This Week in DAOs - December 16, 2021
SushiSwap at a Crossroads, Aave's Business License Vote, and Compound 75/76/77
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📊 This Week’s Stats
Ecosystem Overview - December 16, 2021:
💰 $15.14 billion in DAO treasuries 💰
🗳️ 395,675 ballots ever 🗳️
👥 59,969 unique voters ever 👥
✍️ 3,855 proposals ✍️
Governance Activity - Last 7 Days
🗳️ 27,451 ballots cast on 170 different proposals 🗳️
👥 6,989 unique voters 👥
🌐 37 DAOs with active voters 🌐
✍️ 111 new proposals created this week ✍️
For a deeper dive into DAO governance data, check out the Boardroom Explorer.
📰 This Week’s News
SushiSwap at a Crossroads
SushiSwap has had an eventful couple of weeks as internal strife continues to spill out into the open, sparking calls for major changes at the popular DEX.
To get caught up on all of the drama, check out this article:
And then read this post by (now former) Sushi CTO Joseph Delong:
Woof. 😬 😅
As such, SushiSwap finds itself at a crossroads. There are three big questions left to be answered:
What the **** happened?
Where does Sushi go from here?
What are the takeaways and lessons from this debacle?
A handful of forum posts have appeared urging an answer to the first question, see this post from SushiSquad and this proposal by Shipyard Software, creators of the Clipper DEX.
With regard to the second question, several prominent stakeholders have offered answers which are being considered by the community:
Alex Woodard of Arca and Dean Eigenmann of Dialectic put forth this proposal to restructure Sushi DAO, which includes:
Establishing a legal entity for SushiSwap.
Creating a community-selected council to replace Sushi’s previous “benevolent dictator” model.
Formalizing product, operations and development teams and an open source contributor model across Sushi’s product lines.
Daniele Sesta of the Abracadabra/Popsicle Finance/Wonderland ecosystem introduced a “DAO to DAO” proposal to effectively integrate SushiSwap with “Frog Nation.”
The move to align Sushi and Frog Nation would be a massive win.The synergies between the Frog Nation projects and Sushi are incredibly complementary. Sushi needs to get back to where it started. Which was being the DEX for everyone, the one that people choose to use. With Popsicle Finance being a liquidity manager, with Abracadabra offering the MIM stablecoin, lending and leverage, and with Wonderland striving to be the biggest DAO that exists. Sushi can gain the mandate it needs to thrive and become the biggest DEX on all chains.
Community member hhk posted “SGP-0: Sushi ORGv2” with the following motivations:
Create a life cycle process for future proposals in order to clarify and simplify the governance.
Implementation of SafeSnap to allow on-chain execution of off-chain votes from Snapshot.
Creation of a delegates board to improve transparency and internal governance.
Creation of a code of conduct.
The third question above - lessons from this debacle - has been subject to much discussion on Twitter and elsewhere.
The main takeaway is something that readers of this newsletter already know: governance, and especially decentralized governance, is messy. However, this ordeal with Sushi has put into perspective the importance of organizational structure and transparency in the context of a DAO.
As Adam Cochran points out in the above thread, Sushi is a case study in why DAOs need to build out processes related to transferring power without creating risks of total chaos.
Second, as Orca Protocol points out, DAOs need to be deliberate about structuring themselves to handle growth.
For now, we wait and see what happens with SushiSwap. We should all be paying attention in order to learn the valuable lessons therein.
Compound 75/76/77
In the aftermath of their $50m bug a couple months ago, Compound is considering three governance proposals associated with enlisting the help of different code-auditing service providers.
As we’ve discussed in this newsletter, the process started in November when Larry Sukernik - Compound contributor via his firm Reverie - shepherded a proposal to enlist OpenZeppelin to “implement Security Solutions to prevent and mitigate loss of funds resulting from security risks introduced by community-proposed upgrades to the Compound protocol.”
That proposal - Compound #70 - was voted down in order for the community to consider competing bids from other service providers.
After receiving a number of bids, the selection has now been narrowed to three possible firms - OpenZeppelin, Trail of Bits, and ChainSecurity.
Voting is live now! Make sure to read the thread above for context and visit Compound’s Boardroom page to vote:
This process has been a really cool case study of the future of “B2DAO” business and how firms can compete for contracts with decentralized organizations.
However, another interesting aspect of this process - discussed at length in the above Discourse thread - is the potential to modify aspects of Compound governance (on which many DAOs base their own governance) to accommodate for the different type of vote this necessitates; specifically, solving for the need to have three separate proposals. Check out this interesting response for more on that.
Aave’s License Vote
Aave made waves earlier this year when it announced Aave Arc - a permissioned, KYC’d version of the Aave protocol for financial institutions.
Now they’re considering another move related to adapting how open decentralized systems operate to business realities.
Following in Uniswap’s footsteps, the Aave community voted to adopt a business license for Aave V3 “where the code usage would be restricted for an initial amount of time (tentatively one year) before becoming free.”
According to the proposal:
The idea around the Business License is that the Aave Governance would keep the rights to authorize code forks even during the initial period with projects and teams that show great collaboration and participation in the Aave Ecosystem.