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DAOs: Curve’s Emergency DAO, MakerDAO offboarding drama, Aave<>MakerDAO, Fei <>Balancer, ENS DAO, Gnosis’s merger offer, Uniswap proposal #9 approved, MolochDAO grants are open, and more!

Paradigm
Paradigm
Published in
37 min readNov 13, 2021

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Biweekly report on decentralized autonomous organizations vol.12, 30th October — 13th November

TL;DR

  • Snapshot is integrating the Colony protocol to make DAO decision-making more equitable
  • Curve Finance Emergency DAO kills USDM gauge after discovering some suspicious hybrid + liquidity activity
  • MakerDAO considers involuntary personnel change: The motion to offboard the real world asset team facilitator ran into controversy, and would be one of the first cases of a DAO firing process.
  • Aave V3 announced. Aave governance has executed a vote to fix for vulnerability similar to CREAM’s recent hack. MakerDAO<>Aave innovative cross DAO partnership
  • Funds allocated to the Aragon Network DAO. While the first Escrow transaction on Mainnet was conducted between the Aragon Budget DAO and the Greet DAO
  • Compound passes proposal 68, ending incentives for borrowing COMP that had caused market distortion. Proposal 67 to determine whether COMP should be distributed to early users did not pass. Proposal 66 is live
  • The Uniswap community approves proposal 9 to offer extra low trading fee tier. Uniswap brand update
  • Gnosis proposes acquisition of xDAI chain. GIP-15 is now live for voting on Snapshot
  • MolochDAO Q4 grant pipeline is open. Check out the new DAO handbook
  • BadgerDAO’s BIP 74 approved. The Badgercast introduced. Badger Boost is now operating as a single chain system
  • Fei and Balancer protocol are considering a treasury swap of BAL tokens for a combination of FEI and TRIBE
  • Balancer’s proposal to activate the protocol fee to grow the Balancer DAO is live. Balancer grants wave 2 is open
  • API3’s secondary proposals 9,10,11 & 12 is up for voting
  • Index Coop ran Decision Gate votes. IIP-100, 101,102 passed, while the DG2 proposal for an index called the iROBOT index was voted down
  • Nexus Mutual’s Snapshot proposal regarding Claim 102 is live
  • Gitcoin’s ImpactDAO/ProtocolDAO Sandwich published
  • Vortex on Akropolis: Testnet launched
  • New Idle’s roadmap. IIP-15 has been executed, IIP-16 is live
  • PieDAO PIP-66 & PIP-67 are live for voting, PIP-64 passed
  • PoolTogether V4 has launched. PTIP-40 & PTIP-41 approved
  • Yam’s Jason/punk1004 incident. YIP-92 & YIP-93 passed
  • Bancor V3 Phase I details to be revealed Nov 29
  • Kyber’s KIP-18 executed
  • A pool on Rari Capital’s Fuse suffers oracle manipulation attack, showing added user responsibilities and risks of permissionless lending markets
  • Paladin launches token with airdrop to other protocols’ voters
  • Ethereum Name Service launches decentralized governance
  • Active proposals: Aave, Compound, Curve, GnosisDAO, Idle, Index Coop, MakerDAO, Nexus Mutual, PieDAO
  • New & ongoing discussions: Balancer, mStable, GitcoinDAO, Synthetix, Uniswap, Yam Finance, Yearn Finance, LidoDAO, BancorDAO, Akropolis, PoolTogether, API3, KyberDAO, Kleros, Badger DAO
  • Incentive design & tooling for DAOs
  • Discord Ethereum Integration?
  • Podcasts on DAOs
  • And more!

Overview

Blockchain technology is already radically transforming the financial system. However, properties such as trustlessness and immutability aren’t only useful in monetary applications. Another potential application is governance. Blockchains could enable entirely new types of organizations that can run autonomously without the need for coordination by a central entity.

