🗳 This Week in Governance - October 20
A weekly resource covering DAO news and governance
📣 Key Points
Binance accidentally self-delegates UNI tokens, Synthetix discloses a large OP delegation, SushiDAO votes on their legal structure, Nansen asks SushiDAO to migrate to their web3 tool, Mango repays its hack victims, Maker votes to initiate Endgame Plans, and more
Activity:
🗳️ 194,732 ballots (+1,173%)
👥 24,185 voters (+217%)
📜 189 proposals (+13%)
🌐 59 active DAOs (+7%)
Let’s get into it 🔥
📡 Coverage
📖 READ our latest brief on SushiDAO, Nansen’s proposal for them to migrate to their web3 native communication tool, and why this matters.
🗞 DAO News in Brief
Synthetix Ambassadors Announce Optimism Self-Delegation
The Synthetix Ambassadors Council have announced plans to self-delegate 2M OP tokens from their Optimism Governance Fund grant. Back in June, the DeFi protocol received 9M OP tokens during Phase 0 of Optimism’s Governance Fund. In this phase, 24 projects were approved and funded with OP by the Optimism Foundation. A snapshot vote with these projects was bundled and approved by tokenholders.
The Ambassador council claims three primary reasons for this recent move. First, they argue this move was previously disclosed in an internal Synthetix governance proposal back in May. Second, they claim the need to support their own ecosystem and vote for proposals in their favor. Lastly, the Ambassadors have not been able to vote with their existing vote power due to multisig issues on L2. This move would further raise Synthetix’s governance power on Optimism. Forum sentiment has been filled with skepticism and confusion on the move. The self-delegation of grant funds is quickly becoming a controversial topic at Optimism.
Binance Accidentally Self-Delegates 13M UNI
On Tuesday, the world’s largest centralized exchange, accidentally self-delegated 13M UNI tokens to themselves sparking conversation in the world of DeFi governance. The delegation was ultimately spotted on-chain and discussed all over Crypto Twitter. Hayden Adams, the creator of Uniswap, raised alarms that the centralized entity had effectively become the second largest delegate at Uniswap behind only VC firm a16z. The move was also publicly criticized for using Binance’s own user’s tokens.
Early Thursday, Binance CEO CZ, posted a tweet clarifying that the delegation was an operational error. The centralized exchange claims they were simply moving tokens between their internal wallets. Uniswap’s current delegation mechanism works so that if a wallet is already delegated it will continue accruing voting power if it gets further funded. In this case, the delegation was not intentional and was rebuked by Binance. Critics argue that examples such as these showcase how centralized whales pose an existential threat to the future of decentralized governance.
SushiDAO Votes to form a Legal Structure
After several months of debate, voting is now underway at SushiSwap to approve a new legal framework and structure plan for the DAO. The introduced proposal would form three new entities to steward the DeFi protocol, a Cayman Island Foundation, a Panamanian Foundation, and a Panamanian Corporation. The Cayman Island Foundation would serve as the “DAO Foundation” that includes a governance council to enable DAO-related activities. The Panamanian Foundation would serve to administer the existing smart contract and protocol layer. The Panamanian Corporation would serve to operate the GUI (front-end) of the protocol. All of these entities would be able to enter into agreements with service providers. This process is said to take up to 4 weeks to fully implement after the current governance vote has passed. Voting ends on October 26th.
Mango Begins Paying Back Hack Victims
The attacker behind the October 11th exploit of Mango Market has come forward. Avraham Eisenberg publicly admitted on Twitter as being part of a team that exploited the DeFi protocol. Avraham claims to have run a “highly profitable trading strategy” and admits no wrongdoing for his actions. After a failed initial governance proposal was created by the attacker, a new proposal was brought forth by the Mango core team. This proposal allowed the attacker to keep $47M in exchange that he returns the rest of the stolen funds.
Mango has now moved forward with plans to reimburse its hack victims. Three new governance proposals were voted on this week to decide how this would take shape. The first proposal looks to transfer USDC to a multi-sig to enable reimbursement. The other two proposals offer the community two options on how they would be paid back, either entirely with USDC & MNGO or a mix of previous token balances. As of October 20th, hack victims can now navigate to the Mango site to get reimbursed.
🗳🛡 Breakdown: Paladin
🎧 LISTEN back to our conversation with DeFi project Paladin. We discussed their governance process, governance incentive design, voting bribes, and more.
