Flipside Governance Recap | 12 August 2022
Welcome to the Flipside Governance Team recap! Here’s a weekly summary of heady governance activity, hard-hitting research & data analysis, and key news stories across the broader governance space.
Team Highlights 🚨
- Optimism DeFi Governance Committee: Flipside and 4 other active OP delegates introduced the first DeFi Governance Committee this week. This committee will focus on each DeFi-related proposal, delivering a summary, basic due diligence, and a voting recommendation to Optimism Token House delegates and the community.
- Flipside FTT Fiesta for MakerDAO: Every month, Flipside spotlights a DAO or protocol — for August, we showcased MakerDAO! In addition to an overview of the DAO, every employee receives MKR tokens. Check out the data section to see how the Flipside team has used their MKR so far!
Our Research and Content ✏️
- The Dilemma of Soulbound Tokens: Mike, Raph, and Isabel explore how token-based voting systems are deeply flawed, allowing wealthy actors to dominate proposal outcomes. Are SBTs the solution? While their non-transferability makes for a robust digital identity, there are valid concerns over user privacy and potential dystopian nightmares.
- DAO Governance: A Game of Offense and Defense: The strategy of playing offense and defense is key to success in DAOs, and if utilized effectively, can lead to a massive increase in participation and protocol growth. Fig takes us through what these strategies look like, how to find balance, and why you should always know who you’re up against!
Across the Industry: Governance News of the Week 📰
- MakerDAO Founder Calls on DAI to Drop Dollar Peg Amid Tornado Cash Fallout: DAI’s collateral reconsideration is a reaction to Circle’s decision earlier in the week to blacklist 38 wallets sanctioned in connection to the Tornado Cash ban. Circle froze any USDC present in these wallets in a move decried by privacy advocates as corporate compliance with overreaching and unjust government censorship. Over 50% of DAI is currently collateralized by Circle’s USDC.
- CreatorDAO Raises $20 million in Seed Funding Round: CreatorDAO invests in creators in exchange for a percentage of their future earnings. The DAO structure allows investment decisions to be crowdsourced, and contributions to the DAO, such as mentorship and collaboration, to be rewarded. The round was led by a16z crypto and Initialized Capital.
- Curve Finance Suffers Frontend Hack: Hackers compromised a Curve website or domain name to redirect unwitting users and transactions to a malicious destination. According to Web3 on-chain sleuth, ZachXBT, the thieves made off with $570,000 in ETH, which they sent to the FixedFloat cryptocurrency exchange to launder the money.
Flipside Governance | Analysis of the Week 📊
FTT Maker Analysis
What have Flipsiders been doing with their MKR? So far, ~36% of Flipside employees have used their MKR to vote on a proposal. ~69% are HODLing, and ~28% have delegated — with more soon on the way.
Aave Flash Loans
Aave, a leading decentralized lending /borrowing platform, pioneered the adoption of flash loans. Flash loans are loans that must be paid back within one block space. Users borrow a cryptocurrency without collateral, buy an asset, sell the asset, return the loan, and reap the profit. Another use case for flash loans (covered in our recently published SBTs piece) is to temporarily amass voting power in a DAO by purchasing or borrowing the majority of governance tokens.
Community analyst, @jackste73371898, created an awesome dashboard with the help of MetricsDAO to track the wallet activity of Aave users.
The graph above shows a variance in flash loan size from January 2021 to the present. In terms of digital assets borrowed, 51.1% of flash loans were USDC, followed by 15.7% of Aave tokens.
Flipside Governance Activity 📜
Here’s a recap of the proposals we voted on and the rationale for our votes:
If you are interested in joining the Flipside Governance team, please email us at governance@flipsidecrypto.com or ping @avimeyers on Twitter.
Also, check out our new job posting for a Governance Contributor on Ethereum here!