“Instead of a hierarchical structure managed by a set of humans interacting in person and controlling property via the legal system, a decentralized organization involves a set of humans interacting with each other according to a protocol specified in code, and enforced on the blockchain.” — Vitalik Buterin

DAO stands for “decentralized autonomous organization” and can be described as an open-source blockchain protocol governed by a set of rules, created by its elected members, that automatically execute certain actions without the need for intermediaries.

In simple terms, a DAO is an organization that is governed by computer code and programs. As such, it has the ability to function autonomously, without the need for a central authority.

Like how DeFi is programmable money and how NFTs are programmable media, DAOs are programmable organizations of people.

DAOs Ecosystem Statistics

Deepdao.io

Top DAOs

Like two weeks ago, the rating is headed by Uniswap and BitDAO.

Deepdao.io
  • Top active organizations this week sorted by decisions:
  • Top active organizations this week sorted by discussions:

Read & Listen

Frameworks

Aragon

DAOs as Purpose-Led Organizations: By incorporating as a DAO, any purpose-led organization can be equipped with the tools to allow horizontal leadership to flourish, by economically incentivizing a shared initiative. This evokes the best that humanity has to offer: the innate desire to contribute to something larger than ourselves and beyond profit.

Building a purpose-led organization requires several prerequisites. As they exist right now, DAOs are configured to satisfy all of these requirements:

  1. Belief
  2. Engaged leadership
  3. Integrated purpose
  4. Clear communication
  5. Aligned incentives & performance indicators
  6. Empowered individuals
  7. Established core values.

Incentive Design & Tooling for DAOs: How to match a DAO’s goals with the right incentive mechanisms to achieve them. A great overview of incentive mechanisms & DAO tooling.

How to Join a DAO: Most DAOs are ‘permissionless’ so as soon as you’re contributing, you’re in! That said, there are different levels of engagement so, like most things, the more effort you put in, the more rewarding it will be.

Recent blog posts

Aragon Community Call #7 | November 3rd, 2021:

Aragon Talks S1E02 | What are Pareto Fronts and how can these transform eDemocracy:

Colony

DeFi Tool Snapshot Now Using Colony to Rebalance Power in DAO Voting: By using Colony’s reputation system, Snapshot wants to make the decision-making process more equitable.

“As the DAO ecosystem grows,” said Snapshot Labs’ Head of Growth Nathan van der Heyden, “it seems likely that we’ll see a proliferation of new governance modalities like Colony’s Reputation system, which seek to address the social scalability limitations of token voting.”

Van der Heyden believes using Colony’s reputation system is a natural fit for Snapshot because Colony is focused on on-chain governance and has received several user requests for similar features.

Colony co-founder Jack du Rose sees the integration of the Colony reputation score to the Snapshot UI as a way to increase the social aspect of voting.

“There is a growing demand from DAOs to integrate systems that represent more fairly their involvement in their community in terms of the voting power,” du Rose told. “DAOs are all about community, so anything we can do to help encourage further involvement in DAOs is excellent progress.”

The Commons Stack

Commons Stack Review: Sprint 25:

Bankless: Griff Green and the DAO | Layer Zero:

Daohaus

HAUS Party LIVE!

DAOhaus — What is a DAO? The first in a series of DAO explainer vids:

Moloch

The Q4 grant pipeline is open! Reference the new DAO handbook for more information, or join on Discord.

OpenLaw

Governance

Aave

AAVE <> MakerDAO: MakerDAO is minting DAI and lending it on Aave, rather than through their normal “collateralized debt position” process.

MakerDAO is launching the DAI Direct Deposit Module (D3M) which gives Aave privileged access to mint DAI once the test debt ceiling is raised. This marks a transition point from Maker as a commercial lender to Maker as the financial backbone of DeFi.

https://app.boardroom.info/aave/overview

With the recent attack on Cream exposing a new vulnerability in lending protocols, AAVE has executed a vote to pause borrowing of some assets.

This week, Gauntlet has put on chain a vote to renew their engagement with AAVE to actively manage risk parameters. They’ve also put out a quarterly risk review for the community to review. AMPL has remained an active topic of discussion, and Aavegotchi has announced their intention to push forward an AIP to add GHST as collateral to the Polygon market.