📚 Good Reads
“On-chain organizations need social operating systems” by Vishesh
“The Way of Cosmos” by Mario Gabriele
“Inside a Social DAO: How an Online Community Becomes a Digital City” by Kelsie Nabben
“Snapshot Death Match: NFT vs. Token-Based Voting Participation Rates” from Flipside Crypto
“Token Delegation with Lock-Ups” from jump crypto research
“Nouns — Hyperscaling a Brand & Treasury From Zero” by Delphi Research
“The Liquidity Wars: Empire of Frax” from Tokebase
“Governance Project Uses ‘Contests’ to Help DAOs Improve Decisionmaking” from The Defiant
“OFAC Cannot Shut Down Open-Source Software” by Katie Haun & James Rathmell
“Here’s Why the Path to Decentralized Marketplaces Won’t Be Linear” from nft now
“Quorum is becoming a metalabel” by Samantha Marin
“Making meritocracy work for Web3” by Reka.eth
“The Nouns Federation” by devcarrot
“Aave Q3 Financial Report” from Llama
“Impact Measurement: Aave” from Gauntlet
Mango exploit has Aave self-assessing its risk of a similar attack
🧵 Threads
Introducing Federation: DAO-to-DAO governance rails for Nouns by 0xWiz_
“All You Need to Know about $GHO” by ipor intern
Making Aave 106 pass was a grind by Figue
“Pop-up DAOs will be huge” by Joanwestenberg
🎧 Listens
“Setting up a foundational mindset for governing Social DAOs w/ Tommy Olofsson (PolygonDAO)” on The Clique Podcast
“Bottom-up governance w/ David Phelps” on Juicebox DAO Podcast
“Friends with Benefits’ Alex Zhang on Building Web3 Communities That Endure” on The Defiant - DeFi Podcast
“Verified Contributions to Build Your Reputation” on Crypto Sapiens Podcast
📜 Proposals Briefs
Governance Fund S2 Cycle 7: Otterspace
This proposal requests funding for Otterspace through Optimism’s Governance Fund Cycle 7. Otterspace is a project building non-transferable NFTs called ‘Badges’ for DAOs to use. Badges enable DAOs to perform governance, automate permissions, manage reputation/credentials, and create better incentive systems. The proposal requests 50K OP tokens to incentivize user adoption of Optimism and Otterspace. This is Otterspace’s second attempt to pass this proposal since it previously failed in Season 1. Optimism’s Tooling Governance Committee has recommended a 'Yes’ vote on this proposal.
✅ 91% voting ‘For’ | ⏰ Voting ends Oct 20 | 💬 Read the discussion |
⚡ Type: Snapshot Vote | ✍ Author: Lukas
Moving FWB to a Single Membership Tier
This proposal looks to streamline FWB membership into one single tier at 75 $FWB. The DAO currently has a multi-tier membership system granting holders access to different benefits based on token amount. This proposal hopes to solve problems at the DAO such as local members (5 $FWB) having subpar experience, multiple member tiers making things confusing, and unsupported tiers by the new mobile app. Quadratic voting will be implemented for this vote to mitigate potential whale capture.
✅ 96% voting ‘For - Move to a single tier’ | ⏰ Voting ends Oct 24 | ⚡ Type: Snapshot Vote | ✍ Author: Drew Coffman
Ratification Poll for Endgame Prelaunch MIP Set
This proposal is a set of proposals that will initiate the long-awaited Endgame Plan at MakerDAO. Included in this set are MIP83, MIP84, and 6 sub proposals. MIP83 would enable existing Core Units to begin restructuring themselves as MetaDAOs. MIP84 would trigger the creation of a Protocol-Owned vault through an emulation process (POVE) to enable greater resilience of the protocol. The other sub proposals look to redefine governance items, remove outdated processes, and more generally streamline governance at Maker based on current conditions.
✅ 92% voting ‘Yes’ | ⏰ Voting ends Oct 24 | 💬 Read the discussion |
⛓ Type: On-chain Vote | ✍️ Author: Rune Christensen
Create Coordinape $KRAUSE Budget
This proposal requests community approval to fund a Coordinape CoVault with 40,000 $KRAUSE to compensate DAO members for their contributions. The requested budget of 40,000 $KRAUSE plans to fund 5 months of contributions with an estimated 8K $KRAUSE paid out each month. The Stewards Team will allocate and disburse payouts at the end of each month. This proposal looks to help newcomers prove themselves while getting paid, allow new members to be vetted, incentivize contributions from the existing community, and distribute $KRAUSE to contributors who are not being paid.
➖ 36% voting ‘Abstain’ | ⏰ Voting ends Oct 20 | ⚡ Type: Snapshot Vote | ✍ Author: Spice
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