Proposals

Gelato Network (GEL)

Proposal: GEL Staking Economics V1 and the GEL Flywheel: Incentivizing Gelato Node Operators and Driving Sustainable Growth

Author: Gitpusha

Summary: This proposal introduces the first version of staking economics for the Gelato Network and addresses the structure, rewards, and incentives for node operators.

Key Points:

• After a successful proposal to onboard the first wave of node operators for the Gelato Network (Bware Labs, Chorus One, P2P, Staking Facilities), this proposal introduces V1 of the Gelato network’s staking economics.
• The V1 staking economics framework focuses on the structure, rewards, and incentives for node operators and aims to foster decentralization and alignment.

Proposed Staking Mechanism:

• Minimum Staking Requirement: Node Operators (NO) are required to stake a minimum of 150k GEL to be eligible for task allocation and rewards.
• Task Allocation: The amount of GEL staked by NOs will determine their distribution of available tasks to execute. The greater amount of tasks, the higher the income for a NO.
• Unstaking Period: There will be a 3-month unstaking period for NOs who wish to exit the network.

Node Operator Rewards:

• Gas Cost Refunds: NOs are reimbursed for their gas costs during task execution across all support networks. The reimbursements will come from protocol revenue.
• GEL Incentive Reward Pool: $10k worth of GEL rewards will be paid out to NOs monthly, proportional to their share of tasks executed in a given month; earned GEL will be subject to the same 3-month lock if unstaked.
• The combination of the proposed staking mechanism and reward scheme is expected to create a GEL flywheel effect. As NOs are strongly incentivized to keep their accumulated GEL rewards locked, in order to maintain and maximize their profitability.
• Lastly, this proposal requests 750k GEL from the network growth treasury to be spent on the first period of GEL staking V1 Incentive Reward Pool.

Our Take: The proposed V1 staking economics provides a solid path for attracting long-term NOs. The reward scheme is particularly interesting as it creates a strong flywheel that is directly tied to the activity of the network, incentivizing NOs to acquire more GEL to increase their profitability as network usage increases.

dYdX (DYDX)

Proposal: Shifting from LP rewards toward market maker rebates

Author: Max-holloway

Summary: This proposal suggests reducing DYDX Liquidity Provider (LP) rewards by 50% to 575,342.40/epoch and increasing the maker rebate to 0.85bps from 0.5bps.

Key Points:

• The dYdX LP reward system has received many changes primarily focused on the LP reward formula. In contrast, this proposal focuses on the value of incentives for LPs rather than how it’s allocated.
• dYdX spends 1,150,685 DYDX/epoch (~$2.1M USD) or 15,000,000 DYDX/year (~$27.45M) on LP rewards, based on an LPs uptime, depth, spread, and maker volume on the exchange.

• However, given the rewards program does not strictly reward maker volume there is a portion of unproductive liquidity being rewarded (i.e., liquidity far from the top of the order book that has a low probability of being filled).
• Therefore, this proposal requests to move rewards away from the LP rewards formula and toward the current market maker rebate, encouraging active liquidity.
• Specifically, reducing LP rewards by 50% to 575,342.40/epoch to reduce DYDX emissions and supplement this reduction by an increase in maker rebate to 0.85bps from 0.50bps.
• This change is expected to increase liquidity at the top of the order book benefiting smaller traders, however, larger traders will likely see higher execution costs due to decreased depth.

Our Take: We believe this is a step in the right direction for dYdX and we continue to encourage changes that reduce the reliance on DYDX rewards and that move towards a more sustainable incentive structure.

Aave (AAVE)

Proposal: [TEMP CHECK] GHO Stability Module

Author: AaveCompanies

Summary: This proposal requests approval for the introduction of a Peg Stability Module for GHO.

Key Points:

• A Peg Stability Module (PSM) is a contract that enables the seamless conversion of two tokens at a predetermined ratio. Therefore, users will be able to convert between GHO and governance-accepted stablecoins at a predetermined ratio.
• The GHO Stability Module (GSM) will introduce Price Strategies, Debt Ceilings, The Capital Allocator, Last Resort Liquidations, Price Bounds and Swap Freezes.

• The Price Strategy contract will provide the ability to adjust the pricing ratio between GHO and exogenous assets, based on different strategies.
• Ultimately, the Price Strategy contract controls the calculation of the price ratio and can be fixed or dynamic based on price oracles, markets, stableswap curves etc.
• The Debt Ceiling parameter allows the DAO to limit exposure to specific assets backing GHO through the GSM. Once an asset reaches its debt ceiling, users will no longer be able to swap that asset for GHO.
• The Capital Allocator provides a method through which a pre-defined portion of exogenous assets in the GSM can be used by a “fund manager” to allocate and earn yield.
• The Last Resort Liquidations feature allows the DAO to liquidate an asset in the GSM in case of a rapid increase in the risk of the asset.
• Price Bounds and Swap Feezes allow an external contract to pause trading in the GSM for an asset if the asset’s price causes deviation from a 1:1 ratio with GHO.

Our Take: The additional security features AaveCompanies have provided for the GSM create a robust approach to preventing and minimizing unforeseen adverse events for exogenous GSM assets.

Aura Finance (AURA)

Proposal: [AIP-36] Optimism Deployment

Author: Philjfry

Summary: This proposal requests to deploy Aura Finance on Optimism. If approved, this will be Aura’s second cross-chain deployment.

Key Points:

• Continuing from Aura’s first successful cross-chain launch on Arbitrum, this proposal requests to deploy Aura Finance on Optimism.
• This move will allow users to deposit BPTs (Balancer Pool Tokens) on Optimism and take advantage of the cross-chain veBAL delegated boost.

• The deployment will also facilitate the seamless bridging of AURA tokens from Ethereum Mainnet to Optimism.
• The Optimism deployment payload has been audited by both Halborn and Zellic.

Our Take: We continue to see protocols increase their reach by deploying across multiple chains, specifically, chains with significantly lower gas fees than Ethereum Mainnet to access gas-sensitive users.

Votes

Aave (AAVE)

Proposal: Treasury Management — Acquire B-80BAL-20WETH

Status: Finished.

Created: July 6, 2023.

Ends: July 10, 2023.

Leading Consensus: YAE — 431k AAVE (100% of total votes).

Summary: This proposal will convert Aave DAO’s aBAL, aEthBAL, BAL, and wETH holdings to B-80BAL-20WETH. The expected total holding of acquired B-80BAL-20WETH is ~$1.4M USD.

Curve (CRV)

Proposal: Kill cross-chain (multichain) gauges for Avalanche, Fantom, and Celo

Status: Live.

Created: July 7, 2023.

Ends: July 14, 2023.

Leading Consensus: Pending votes.

Summary: Given the recent arrest of Multichain’s CEO and the protocol’s exploit, Multichain assets are trading at a significant discount. This vote requests to kill gauges for all pools containing Multichain assets and add a gauge for a new base pool made of LayerZero assets (i.e., LayerZero bridged: USDC, USDT, DAI).

ParaSwap (PSP)

Proposal: PIP — 36 : Multichain Staking and Gas Refund Consolidation

Status: Live.

Created: July 6, 2023.

Ends: July 11, 2023.

Leading Consensus: For — 28M PSP (95.65% of total votes).

Summary: This proposal implements ParaSwap’s multichain staking framework on Optimism, allowing PSP holders to lock sePSP2 and allow for gas refunds in the form of sePSP1 on Optimism.