Active proposals

Closed proposals

New and ongoing discussions

Latest governance topics on governance forum.

Akropolis

Recent blog posts

There were no active proposals these weeks.

Latest governance topics on governance forum.

API3 DAO

deepdao.io

Recent blog posts

API3 DAO Tracker: API3 DAO currently involves 3,373 members participated in 14 votings.

New and ongoing discussions (Sentiment Check)

Official proposals

Latest governance topics on governance forum.

Bi-weekly Community Call — 11th of November:

API3 Alliance Spotlight — New Change FX:

Apidays LIVE London 2021 — Open Insurance & Smart Contracts by Giovanni Lesna:

Badger DAO

https://deepdao.io

Recent blog posts and news

https://app.boardroom.info/badgerdao.eth/overview

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

Badgercast: “The Curve Wars”:

Badgercast: Spadaboom on Interest Bearing Bitcoin:

Balancer

deepdao.io

Recent blog posts and news

https://app.boardroom.info/balancer/overview

Closed proposals

New and ongoing discussions

Latest governance topics on governance forum.

Bancor

https://deepdao.io

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the forum.

Compound

https://app.boardroom.info/compound
https://www.withtally.com/governance/compound

The Compound community had 3 governance proposals to update various risk parameters, get community feedback on distributing COMP to early users, and end cCOMP borrow rewards.

The Compound community has an active governance proposal to update various collateral factors, and ongoing discussions on continuous auditing of the protocol codebase.

Active proposals

Closed proposals

New and ongoing discussions

Latest governance topics on governance forum.

Curve

Curve Finance Emergency DAO Action: A notable DAO governance story is currently developing in the land of Curve Finance, the increasingly systemically important DeFi protocol with the most “Total Value Locked” in all of DeFi according to DeFiLlama.

Mochi Inu — a brand new project which describes itself on Twitter as a “Next-Gen Decentralized Digital Currency Backed By Long-Tail Cryptoassets” — entered the so-called “Curve Wars” this week. Mochi’s token launch November 10th quickly attracted nearly $100m in liquidity, which enabled the project to mint a sizable amount (~$40m) of its native stablecoin, USDM. The project then converted USDM to DAI to purchase Convex tokens, which can be used to influence Curve governance and, by extension, the allocation of CRV rewards — thus accruing value to Mochi.

Curve community participants were quick to flag these actions — and Mochi’s founder Azeem Ahmed — as nefarious. And in a Curve Finance first, the Curve “Emergency DAO” turned off Mochi’s rewards.

There are two DAO governance angles to this story worth exploring.

The first: we are seeing the effects of the purposefully adversarial nature of Curve governance, which is designed such that there is a major incentive to accumulate (or bribe holders of) CRV tokens in order to use them to boost rewards for liquidity provided to Curve. This design is the basis of the so-called Curve Wars, i.e. protocols competing for shares of CRV emissions. Until the actions taken by the Emergency DAO, the “rules of engagement” have not been clear. Indeed, they’re actively being worked out in real time. See this CoinDesk article by Andrew Thurman and the Curve Market Cap newsletter for more insight on what’s happening.

Second, the actions of the “Emergency DAO” — and, in some ways, its mere exitstence — are sparking a debate around whether Curve is a fair, decentralized system. Technically, the actions of the Emergency DAO can be undone by the full Curve DAO, which is also currently weighing whether to remove the DAO whitelist.

Active proposals

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the forum.

  • Curve Finance considers removing the smart contract whitelist for interacting with governance and veCRV vote locking mechanisms:

Gitcoin

Recent blog posts

https://www.withtally.com/governance/gitcoin
https://app.boardroom.info/gitcoin/overview

In Gitcoin DAO news, Kevin Owocki published the ImpactDAO/ProtocolDAO Sandwich, which describes how he perceives Gitcoin’s place in the emerging DAO ecosystems as a ProtocolDAO/ImpactDAO; Sandwich: A ProtocolDAO is a DAO that is centered around a crypto-economic protocol.

