DAOs: ENS establishes mega-delegate to counter governance attacks, Wormhole, Tally & ScopeLift announce ‘MultiGov’, SushiSwap governance continues deterioration, Nouns proposes fungible token to boost participation, Uniswap faces SEC scrutiny, and more!

Paradigm

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Paradigm

17 min readApr 19, 2024

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Biweekly report on decentralized autonomous organizations vol.47, 1st April — 19th April

TL;DR

Multichain governance system announced by Wormhole, Tally, and ScopeLift
Uniswap community elects a treasury working group. The DAO is under SEC scrutiny
SushiSwap governance experiences ongoing deterioration
Aave to select second risk service provider from finalists
ENS establishes mega-delegate to counter governance attacks. The Enable Self-Funding for the Endowment proposal suggests a change to allow the Endowment to finance itself
Gitcoin introduces GG20 Project Charter, revitalizing Gitcoin Grants in 3 phases. The Climate Coordination Network: Funding Proposal passes
Maker 3 Ratification Polls are active till Apr 23. DeFi Drama at Maker
Lido’s Renew GateSeal for the Withdrawal Queue and Validator Exit Bus Oracle approved. Dual Governance proposal is active
Gnosis GIPs 95–97 pass, GIP-98 is active
Compound’s proposals 237–239 pass
Decentraland considers a strategic framework
ApeCoin’s Voter Discovery and Coalitions in ApeCoin DAO proposal seeks to enhance DAO’s governance by using data and analysis from DeepDAO
Nouns proposes fungible token for increased participation. The Spec and Economic Audit of Alternate Forking Mechanics proposal outlines a research project by Cryptecon
Arbitrum DAO elects a trusted council to protect chain in case of emergency. The STIP Bridge proposal seeks to sustain and enhance Arbitrum’s position in the Layer 2 market
Frax’s Singularity Roadmap outlines a comprehensive vision
European Students Blockchain Coalition (ESBC) adopts the Open Campus Protocol
Safe’s Unpause SAFE Token Contract proposal aims to enable the token transferability of the SAFE token
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

Top DAOs

The rating is headed by Arbitrum and Optimism.

Read & Listen

Read on DAOs

Left-Curving DAOs, by LGHT
Next Gen DAOs, by John Palmer
DAOs Beware: Neo-Imperialism Is on the Rise in Crypto-Land, by Martin Schmidt
Two workable mechanics for decentralized governance, from Rune Christensen
Improve Advanced Delegation Voting (Optimism), from Agora
Adding Anonymous Voting Option to Maker Polls, from Open Sky
Aave v3.1 and Aave Origin, from BGD Labs
Should Gnosis Guild steward GnosisDAO Governance? from Gnosis Guild
The Impact of Governance Proposals on Token Valuation, by Kenechukwu Eze
New Hampshire Has a Better Approach to DAOs, by Keith Ammon and Bill Ardinger
What Else Could Memecoins Be? by Vitalik Buterin
Data DAOs: The Path Towards a User-Owned Internet, by Anna Kazlauskas
Supporting the DeFi Education Fund (Uniswap forum discussion)
Elect a Mayor to Save the DAO (BanklessDAO forum discussion)
Addressing immediate gaps in DAO governance (Gitcoin forum discussion)

Listen

“We Plan to Win” — Hayden Adams on Uniswap vs. the SEC, on Bankless
Governance Solution Providers & DAO Marketing w/ Juan from StableLab, on DAO Talk
Karma Gap with Mahesh Murthy, on Green Pill
The MakerDAO-Aave Debacle, on 0xResearch
Ronin: The Frontier of Web3 Gaming w/ Jihoz, on StablePod
The Dawn of the DeFi Civil War — Ethena, SBF, Blast, & More, on The Chopping Block
The Real Reason Why the SEC Might Be Going After Ethereum, on Unchained

Governance

Aave

Onboard New Risk Service Provider: The Aave Chan Initiative proposes to select a new Risk Service Provider for Aave DAO from three contenders — LlamaRisk, OpenBlock, and Allez Labs — each of which has passed preliminary evaluations. The selection process involves a ranked voting ARFC snapshot, allowing governance members to express their preferences among the three candidates. The winning proposal from this snapshot will progress to an AIP vote for final approval as the second Risk Service Provider alongside Chaos Labs.

Active proposals

Closed proposals

Discussions

Latest governance topics on governance forum.

Compound

Closed proposals

Discussions

Latest governance topics on governance forum.

