, Delphi members can read about the Convex flywheel here.

A Token for Multisigs, and Astroport’s Council Assembles

[Excerpt from our Apr. 12th DAO Insights]

Forum Spotlight

  • The Governance House Rules
  • Synopsis: Tribe DAO received a proposal from Index Coop contributor Mather Graham to participate in Index’s new Governance House product. Governance House is a proposed sub DAO of Index Coop which offers metagovernance-as-a-service (MaaS) to DeFi projects. Governance House aims to solve voter apathy by providing an unbiased service (not yet revealed) that votes to support the ecosystem. However, large delegators in the Governance House will retain the ability to direct Governance House votes. Index is asking Tribe DAO to participate by granting Governance House the ability to use Tribe DAOs 100k INDEX tokens for governance. The sub-DAO will use the INDEX for all Index Coop metagovernance votes and Governance House proposals. Governance House would run all metagovernance votes related to FEI and TRIBE through a TRIBE snapshot. For those unaware, Index Coop will use the governance tokens it holds for its index products to vote in other governance protocols. The process of DAOs or protocols using other protocols tokens for governance is generally referred to as metagovernance. Examples of metagovernance can be found here and here. Graham initially proposed Governance House on March 28th on the Index Coop forum, and then moved to a Tribe DAO snapshot on April 6th. Tribe DAO eventually voted it down, discovering later that the project was still very new and officially adopted by Index Coop.
  • Pro Arguments: Users in the forum were supportive. Many felt that this initiative would increase Tribe Dao’s influence across the space and benefit the FEI ecosystem.
  • Counter Arguments: Some users in the forum felt like delegating the complete 100k INDEX was too much and recommended a smaller delegation. Their concerns centered on how Tribe DAO would lose a considerable chunk of its influence through delegating the votes. Graham offered to amend the proposal to 60k INDEX due to those concerns. Another Index governance contributor chimed in and felt that Governance House was still too new and that asking for delegations was premature. This comment had a chilling effect on the proposal, convincing at least one person to change their vote. Graham responded with reassurances but asked that people don’t delegate until he posts another proposal.
  • Our Position: Governance House is an exciting product. Metagovernance is still a very underutilized and unexplored governance method in the space. Protocols like Convex have shown an opportunity for protocols to step into the space and act as aggregators of governance power. But so far, the only real traction on these things has been chiefly for gauge voting. Lobis and Bribe are still struggling to find their market fit. Based on the proposal, this seems to be beneficial to Tribe DAO. They could influence governance in other protocols to be beneficial to Tribe DAO and FEI. However, Governance House is still new, and we feel that Tribe DAO made the correct move by voting the proposal down. We had many of the same questions and concerns as those in the forum, especially around transparency and operations. Our questions and reticence aren’t to disparage Graham and at all. We constantly see him in forums, hustling to improve the ecosystem and being very active in governance. As a lot of the DAOs we look at often seem to struggle to ship products and coordinate people, we are sympathetic to the accelerated timeline. And although the initial proposal was premature, we eagerly await the next one, as we think this could be an exciting product.
  • For more, Delphi members can see the latest DAO Insights here.

The Resurrection of THORChain

[Excerpt from Apr. 11th Delphi Pro]

MCCN Journey

  • Since the beginning of March, THORChain has experienced a surge in activity. By the end of the month, both volume and TVL reached a new ATH at $162M and $549M respectively. In this post, we will analyze the three recent milestones which have laid the foundation for THORChain’s recent traction. Namely, they are: the activation of THORSynths, an integration with Terra, and the removal of liquidity caps. Without further ado, let’s jump right in.
  • Let’s take a brief look into THORChain’s MCCN journey. MCCN refers to the “Multi-Chain Chaosnet” which precedes the full-blown Mainnet. As the name suggests, this iteration was subjected to periods of chaos. Since its launch in April, THORChain has been exposed to multiple exploits, from which it has recovered stronger than ever. THORChain LPs have been compensated for their losses via funds in the treasury, but also have been consistently enjoying lucrative yields.

  • Prior to synths, one could think of THORChain as an exchange where users were forced to deposit, swap, and withdraw assets, bearing expensive gas costs each time they wanted to make a trade. With synths, users have the option to deposit and do as many trades as desired on THORChain, while also keeping the option of being able to withdraw native tokens to their chain of choice. Naturally, this is a much cheaper mode of operation and has so far attracted significant traction.
  • Despite 2.5% caps, synth swaps (mint & burns) account for 30% of the total volume across all pools. In other words, synths have been 12x more productive in terms of generating volume compared to regular LP. This was possible because, unlike their native counterparts which live on slow and expensive external chains, synths live on the app-specific THORChain blockchain and thus can be frequently mobilized (for example, 5 second block times on THORChain vs 10 mins on Bitcoin) and cheaply transferred.
  • For more, Delphi members can see the full Delphi Pro Report here.
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Joo Kian + 2 others