To summarize, an ImpactDAO is a DAO that is oriented around the creation of positive externalities.” The DAO is also currently leaning into ecosystem rounds, where projects run their own matching pools alongside the main Gitcoin matching pool. This can be seen in the recent case study that highlights Uniswap’s goals, experience and results using ecosystem rounds in GR11 here.

Non-transferrable governance token for “structured workstreams” to signal contributor interests by DisruptionJoe proposes to “create a governance token for all workstreams that choose to collaborate rather than defect” from the decisions of The CrossStream DAOops Governance (SDG) council.

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

Tally Workshop Room 2 November 2021:

Superfluid How to Use Money Streams to Improve DAO Operations:

Gnosis

Gnosis Proposes Acquisition of xDAI Chain: This proposal would result in a conversion of STAKE tokens into GNO, and fold xDAI chain into Gnosis’s wider scaling plans.

Gnosis made waves this week with an ambitious proposal to acquire the xDAI sidechain and linked STAKE validator token. While many other EVM sidechain and L1 projects have seen huge growth in price and adoption in the past year, xDAI has lagged competitors. Gnosis similarly has lagged the market despite having one of the largest treasury reserves in the space. The new proposal has the potential to galvanize both projects, but also brings various governance risks.

The deal would resemble a tender offer from traditional finance space, with each STAKE holder receiving a share of Gnosis’ GNO tokens based on a discount from the average price from just before the deal was announced. While the market initially reacted favorably to the proposal, it has since given back nearly all of the recent gains and the xDAI community seems to be skeptical as shown by negative comments in their forum.

xDAI forum

While the proposal would yield an immediate mark to market increase in value for token holders (with the GNO/STAKE conversion price favoring STAKE holders), the xDAI community would lose autonomy and would become part of a much larger and more capital intensive organization.

Gnosis has had widely publicized governance fights in the past, with minority parties upset about excess capital being hoarded instead of being returned to token holders. Given this governance risk, STAKE holders may feel they have more upside potential as an independent project. But on the other hand, many other EVM sidechains have initiated large ecosystem incentive programs, and Gnosis’s deep pockets could help xDAI remain competitive with better resourced peers while continuing to fund core research and development.

Forum polling is notoriously unreliable, so while initial votes have shown community opposition to the merger we may see a change of momentum as token weighted voting begins. Gnosis is fairly closely held, so the biggest question to the deal is how many large STAKE holders are onboard with the acquisition plans.

https://app.boardroom.info/gnosis.eth/overview

Active proposals

New and ongoing discussions

Find out the latest GnosisDAO proposals here.

Idle

Recent blog posts

https://www.withtally.com/governance/idle

Active proposals

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

Index Coop

Recent blog posts

https://app.boardroom.info/index/overview

This week Index Coop ran three Decision Gate votes, two noted as DG1, effectively the first step to dedicating substantial Index Coop resources to diligence, potentially leading to a subsequent decision-gate (DG2) vote; DG2 passage would indicate a decision to launch the product to market. The two DG1 votes (for a leveraged Chainlink product and an emerging DeFI sector index) passed while the DG2 proposal for an index called the iROBOT index was voted down. Otherwise, the operations account was authorized via IIP-101 to engage in investment strategies involving Rari Capital.

Active proposals

Closed proposals

New and ongoing discussions

Find latest Index Coop proposals here.

To read more about the different proposals and take part in the decision, check out the governance forum.

Kleros

Recent blog posts

https://app.boardroom.info/kleros/overview

There were no active KIPs these weeks.

To read more about the different proposals and take part in the decision, check out the governance forum.

Kleros/Maker Fellowship — Presentation of Results of the Research:

KyberDAO

Recent blog posts

Closed proposals

Discussions

Find out all proposals here. Check them out on GitHub.

Lido

Recent blog posts

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

MakerDAO

MakerDAO Considers Involuntary Personnel Change: The motion to offboard the real world asset team facilitator ran into controversy, and would be one of the first cases of a DAO firing process.