Gitcoin

DAO Digest #5 2024

Shoutout to @gaoa97 @rohit @quaylawn for coordinating this Digest! 🔥 Hot Topics 📢 Get ready for Gitcoin Grants Round…

gov.gitcoin.co

Closed Proposals

Discussions

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

Gnosis

Active proposals

GIP-98: Should GnosisDAO invest in HOPR to kickstart development of GnosisVPN?

Closed proposals

Discussions

Find out the latest GnosisDAO proposals here.

Lido

Recent blog posts

Lido Monthly Report: March 2024

Active proposals

Dual Governance: design and path towards implementation

Closed proposals

Discussions

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

MakerDAO

DeFi drama at MakerDAO & Aave, among others: After MakerDAO incorporated Ethena’s USDe, a “synthetic dollar,” into its collateral pool — and then proposed substantially increasing its lending capacity in a move to bolster DAI usage — other DeFi entities expressed concerns, leading some to reconsider DAI’s collateral status on their platforms. Critics, citing risk management issues with MakerDAO’s new strategy, say these moves are to prevent potential contagion within the DeFi lending sector. In Aave, for example, there’s a proposal to adjust the risk parameters for DAI by setting its Loan-to-Value ratio to 0% across all versions and networks. Meanwhile, some defend MakerDAO’s decision by pointing out the multiple backstops designed to safeguard DAI’s stability.

Active Polls

3 Polls — ending Apr 23

Executive

Increase GSM Pause Delay, Increase Spark MetaMorpho Vault Maximum Debt Ceiling, Add Native Vaults to Debt Ceiling Breaker, SparkLend Proxy Spell, and TACO Resolutions [executed]

Discussions

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

Uniswap

Recent blog posts and news

Uniswap under SEC scrutiny: Uniswap Labs on April 10th received a Wells notice from the SEC, indicating potential legal action. In a blog post, however, the company expressed their commitment to continuing operations and product development. The company argues that, despite the SEC’s position that tokens are securities, most tokens (like those traded on Uniswap) are not inherently securities but rather digital files capable of storing various types of value, and thus should not be treated as such by regulators. They emphasize that the vast majority of tokens, such as stablecoins and commodities like Ethereum and Bitcoin, are not securities and that tokens on secondary markets like Uniswap do not constitute investment contracts. Precisely how UNI — Uniswap’s governance token, which was launched in 2020 — will be viewed by the SEC is as yet unclear. As UNI is integral to the Uniswap DAO, which was established to give the community decentralized control over many aspects of the development of the protocol, the outcomes of the forthcoming case could have major implications for governance participants.

Treasury Working Group (UTWG) Election: The Uniswap DAO has passed a temperature check to establish the Uniswap Treasury Working Group (UTWG), which is tasked with researching best practices for managing the treasury. The UTWG, consisting of four members to be elected through this proposal and two pre-selected ones, will explore historical treasury management strategies and interview experts, concluding their eight-week research period by publishing findings and recommendations for the DAO. The group’s objective is not to manage the treasury directly but to develop informed proposals that could include initiating a treasury manager RFP process, with subsequent steps requiring further alignment with the DAO’s legal structure. Voting ends on April 20th.

Closed proposals

Discussions

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

Upcoming Events

Apr 20–21: Arts DAO Fest 2.0, Dubai
Apr 20–21: Blockchain Universe Summit, Dubai
May 15–16: Conf3rence, Dortmund
May 27–30: BlockSplit, Split, Croatia
May 29–31: Consensus, Austin

MISC

ENS has established a mega-delegate, known as veto.ensdao.eth, which swiftly accumulated over 3.8 million delegated tokens within the ENS DAO. This move aims to thwart potential governance attacks rather than initiate them. Operated via a specialized contract, this account limits voting to “no” by trusted DAO members committed to using this authority solely to veto proposals that endanger the DAO’s integrity or violate the ENS constitution. This strategic approach seeks to fortify defenses against governance threats, with plans for an official “vetoer” role and broader enhancements in delegation and token distribution under consideration for the future.

The ENS: Enable Self-Funding for the Endowment advocates for empowering the Endowment to self-finance. It proposes granting Metagov stewards the ability to withdraw up to 30 ETH monthly for operational expenses, particularly for payments to service providers Karpatkey and Steakhouse. This initiative aims to streamline financial processes by providing a direct allowance for these expenses, eliminating the need for continual funding requests to the DAO. Moreover, it includes a provision to reimburse the Metagov Safe with 43.54 ETH in service fees already paid for January and February 2024, thereby applying this financial autonomy retroactively. Voting concluded on April 10th with over 90% in favor.

