🗳 This Week in Governance - Nov 23
A weekly resource covering Web3 governance, politics, and power.
📣 Key Points
ENS Chooses Karpatkey as Fund Manager
dYdX Approves Proposal to Form an Ops Trust
Mango Hacker Attempts Similar Exploit on Aave
Redacted Votes to Extend its DAO Operations Budget
… and much more
Voting Activity (L6)
🗳️ 35,772 ballots (+76%)
👥 10,861 voters (+2%)
📜 147 proposals (-19%)
🌐 48 active DAOs (-19%)
Let’s get into it 🔥
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🗞 News in Brief
ENS Chooses Karpatkey as its Endowment Manager
A controversial vote transpired this week at ENS DAO. The naming service community found itself in the middle of a highly contested vote over who would become its inaugural endowment fund manager. EP2.2.5 was the continuation of a previously passed proposal to source and name a manager to steward part of the protocols treasury. In the end, Karpatkey, the DeFi fund management platform, ultimately came out on top as the final hours saw the lead switch back and forth. A total of 3.1M votes were submitted with close to 1,500 ENS voters weighing in on the proposal.
In this proposal, ranked-choice voting was implemented to help select a winner from the list of candidates. This style proved to be controversial as members of the community found the use of it complicated during such an important vote. Forum posts and tweets followed as voters posted their voting rationale and lobbied for their side. Even Coinbase, who seldom votes on proposals, found itself weighing in and utilizing all 240K ENS of its voting power to vote ‘None of the above’. The centralized exchange explained their vote was out of an abundance of caution. Voters of ‘None of the above’ mostly voted this way based on concerns about its overall risk exposure, the allocation size for the proposed endowment, and low confidence in the candidates.
Next, the meta-gov stewards will work closely with Karpatkey to finalize a proposal to present to the DAO and formalize their relationship. Separately, the same working group is working on proposals that outline the day-to-day treasury operations for the DAO, ensuring there is a sufficient runway in stablecoins, and reducing general exposure to volatility.
dYdX Votes to Launch an Operations subDAO
On November 21st, the dYdX community successfully voted to approve the formation of a first-of-its-kind Operations subDAO. In the proposal, Reverie authors of the proposal outline launching a so-called ‘Ops Trust’ as a Guernsey Purpose Trust. This legal wrapper would encompass the newly formed subDAO and permit them to utilize and explore various legal options on behalf of dYdX. The Ops Trust will consist of three Trustees and one Enforcer and its focus will center around creating a dYdX DAO playbook, managing communication channels, and accessing traditional fiat payment structures for payments. Reverie Reserves LLC, Joanna Pope, and Callen Van Den Elst will be the three Trustees with George Beall as the lone Enforcer. The proposal outlines a compensation structure that lasts for six months as the project’s initial runway. The proposal requests $372K from the dYdX treasury to cover all costs and compensation over the course of the program with plans to revisit at the conclusion of six months. The next steps for the proposal include creating a multi-sig with the Trustees, drafting the Trust Agreement, and prepping the on-chain vote.
Mango Hacker Fails to Exploit Aave
A short squeeze was attempted on Aave v2 this week by the same hacker who exploited Mango Markets. The attempted exploitation centered around a short squeeze of the CRV token. Fortunately for Aave, the hacker was unable to profit from the trade. Around the time of the exploit, Curve published their highly anticipated stablecoin whitepaper and codebase which caused the CRV token to rise rapidly ending their chances of a profit. However, there was fallout from the failed trade as a $1.6M USD bad debt position was created for the protocol. This meant that Aave had to find a way to pay back the accumulated debt as they were on the hook.
On Tuesday afternoon, Gauntlet posted a risk parameter change proposal to immediately freeze 17 markets in wake of the attempted exploit. The rest of Aave’s service providers have also chimed in as the DAO mobilizes to unwind the bad debt and secure the protocol. Llama has stepped in with their own proposal to disable borrowing on only a select few markets. A separate proposal co-authored by Llama and Gauntlet was also published that provides a plan to repay the ~1.6M USD in bad debt accumulated during the failed exploit. In this proposal, Gauntlet will pay down the debt from its insolvency refund per their service agreement and the Aave Treasury will cover the rest. The Aave community currently finds itself debating exactly which markets pose the most risk as it searches for a long-term solution.
📡 Coverage
📖 READ our latest brief on Redacted Cartel, their proposal to extend its DAO operations budget, and the bigger picture.