While Maker is no stranger to backroom politics, it had experienced a period of relative calm in the year since project governance had transitioned to a fully DAO managed framework. But this was recently broken as an internal political conflict broke into the open.

The latest controversy centers on MakerDAO’s real world asset (RWA) team, which reviews and processes applications for offchain assets to serve as collateral for minting DAI. Rune Christensen, cofounder of Maker and leader at the Maker Foundation, submitted a proposal to replace the existing RWA team lead with a new leader.

Rune’s initial post seemed to indicate a mutually agreed split, but it quickly became clear that the facilitator was being forced out. Rune controls the vast majority of currently delegated and active voting power (roughly 47,000 MKR worth), suggesting he may have the ability to force changes through unless there is significant opposition. This action has also stirred controversy among previous Maker employees who were involved in the “purple pill” controversy from several years ago.

Ashleigh’s response surfaced a few issues, including the possibility of self dealing contracts for managing Maker’s RWA deals through third party “introducer” companies. Rune later acknowledged potential financial interests in Maker counterparties while claiming they should not represent a conflict of interest. But this case shows that the overall level of disclosure may need to improve as Maker engages in more complicated financing arrangements.

While there has been some public backlash against the proposed personnel change, some commenters have voice support for the underlying reasoning. Rune argued the proposals were necessary due to the existing RWA team lead having privileged positions in various Maker related contracts. Giving individuals excessive power within DAO agreements could create risk of organizational capture, even if this was done for expediency rather than any ill intent. Rune also noted potential issues with the Centrifuge asset origination model. Maker has relatively little protection against borrowers unilaterally changing terms, and the ability to make legal claims for recovery is also unclear. So part of the debate centers on the DAOs risk appetite.

The reassignment proposals will likely go up for a vote within the next month, representing possibly the first case of involuntary personnel change at a DAO. But this could also be an important test of wills and voting power between various Maker constituencies.

MakerDAO Drama: This week, internal politics within MakerDAO was brought out into the sunlight. It all started when Rune Christensen, MakerDAO founder, initiated a governance proposal to remove the current leader of the Real World Assets team, Sébastien Derivaux, from his role. Check it out here: MIP41c5-SP2: Facilitator Offboarding

From Derivaux’s response in the forum, it quickly became evident that this was not something that had been discussed prior to Rune’s post — effectively, Rune was attempting to fire him via governance forum post.

Things started to heat up when Ashleigh Schap, who most recently worked with Uniswap but was involved with the Maker Foundation in the past, posted in the thread and called on the Maker community to vote against Rune’s proposal to preserve decentralization. She also accused Rune of self-dealing and backroom politics. Rune’s responded addressing Ashleigh’s allegations and provided more detail on the background of his proposal.

I am willing to stay involved for another year to try to put in place the clean money vision and the decentralized workforce framework (I briefly explained it on a recent governance call), and then beyond that I am going to pull out and stop being active in “deep governance” other than passively delegating and potentially using my public platform to promote the project and the important role it can play in mitigating the climate catastrophe. But if something as simple as offboarding a facilitator has to devolve into absurd drama, then I am just gonna gtfo. There’s no reason why I should have to deal with this kind of madness.

And to be clear, I already stated the entirety of my interests in the beginning of this post. Hopefully this is already obvious but all the claims and accusations Ashleigh made are lies or heavily distorted facts, and obviously the entire narrative is extremely biased and one sided. It’s funny how Ashleigh is accusing me of “going to war”, and then explodes with a tornado of libel because I dared to make a governance proposal. [Rune’s Response]

The TLDR is that, behind the drama of the first public “firing” of a DAO contributor, there is a significant governance issue. Rune believes there is legal risk with how the Real World Asset group and the Centrifuge asset origination model are currently conducted.

8 Active Polls — End Nov 22

2 Active Polls — End Nov 15

New and ongoing discussions

and many more!

Read more about the different proposals and take part in the decision.

Governance Portal, Governance Forum

MakerDAO events calendar here.

