🗳 This Week in Governance - Aug 24

A weekly resource covering crypto governance, politics, and power.

Aug 24, 2023

Tornado Cash developers indicted
SuperRare to deploy RARE staking on mainnet
Aave considers real-world assets
dYdX moves closer to v4 adoption and token migration

Voting Activity (L7)
🗳️ 640,826 ballots
👥 82,891 voters
📜 286 proposals
🌐 70 active DAOs
Query more data using the Governance API

Let’s get into it 🔥

📰 News

Tornado Cash developers indicted

Roman Storm and Roman Semenov have been indicted on charges related to their alleged creation and operation of Tornado Cash, the cryptocurrency mixer service. The U.S. authorities claim that this service facilitated more than $1 billion in money laundering transactions, including hundreds of millions for the Lazarus Group, a North Korean cybercrime organization under sanctions. Both Semenov and Storm face multiple charges, including conspiracy to commit money laundering and sanctions violations, which carry potential prison sentences upon conviction.

As Coin Center’s Peter Van Valkenberg writes, however, the indictments “seem to run counter to FinCEN guidance.” While the indictment contends that Semenov and Storm engaged in the business of transferring funds for the public without FinCEN registration, the 2019 FinCEN Virtual Currency Guidance states that anonymizing software providers are not considered money transmitters. The activities attributed to the defendants, such as web hosting and software repository services, seem to align more with the provision of software tools, rather than actual money transmission as per FinCEN’s guidance. Van Valkenburg writes that the case “could potentially criminalize the publication of software code.”

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📜 Proposals

Recently Closed

SuperRare: Proposal to Deploy Rare Protocol to Ethereum Mainnet

Following the successful RARE Staking testing on the Goerli testnet, Brennan Mulligan and Charles Crain, from SuperRare Labs, propose the deployment of the protocol to the Ethereum mainnet with the DAO Council assuming ownership of all associated contracts. Additionally, a modification will be made to the Bazaar so that 1% of every sale, out of the existing 3% network fee, is directed to the seller’s rarity pool (if present), and the unstake burn fee will be set to 0% to monitor potential exploitation in a real environment. The proposal passed on August 23rd with nearly 100% voting “yes.”

1inch: Reduce Governance Quorum to 7m Unicorn Power (UP)

The [1IP-26] proposal altered the calculation of the 1inch Governance Power by replacing the previous 20% weighted v1INCH strategy with a new strategy that mimics the power decay of Unicorn Power. This change inadvertently made reaching the quorum for 1inch proposals more challenging due to the governance power decay. Consequently, this new proposal recommended reducing the 1inch Snapshot space quorum from 10M UP to 7M UP.

Ending Soon

Aave: Aave Treasury Proposal for RWA Allocation

The proposal seeks to allocate a segment of the Aave Treasury's stablecoin holdings to real-world asset (RWA) investments via Centrifuge Prime. This move aims to generate yield from idle stablecoins, diversify collateral sources beyond solely crypto assets, and build expertise in the RWA market; the initial plan includes investing 1M USDC in short-duration US treasuries, potentially expanding up to 20% of Aave's stablecoin holdings based on future governance decisions. Voting on this offchain proposal ends on August 25th.

Upcoming

Arbitrum: Arbitrum One Governance Parameter Fixes

This proposal identifies and suggests remedies for three issues within the Arbitrum One Governance system. Specifically, it proposes: 1) updating the airdrop distributor fee sweep address to the DAO Treasury’s address after a designated claim period, 2) adjusting sequencer gas fee reimbursement parameters to reflect accurate system costs, and 3) rectifying a bug in the L1 Core Governance Timelock to enable smoother L1 to L2 operations. These fixes, after undergoing an audit by Trail of Bits, are implemented in the Governance Action contracts and are available for community verification. Onchain voting opens on August 24th.

Balancer: Change Passive Fee Distribution

This proposal suggests modifying the passive protocol fees payment method, transitioning from bbaUSD to USDC due to the recent deprecation of bbaUSD. The change, set to commence on August 31st, requires operational adjustments by Maxis, but no onchain execution. Voting opens on August 24th.

📚 Reads

Developing The DAO Health Pulse, by Navojit Roy and Kenneth Francis
Safeguarding On-chain Governance, by Matt Stein
The Great Unraveling, by Lucas Mascatello
Takeaways on friend.tech, by David Phelps
The evolution of good governance, from DAOplomats.eth

🎧 Listens

Gitcoin Citizens Round: Results & Lessons with Kris, Shawn & Umar, on Green Pill
The Village that Accidentally Slayed Moloch with Victor Rortvedt, on Green Pill
Can Maker’s Rune Christensen Fix the Sad State of DAO Governance? On Unchained
Bringing a Billion Users Onchain w/ Jesse Pollak, on On the Other Side
The Driving DAOer, on DAO Talk

💬 Forums

Aura: Reducing Minimum Voting Weight

Aura Finance contributors have proposed an amendment to the governance parameters to lower the minimum voting requirement for gauges from the current 0.2% of vlAURA votes to 0.1%. This change aims to increase participation, promote decentralization, and support the protocol's growth by allowing more stakeholders to contribute to governance decisions; a voting session on this proposal will be initiated following a three-day discussion period on the forum.

Aztec: The Return of The Jedi

In a collaborative proposal with @cooper-aztecLabs, a hybrid approach is introduced, combining elements from non-governance and The Republic. While the proposal champions an immutable state transition function, it grants the Senate the power to alter gas-pricing and the sequencer selection contract, drawing boundaries to ensure the Senate's authority remains well-defined and limited in scope. The framework aims to provide flexibility for certain network upgrades while safeguarding core system properties, and includes provisions to counteract potential malicious governance actions.

Decentraland: Code of Ethics

The proposal advocates for the establishment of a comprehensive Code of Ethics for the Decentraland DAO to guide participants' behavior and ensure consistent standards of conduct. This code seeks to foster an inclusive, secure, and accountable environment, addressing principles such as fairness, inclusivity, and conflict resolution, while detailing specific rules of engagement and enforcement mechanisms.

dYdX: V4 Adoption & DYDX Token Migration to dYdX Chain

Wintermute proposes that the dYdX community adopt the upcoming dYdX v4 software as the next version of the dYdX protocol, adopt DYDX as the primary token for the dYdX Chain, and integrate an Ethereum Smart Contract to enable a one-way bridge for the DYDX token migration from Ethereum to the dYdX Chain. If the upcoming Snapshot vote is successful, holders of DYDX tokens are encouraged to delegate their proposing power to Wintermute to facilitate the implementation, while an onchain vote for the wethDYDX governance and utility functions will be shared after the successful Snapshot vote.

Safe: The Missing Piece for Safe Ecosystem Grants Program

Covariance proposes an ecosystem support organization that collaborates with the Safe Ecosystem Foundation (SEF) Grants team to enhance the support for builders and entrepreneurs in the Safe ecosystem. This initiative aims to offer a structured program that provides targeted resources to grantees, facilitating their success, improving user experience, and optimizing the return on grants, with an estimated budget of ~$160K USDC for a six-month period, starting from October 2023.

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