Proposals

Arbitrum (ARB)

Proposal: Transforming Arbitrum’s Financial Ecosystem — Enhancing Sustainable Growth and Innovation through SushiSwap’s Bond Program

Author: Sushi

Summary: Sushi is proposing to launch an Arbitrum bond program, created and operated by SushiSwap that will allow the DAO to create and manage Protocol Owned Liquidity (POL).

Key Points:

• Bonding programs allow DAOs to acquire desired assets using their native token, without directly selling their native token on DEXs. Bond purchasers typically receive the DAO’s native token over time as it vests with a specified discount to market price.
• Sushi is proposing for the Arbitrum DAO to utilise a portion of their idle ARB treasury funds to build up protocol-owned liquidity and in turn, create yield-bearing assets for the DAO.

• A maximum of 12.5M ARB per quarter will be used for bond sales, for up to four total quarters.
• Sushi will sell vested ARB tokens at a discount to users who purchase bonds using ETH-ARB, USDC-ARB, USDT-ARB, and/or wBTC-ARB LP tokens.
• If successful, this will dramatically increase the liquidity of blue-chip tokens such as ETH, wBTC, and Stablecoins on the Arbitrum network; while also increasing the liquidity depth of ARB.
• A 5% success fee will be charged by Sushi.
• The Arbitrum DAO is expected to turn profitable after 450 days of the program going live, assuming all KPIs are met.

Our Take: This is a great initiative by Sushi and a good opportunity for the Arbitrum DAO to create sticky protocol-owned liquidity on the Arbitrum network. The level of earmarked liquidity will create a competitive advantage for the trading volume of ARB on the Arbiturm network as opposed to other networks.

ENS (ENS)

Proposal: Introducing TKN.eth: ENS’s Native Token Database

Author: kindnesss.eth

Summary: This proposal introduces TKN.eth an on-chain token list, token tracker, and swap interface built on top of ENS.

Key Points:

• TKN is a decentralized, predictable, composable and community-owned registry for token lists built on top of ENS.
• Currently, all apps use a combination of fractured centralized token lists; while on-chain users suffer from falling victim to scam-duplicate token tickers.

• TKN plans to combat this by hosting a fully on-chain token registry with token metadata (e.g., name, contract address, url, twitter, etc.) that is maintained by the community and easily queried both on-chain and off-chain.
• Underlying the TKN protocol is the ENS domain tkn.eth, therefore, all symbols are persisted on Ethereum mainnet as subdomains of tkn.eth. For example, the contract for USDC can be found at usdc.tkn.eth.
• Token symbols are granted and cannot be purchased and all existing crypto projects above a $10M market cap will be granted their ticker regardless of fitness.
• If a project becomes inactive and falls below the market cap requirements, it will enter into a probationary period which allows the project to re-meet minimum requirements before being delisted.
• Any user can submit a data update or correction, while elected delegates validate user-submitted data for accuracy before merging the data on-chain.
• Users can already check prices and manage their portfolio from a decentralized community-owned token tracker on the TKN webapp and mobile app.
• Furthermore, swp.eth has been developed on top of TKN as a “headless DEX” — a DEX with no UI.
• This allows users to send $ETH to usdc.swp.eth and $USDC is automatically returned in the same transaction with no UI needed.

Our Take: This is an innovative public good demonstrating the sort of utility ENS subdomains can bring to the ecosystem. We look forward to watching TKN’s growth and how they manage data integrity in a decentralized manner.

Cosmos (ATOM)

Proposal: ATOM Tokenomics Update — Monetary Policy

Author: effortcapital

Summary: Blockworks Research is proposing to change ATOM’s monetary policy from a dynamic inflation model (as a function of % bonded) to a static supply schedule due to the advent of liquid staking.

Key Points:

• Currently, ATOM has a dynamic inflation model that’s dependent on the amount of ATOM staked/bonded which is very different to other Proof-of-Stake (PoS) networks.
• If the % of ATOM bonded is >66%, inflation decreases block-by-block to a minimum of 7% inflation; if the bond ratio is <66%, inflation increases block-by-block to a maximum of 20%.

• The speed at which inflation increases/decreases is based on how far away the bond ratio is from 66% and a scalar factor set to “1”.
• For example: At a 70% bond ratio, ATOM inflation would decrease by ~6.06%/yr until it reaches the minimum bound of 7%. A bond ratio of 64% would increase inflation by ~3%/yr until it reaches the maximum bound of 20%.
• Given a PoS network’s economic security is determined by the amount of native assets staked to secure the network. ATOM’s dynamic inflation was designed to ensure that bonded ATOM receives a competitive yield in comparison to any other DeFi-related ATOM activities e.g., lending markets for ATOM; to ensure economic security.
• However, with the launch of liquid staking users can get both staking rewards and DeFi yield making the need to compete with DeFi by inflating its supply less important.
• Furthermore, having a dynamic inflation model creates uncertainty around ATOM’s supply which in turn hurts its reserve asset and store of value qualities.
• To combat this, Blockworks is proposing a set supply schedule for ATOM which is no longer a function of the bond ratio and instead follows a block-by-block decrease in inflation.
• Proposed Yearly Inflation Rate Change = -50%; if annual inflation rate > 3%, or -25%; if 3% >= annual inflation rate < 1.5%.
• Once an effective annual inflation rate of 1.5% is reached, it stays there in perpetuity as a minimum security budget.

Our Take: Blockworks has provided a simple, more predictable, and sustainable monetary policy for ATOM. However, it will be interesting to see the short to medium-term effects of liquid staking on the bond ratio and whether or not that stabilises the current inflation rate.

Votes

Convex Finance (CVX)

Proposal One: Changes to the vlCVX staking structure.

Status: Live.

Created: Sep 15, 2023.

Ends: Sep 20, 2023.

Leading Consensus: For — 10M CVX (99.84% of total votes).

Summary: This proposal requests to remove vlCVX from CVX staking, remove cvxCRV rewards, and give undiluted 4.5% of Curve fees to staked CVX. This will allow staked CVX outside of vlCVX to earn the full 4.5% of Curve protocol fees as cvxCRV, while vlCVX will continue to earn voting bribes.

Proposal Two: FXS Protocol Treasury Fee Changes

Status: Live.

Created: Sep 15, 2023.

Ends: Sep 20, 2023.

Leading Consensus: For — 14M CVX (99.42% of total votes).

Summary: This vote ratifies changes to increase Convex’s POL of cvxFXS. This will be achieved by increasing protocol boost fees from 17% to 20%, vlCVX boost share adjustment from 7% to 5%, increase treasury share of boost fees to 5% and add a 5% fee on veFXS fee revenue to be directed to the treasury.

Aave (AAVE)

Proposal: [ARFC] Safety Module — Polygon & Avalanche Coverage Update

Status: Live.

Created: Sep 17, 2023.

Ends: Sep 20, 2023.

Leading Consensus: YAE — 562k AAVE (99.97% of total votes).

Summary: This vote requests to remove Polygon v2 and Avalanche v2 deployments from the Safety Module coverage while extending coverage to Avalanche v3. This is to further encourage migration from v2 deployments to v3.