MakerDAO activates the direct deposit module, injecting funds into the Aave money market in an innovative cross DAO partnership:

mStable

Recent blog posts

https://app.boardroom.info/mstable/overview

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

AMA with Atlantis World — mStable:

Nexus Mutual

Active proposals

Closed proposals

Vote on governance proposals to decide the future of the protocol here.

To read more about the different proposals and take part in the decision, check out the governance forum.

Mutant Meetup | 04 November, 2021:

Synthetix

Recent blog topics and news

https://app.boardroom.info/snxgov.eth/overview

Closed proposals

To read more about the different proposals and take part in the decision, check out the governance forum.

SIP/SCCP status tracker:

  • SIP-120 approved but not implemented
  • SIP-167 approved and still testing to ensure its secure
  • SIP-184 for Dynamic Exchange Fees approved but will not make it to the next release, Alkaid.
  • SIP-80 for Futures is in a feasibility stage to understand how it effects existing services.
  • SIP-156 still being drafted and specs checked for the Debt Pool Oracle
  • SIP-165 for Debt Pool Unification being drafted and a discussion is needed to create an abstract for this idea or at least how it will look
  • SIP-185 Spartan Council review pending

The Stakeborg DAO Talks with Kain Warwick — Lessons from a multi-billion dollar DAO:

Pie DAO

Recent blog posts and news

  • How to Claim and Redeem SLICE Rewards
  • PieDAO did monthly Community Call on the 10th of November. Lot of topics covered: first SLICE distribution, KPI Options launch, LisCon update, Community Contribution updates, and more. Recording, slide deck, and meeting notes are all linked in this forum post.
https://app.boardroom.info/piedao/overview

Active proposals

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

PoolTogether

https://www.withtally.com/governance/pooltogether
https://app.boardroom.info/pooltogether/overview

V4 has launched, and with this comes new lottery pools and better distribution of winners. For the next few weeks, large daily prizes will be given to around 200 winners. The new mechanics in V4 are able to be reviewed here (TWA Balance, Prize Distribution, etc.)

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

APING IN — EP #3 — PoolTogether x Cre8rDAO talk Coordinape:

Uniswap

https://www.withtally.com/governance/uniswap

Uniswap proposal #9: Last week, a proposal to add a 1 basis point fee tier to Uniswap V3’s factory contract to compete in the stablecoin swap space passed the Temperature and Consensus check stages was officially voted via on-chain governance. The proposal should add a 1bp fee tier with 1 tick spacing. This change is straightforward from a technical perspective and would help Uniswap compete in stablecoin <> stablecoin pairs.

https://www.withtally.com/governance/uniswap/proposal/9

Recent governance topics and news

https://app.boardroom.info/uniswap/overview

Closed proposals

New and ongoing discussions

To read more about the different proposals and take part in the decision, check out the governance forum.

Yam Finance

Recent blog posts and news

Closed proposals

New and ongoing discussions

Check out the latest YIPs discussions here.

Yearn Finance

https://app.boardroom.info/ybaby.eth/overview

There were no active proposals these weeks.

Discussions

Check out the latest YIPs discussions here.

MISC

ENS DAO

Ethereum Name Service (ENS) made a big splash this week when they announced that they will be decentralizing control over “key components of the ENS protocol” with the launch of ENS DAO and the $ENS token.

Token Distribution and Utility: There will be 100 million $ENS tokens minted, with 50% headed to a community-governed treasury and the other split among ENS contributors and users.

ENS DAO Announcement Blog

Via the ENS DAO, $ENS tokenholders will have control over the ENS Community Treasury. As noted above, this Community Treasury will hold 50% of the $ENS token supply but, crucially, it will also hold the ETH-denominated proceeds of name registrations and renewals. Thus, ENS DAO may end up with one of the largest DAO treasuries in the space. The first acts of $ENS tokenholders will be to:

  • Vote on “a proposed ENS Constitution, a set of rules and guidelines for the community” during the first week of the claim process, which starts November 8th.
  • Vote on “a proposal to formally request from the root key holders the ability to (1) govern protocol parameters, like .ETH pricing, the price oracle, and more [and] (2) control funds from the existing community treasury, as well as receive future revenue.”

