DeFi Governance Digest: 13 Jun 2023

Proposals

Aave (AAVE)

Author: AaveCompanies

Summary: After extensive community discussion and multiple phases of the Aave DAO governance process, Aave Companies is proposing the official launch of GHO to Ethereum Mainnet.

Key Points:

GHO is Aave’s native decentralized stablecoin that can be minted/burned by various collateral types called ‘Facilitators’ up to a certain limit known as ‘bucket size’.
GHO will be initially launched on Ethereum Mainnet and have only two whitelisted Facilitators: Aave V3 Ethereum Facilitator and the Flashmint Facilitator.

The Aave V3 Ethereum Facilitator will allow depositors on Aave V3 Ethereum to borrow GHO against their collateral at a rate of 1.5% and a total minting capacity of 100M GHO.
stkAAVE holders will have a 30% discounted borrowing rate, implying that they will only need to pay 1.05% interest on their borrowed GHO.
The FlashMinter Facilitator is a Flashloan module that allows a user to mint and repay GHO in a single transaction. There will be a 2M GHO limit and this mechanism is expected to help maintain GHO’s peg at launch.
After a successful mainnet launch, further proposals will be made to expand GHO minting capability to Aave’s multi-chain deployments.

Our Take: This is a significant moment for Aave which will unlock greater capital efficiency for both current single collateral and future LP collateral positions.

Proposal: [TEMP CHECK] Allocating part of GHO Revenue to Safety Incentives

Author: Marc Zeller

Summary: This proposal requests to direct 20% of Aave’s revenue earnt from GHO to incentivize the Safety Module.

Key Points:

Once GHO has launched, the DAO will begin earning 100% of all interest generated from GHO borrowers.
This proposal requests to direct 20% of this revenue towards Aave Safety Incentives, enabling stkAAVE & stkBPT holders to earn both AAVE and GHO tokens.

By directing a portion of GHO revenue to the Safety Module, Aave can begin reducing its reliance on AAVE rewards to insure the safety of the protocol.
The remaining 80% of GHO revenue will be sent to the DAO’s treasury.

Our Take: This is a great step towards ensuring the sustainability of Aave’s Safety Module; one of Aave’s largest expenses.

Index Coop (INDEX)

Proposal: Launch Leveraged rETH Staking Yield ($icRETH)

Author: Allan.g, DevOnDeFi

Summary: Index Coop is proposing the launch of a Leveraged rETH Staking Yield token (icRETH), which will provide enhanced staking yield on Rocket Pool ETH.

Key Points:

icRETH will be the first tokenized leverage staking strategy for rETH, allowing rETH supporters to gain enhanced yield on their staked ETH token.
The product will utilise Aave V3 to deploy its leverage strategy, targeting 8x leverage.

The product will come with no minting or redemption fees but users will pay a 0.75% streaming fee, which accrues back to Index Coop.
Index Coop expects the product to gain $10M in Total Value Locked (TVL) in the first 12 months, producing $5,331 in average monthly revenue.
icRETH is Index Coop’s second tokenized leveraged ETH staking product, following after icETH which utilises stETH and currently has ~$20.9M USD TVL.

Our Take: Following the success of icETH, icRETH has a great opportunity to be the first mover in tokenizing a leverage rETH yield strategy. We look forward to watching the growth of the product.

Osmosis (OSMO)

Proposal: Supercharged Liquidity Pools Rollout

Author: Johnny Wyles

Summary: This proposal introduces Supercharged Liquidity Pools, a new type of liquidity pool mechanism similar to Uniswap V3’s concentrated liquidity pools.

Key Points:

Similar to the change from Uniswap V2 to Uniswap V3, Supercharged liquidity pools improve the efficiency of liquidity by concentrating a liquidity provider’s tokens around a chosen finite range.
Users will be able to use a migration portal that will transfer their classic pool liquidity positions to the new Supercharged pools with a 14-day unbonding period.

The new Supercharged pools will receive the same incentive rate as classic pools, however, a 5% discount rate will be applied to classic pools at launch to incentivize migration.
Importantly, users will have to decide between actively managing their new Supercharge liquidity pools by adjusting their positions to earn higher swap fees or fixing and bonding their current position to Superfluid staking to earn incentives.
To reduce risking unnecessary issues with current liquidity, the initial deployment will consist of a DAI/OSMO Supercharged pool which has significant volume and liquidity but doesn’t account for a large portion of the overall total value locked.
Furthermore, Supercharged pools will launch with permissioned creation requiring a governance vote for their deployment. This is to reduce liquidity fragmentation and ensure each classic pool has a corresponding Supercharged pool that is set up correctly.
Once all incentivized classic pools have a corresponding Supercharged pool, permissionless creation will be enabled.

Our Take: Concentrated liquidity brings greater capital efficiency to DEXs, leading to improved prices for users. This is an important upgrade for Osmosis DEX.

Votes

QiDAO (QI)

Proposal: Activation of QiDao Guardians Initiative

Status: Live.

Created: June 11, 2023.

Ends: June 16, 2023.

Leading Consensus: Marc Zellar, Hamzah Khan, Weso — 11M QI (99% of total votes).

Summary: This proposal ratifies the activation of QiDAO Guardians Initiative — a 4/6 multisig system used to safeguard the QiDAO ecosystem. The multisig serves as admin for MAI, QI, and Vault contracts, allowing signers to protect the protocol against governance and smart contract attacks. If successful, the vote will add Marc Zellar, Hamzah Khan, and Weso to the multisig alongside 3 QiDAO members.

Aave (AAVE)

Proposal: Deprecate Aave V2 AMM Market

Status: Finished.

Created: June 8, 2023.

Ends: June 11, 2023.

Leading Consensus: YAE — 549k AAVE (100% of total votes).

Summary: Gauntlet has proposed to deprecate Aave’s V2 AMM Market given its low usage and the fact that all unfrozen assets are currently listed on Aave V2 and V3. Once executed, the on-chain payload will freeze all non-frozen assets and no new positions will be able to be created by users.