Nouns: Spec and Economic Audit of Alternate Forking Mechanics (incl % Exit): This proposal outlines a research project by Cryptecon to develop alternative exit strategies for NFTs within the Nouns DAO ecosystem, aiming to address arbitrage that overshadows genuine demand. The project aims to specify and analyze exit schemes that incorporate unique factors of NFTs and minimize arbitrage opportunities, focusing on creating equitable valuation mechanisms. Spanning nine weeks with a budget of $48,000 and one Noun, the project involves economic modeling, game theory, and agent-based simulations to evaluate different exit strategies’ impact on auction engagement and ecosystem value. Voting begins on April 12th.

Is it time for $nouns? The Nouns Verbs Team is proposing the creation of a fungible token, $nouns, to facilitate broader, more affordable access to Nouns ownership, aligning to expand the Nouns brand. This token will enable holders of a Noun NFT to convert it into one million $nouns tokens, which can then be redeemed for a Noun NFT using the same amount of tokens. The proposed token, to be governed by the DAO, will integrate standard ERC-20 functionalities and an upgradable contract framework, allowing for future enhancements and governance decisions by the DAO, including adjustments to token governance and potential changes in the redemption process.

SushiSwap governance faces continued deterioration as highlighted in recent articles from The Defiant and Decrypt, among others. A contentious proposal named “Evolving Sushi — Burū no Shinka,” put forth by Sushi’s Operations Team, has sparked renewed anger within the community. The proposal aims to transfer substantial treasury assets (exceeding $45 million) from the DAO to the centralized Sushi Labs team. Proponents argue that this move would streamline operations, accelerating protocol development and tackling bureaucratic hurdles. However, critics like Naim Boubziz, a former Sushi developer, condemn the proposal as a “hostile takeover.” Boubziz alleges that the Ops Team bolstered their influence through short-term liquidity tactics to sway the upcoming vote, sidelining the DAO and manipulating voting power. The broader Sushi community, represented by groups such as SushiCitizens and individuals like Mountain Goat, largely opposes the proposal, viewing it as a power grab that undermines the decentralized and community-driven essence of Sushi’s governance.

Wormhole, Tally, and ScopeLift announce a groundbreaking multichain governance system named MultiGov. This collaborative effort introduces a multichain governance framework for DAOs operating on Solana, Ethereum mainnet, and EVM-compatible L2s. Wormhole DAO serves as the pioneering adopter of this governance model. The system employs a hub-and-spoke model, enabling active, accessible, and decentralized participation for token holders across different chains. Proposals and votes can be generated and aggregated seamlessly across supported chains, aiming to enhance DAO governance by fostering flexibility and inclusivity. MultiGov addresses the limitations of single-chain governance systems and the escalating participation costs observed on networks like Ethereum.

Arbitrum: Double-Down on STIP Successes (STIP-Bridge): The STIP Bridge proposal aims to solidify and bolster Arbitrum’s position in the Layer 2 market by providing targeted incentives to key protocols. This initiative seeks to sustain these protocols and prevent their migration to rival networks by offering interim support until the launch of the Perpetual Incentives Program. Eligible protocols can seek bridge grants, capped according to their previous funding under STIP, to continue their development on Arbitrum while ensuring user retention and project momentum. Voting for this proposal commences on April 19th.

Arbitrum Proposal to Decrease Oracle Keeper Rewards from 1 to .25 HAI: This proposal advocates for decreasing the reward for Oracle Job keepers from 1 to 0.25 HAI. With the recent Dencun upgrade and the introduction of blobs, L2 fees have notably decreased. Consequently, this proposal suggests adjusting the HAI reward for incentivized calls to update oracles to reflect the reduced cost of making them.

Decentraland: DAO Strategic Framework: This proposal introduces a Strategic Framework for Decentraland DAO to guide the organization’s long-term goals and decision-making processes as it grows and faces increasing complexities. It details a structured annual and quarterly process for setting and reviewing goals, aligning actions, and updating key performance indicators to maintain responsiveness to the community’s needs. This framework would undergo a test period from July to August 2024 before full implementation in January 2025. Voting on the proposal ends on April 29th.