After that, ENS DAO will make key decisions about ENS’s handling of various (currently) “non-crypto entities” and their trademarks. This will be something to watch for those interested in how DAOs will interact with “the real world.” [Read “$ENS Token Allocation”]

Legal Structure: Speaking of interacting with traditional organizations and frameworks, it is worth noting how ENS is approaching legal structure. From the above article on their Mirror page, “We have established an organization called The ENS Foundation in the Cayman Islands to legally represent the DAO, e.g. fulfill any tax obligations.” ENS goes into more detail in their Governance Docs. The DAO may vote to:

  • Appoint or remove a director, member, or supervisor.
  • Prohibit admitting any members in future.
  • Instruct the directors to wind up the foundation, and specify what charity or other foundation should receive the foundation’s assets.

Though not specified directly in the Articles, the DAO may also instruct the directors to take action on behalf of the Foundation — such as signing a contract, engaging a company for a service the DAO requires, or delegating some of the directors’ powers to a DAO working group.

Delegation: Following the lead of Gitcoin, ENS DAO is integrating delegation into the token claiming process. Currently there is an open call for delegates: ENS DAO: Call For Delegates A running thread of ENS delegate pitches can be viewed on the ENS Discourse here: ENS DAO Delegate Applications

Ethereum Name Service Announces Decentralized Governance: ENS has a large treasury to govern, but also faces some of the most complex challenges of any protocol DAO.

Earlier this week, the Ethereum Name Service announced that they would be decentralizing core governance functions through a DAO. Launching on October 8, the structure will feature a token distribution to team members and the community, along with a Cayman Islands foundation to represent the DAO’s legal interests and responsibilities.

Initial 50% token distribution is split evenly between core contributors and past users, with the remaining half of the token supply allocated to the DAO. In addition to ENS tokens from the genesis supply, governance will also control the ETH earned by the ENS root multisig for name registrations and renewals, which should quickly vault ENS into the top tier of organizations by treasury value.

While ENS has a significant head start in terms of financial positioning, the new ENS DAO will face some of the more difficult challenges among any protocol DAOs. The domain namespace is inherently integrated with non crypto native industries, with issues such as honoring trademarks and evicting squatters still largely unexplored in a decentralized context. Forming a DAO may be an important step to build enough legitimacy to be able to take action on these sorts of issues.

To help kickstart engagement in DAO governance, ENS is making a call for delegates over the next week. This follows on from the successful Gitcoin token launch, where users were able to select from many public delegates while claiming their tokens, helping drive voter engagement and a diversity of participating delegates.

ENS has enough real world integrations and entanglements that it may be unavoidable to integrate deeply with the traditional legal system. Nevertheless, the formation of a linked foundation has caused some scepticism among community members, in light of the history of offshore foundations as centralized organizations in many crypto projects.

ENS makes the distinction of giving token governance explicit authority over foundation operations and board membership. This inverts the power dynamic of previous off chain entities and potentially helps avoid some of their pitfalls of poor oversight. If this DAO directed trust structure proves effective, we may see a wave of projects seeking incorporation to benefit from additional clarity on legal and tax issues.

ENS DAO Rollout: ENS DAO’s rollout has been the talk of crypto Twitter for much of the past week, not least because of both its smooth implementation and, of course, the major price action that $ENS has had.

One notable aspect of the $ENS claiming process is the built-in delegation step, which prompts $ENS holders to delegate their tokens to a long list of eligible delegates. [Current Delegate Counts]

Among those options is Coinbase, which is currently 2nd in delegated votes. Some in the community have expressed dissatisfaction with this result. But smaller startups, individuals, and other DAOs are all poised to play a large role in the governance of this crucial public good as well. There has also been discussion around whether ENS delegates, and delegates in general, should be paid for their services.

ENS sees governance successful launch with hundreds of delegates and broad vote distribution:

Fei Protocol Considers Series of DAO Partnerships

Proposed partnerships with Balancer and Tokemak include treasury swaps and improved liquidity support for FEI.