📚 Good Reads
“On-chain vs Off-chain Governance” from StableNode
“Governor Note: The Future of dYdX DAO” by Ryan Holloway
“Analyzing DAO Treasuries” from Bankless Publishing
“Decentralization” by Packy McCormick
“Computer-Aided Governance in Action: Steering Complex Systems Using the CAG Map” from BlockScience
“SAFE Governance Stats” from Flipside Crypto
Uniswap: “Community Governance Process Changes” by Devin Walsh
Aave: “Reducing Long Tail Asset Risk” by Monetsupply
🧵 Threads
“Here’s how NounsDAO works under the hood..” by 0xDigitalOil
“Yesterday, @fund_defi filed a reply brief in the Ooki DAO case…” by Jake Chervinsky
🎧 Listens
“How to Grow DAOs Organically w/ Mika Honkasalo & Shreyas Hariharan” on Bell Curve
“Nick Cannon @ Gauntlet Network & Aera Finance” on DAO Talk
“Coordination Mechanisms w/ Griff Green” on Green Pill Podcast
“The Ultimate Use Case for DAOs w/Aaron Soskin” on Rehash Podcast
“Genesis of SafeDAO” on DAO Governance Education Sessions
“Govrn, Governance & Autonomy w/ Aaron Soskin & Stefen Delev” on Coordination Frontiers
“The Cosmos Network, Collaborative Finance (Co-Fi), and the Empowerment of Monetary Localism w/ Ethan Buchman” on The Ownership Economy
📜 Proposals
DAOStewards Funding Proposal
This proposal looks to fund the DAOstewards, a new metagovernance workstream at BanklessDAO, with 300K BANK for Season 6. Contributors at bDAO initially created the DAOstewards to consolidate the tokens during SafeDAO’s airdrop, but now seek to expand their function within the DAO. The proposal suggests two workstreams be created, ‘BanklessDAO governance’ and ‘Governing DAOspace’. DAOstewards are to focus on both internal-facing governance within bDAO and meta-governance work on the wider DAO ecosystem. A compensation structure of 100K BANK per stream with an additional 100K BANK paid out to each protocol lead starting with SafeDAO is being proposed. KPIs in the proposal include, ‘number of proposals on bDAO forum’ and ‘number of external proposal voted on’.
👥 Type: Discussion Stage
✍ Author: jengajojo, 0xBaer
Strategy on sunset of Aave v1
This proposal seeks to gather community consensus on how to best sunset Aave v1. The DeFi lending protocol has been discussing how to sunset its previous edition called Aave v1, as newer versions (v2 & v3) have rendered it obsolete. Here, BGD Labs, author a proposal that offers three options on how to best proceed. Option 1 has them disabling and freezing the version. Option 2 has them disabling variable borrowing. And the final option is to do nothing and wait for everybody to exit with no entering.
✅ 99% voting ‘Freeze v1s (no supply/borrow)’
⏰ Voting Ends: Nov 25
⚡ Type: Snapshot Vote
💬 Read the discussion
✍ Author: bgdlabs.eth
IIP 169: Purchase MVI from Metaportal
This proposal is to ratify terms between Index Coop and Metaportal to change their existing fee split on MVI. The Metaverse Index is an index product at Index Coop designed to “capture the trend of entertainment, sports, and business shifting to place in virtual environments”. MVI launched back in April 2021 with a 60/40 split between Index and Metaportal. This proposal would pay MetaPortal 65K USDC and restructure the fee split to 100/0, effectively giving Index full ownership of the product.
✅ 100% voting ‘For’
⏰ Voting Ends: Nov 25
⚡ Type: Snapshot Vote
✍ Author: afromac
GMX <> Redacted partnership
This proposal looks to solidify a partnership between GMX and Redacted through a $200K OTC treasury swap. In the proposal, $200k GMX is to be exchanged for $200K of BTRFLY based on a 30-day trailing average of both tokens. Redacted will deposit their share of swapped tokens to bootstrap liquidity in the newly created pxGMX/ETH LP. GMX is to lock their swapped tokens for rlBTRFLY. Proposal RIP27 at Redacted previously approved GMX as the next protocol to be integrated at Pirex Protocol, a new product from Redacted that creates liquid wrappers to allow auto-compounding and the tokenization of future yield events.
👥 Type: Discussion Stage
✍ Author: funky
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