ApeCoin: Voter Discovery and Coalitions in ApeCoin DAO: This proposal seeks to enhance ApeCoin DAO’s governance by using aggregated data and analysis from DeepDAO to identify barriers to voting, enabling tailored onboarding incentives and programs to increase quality participation and engagement within the community. The initiative aims to optimize governance processes, attract skilled contributors, and protect against governance attacks by analyzing the DAO’s voter interests, voting patterns, and internal power coalitions. The proposal requests $25,000 in funding to strengthen the DAO’s long-term health through informed decision-making and targeted community outreach.

Frax: Singularity Roadmap Part 1: The Frax Singularity Roadmap, presented by Sam Kazemian and various contributors, outlines a comprehensive vision for integrating all aspects of Frax into a unified ecosystem, with Fraxtal being a pivotal achievement towards achieving a 100% collateralization ratio. This roadmap introduces the concept of Fraxtal as an operating system for the Frax ecosystem, aiming to create a digital nation, Frax Nation, complete with its own culture and digital space, and outlines the launch of Level 3 sub-communities within the Frax Network State. It emphasizes strategic resource allocation towards game-changing products and native Frax Assets, aiming for a $100B+ total value locked by the end of 2026 and establishing Frax as a full-stack protocol that innovates beyond traditional Layer 2 offerings to enhance the developer and user experience on Ethereum.

Open Campus: European Students Blockchain Coalition adopting the Open Campus Protocol: The European Students Blockchain Coalition (ESBC) is seeking a $15,000 grant to support its aim of enhancing blockchain education, innovation, and collaboration among students across Europe and beyond. Through fostering global connectivity, facilitating access to web3 events, and serving as a knowledge hub, ESBC intends to bridge the academic-industry gap and cultivate a comprehensive ecosystem for blockchain engagement among students. The budget will be allocated towards operational costs, educational initiatives, and partnerships, including setting up a legal entity, hosting webinars, and marketing efforts to expand the coalition’s reach and impact. Voting ended on April 10th.

Safe: Unpause SAFE Token Contract (Enabling Transferability): The proposal, initiated by a collective of stakeholders from various organizations, aims to enable the transferability of the SAFE token by calling the unpause function on the token contract, using the SafeSnap module, with unvested tokens remaining non-transferable. This action follows the completion of all predefined milestones agreed upon by SafeDAO governance, setting the earliest date for token transferability as April 23, 2024, post-voting. The proposal outlines a transition into a new phase for SafeDAO, increasing market engagement and utility of the SAFE token, while emphasizing the impact on governance participation and ecosystem growth. Voting ended on April 14th.

DAO governance challenges — and proposed solutions: There’s been quite a bit of conversation on the subjects of DAO governance and structure recently. To begin with, Scott Fitsimones, the leader of CityDAO, has decided to step back from his leadership role due to the challenges of finding consensus on the DAO’s direction and realizing his vision for the project. CityDAO might wind down as a result. At BanklessDAO there’s a revised proposal to restructure that aims to evolve the DAO with a focus on transparency and inclusivity. The plan outlines a two-phase process starting with discovering what is important to DAO members through DAO-wide retrospectives, discussions within guilds/departments, and possibly in-depth interviews. Meanwhile, a proposal at ENS aims to address voter apathy and increase decentralization by introducing “ENS matching” and “inertial delegated voting power.” At Paladin there’s a proposal to transition the governance model to an optimistic council structure to enhance efficiency, specialization, and responsiveness, while maintaining accountability and stakeholder sovereignty. And finally, Aribtrum is considering creating an Operation Company to enhance the DAO’s ability to navigate operational challenges, drive ecosystem growth, and foster innovation. The “OpCo” would be tasked with hiring full-time contributors, improving operational efficiency, fostering ecosystem growth through collaborations and grants, and pursuing strategic partnerships, all under the guidance of an elected board.

It’s DAO service provider season: Service providers have been putting themselves forward to DAOs in numbers, likely due to the combination of factors — the bull (?) market, the beginning of Q2, and project timelines among them. Here are a few such instances: Karpatkey is looking to become the SafeDAO treasury manager. Karpatkey is also looking to extend their services with the GnosisDAO, while Gnosis itself considers setting up a legal conduit to onboard Centrifuge Prime. The Euler DAO is voting on whether to renew the contract for services with Euler Labs. LlamaRisk has proposed to become an Aave risk management service provider, stepping in after Gauntlet’s departure. And finally, Bored Ghosts Developing (BGD) successfully put a proposal forward to Aave to continue funding for Phase 3 of their development services.