As Fei approaches their v2 launch, they have come out with a series of cross protocol partnership proposals that should help drive deeper liquidity and utility for their project tokens. First, Fei and Balancer protocol are considering a treasury swap of BAL tokens for a combination of FEI and TRIBE. With Fei v2 built largely on Balancer’s smart pool architecture, this swap will help build trust and incentive alignment between the two protocols. If approved, Fei will deposit their BAL in a BAL/ETH liquidity pool, earning additional liquidity rewards and fitting into their long run treasury diversification strategy. Balancer could also benefit from additional non native treasury assets, particularly the portion of FEI stablecoins which can be used to fund operating expenses without BAL dilution.

There has been some dissent with around 20% of BAL votes against the proposal, possibly because TRIBE would be a non-core asset that doesn’t directly fit into Balancer’s product strategy. But the proposal is still likely to pass based on current vote totals and historical participation in Balancer governance. In addition, Fei is also pursuing a similar partnership plan with Tokemak, which is a protocol for automated liquidity provision that can help direct funds towards the Fei protocol ecosystem tokens.

withtally.com

The initial proposal from the Fei side would deposit 10,000 ETH into Tokemak’s single sided staking pool, with a commitment to deposit a further 6 million TRIBE tokens and potentially also FEI stablecoins into Tokemak if and when pools are created for these assets. While Tokemak hasn’t yet considered any reciprocal actions, Fei’s first steps may make TOKE holders more willing to support collaboration in the future.

With a large treasury of non-native treasury assets, Fei has the financial resources to pursue DAO to DAO partnerships at scale. But it may be difficult to maintain focus while integrating with so many disparate projects, and it remains to be seen how Fei will manage their growing governance powers within external protocols.

Paladin Launches Token with Airdrop to Other Protocols’ Voters

The broad token distribution could help combat stigma around vote renting.

Paladin.vote is a protocol for borrowing and lending token governance powers. It can offer these vote based loans without collateral, as only the voting power is delegated while tokens themselves remain in the protocol’s smart contracts. In this sense, it’s somewhat similar to the trustless bribing mechanisms introduced into the Curve Finance ecosystem. But while Curve and Convex bribes have a high level of community support and are focused on influencing liquidity mining reward allocations, trading in votes is much more controversial in the projects covered by Paladin (Compound, Aave, and Uniswap).

Paladin’s recent PAL token airdrop may help make inroads into these communities. In addition to allocations to active Paladin discord users and protocol depositors, nearly 90% of airdropped funds were granted to COMP, AAVE, UNI, and CRV holders who participated in on chain governance voting in their own protocols. In addition to buying goodwill, this airdrop mechanism also selects for more engaged governance activists and helps filter out sybil accounts (who are less likely to pay the gas fees required for on chain voting).

Paladin also borrowed a mechanism from the Inverse Finance token distribution from the beginning of the year; tokens initially are non-transferable and have no market value, only allowing for participation in Paladin protocol governance. While it is assumed that governance itself will eventually allow for transferability, this gives an opportunity to build up a core base of support and also gauge token holders’ participation. Paladin could even follow Inverse’s lead and revoke tokens from non-active DAO members before the token begins trading.

Paladin.vote Airdrop: Paladin.vote is a protocol that is bringing the vote-bribing properties of Curve Finance to other DeFi DAOs. [Paladin summons its PALs] Paladin announced their airdrop and 1 million $PAL tokens will be set aside for holders of $AAVE, $COMP, $UNI, and $CRV who have voted or created governance proposals. This could have the effect of helping the practice of lending/borrowing voting rights more welcome in these major DAOs. Something to watch, for sure.

If this every happened, it would undoubtedly be a major unlock for DAOs, and crypto in general, as Discord is home to so many crypto communities and organizations. On the other hand, it would be a direct hit to projects like Collab.land that offer related functionality through bots.

  • Governance vote buying mechanisms expand from Curve and Convex protocols to Tokemak:
  • A pool on Rari Capital’s Fuse suffers oracle manipulation attack, showing added user responsibilities and risks of permissionless lending markets:

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