Wintermute DeFi Governance Digest January 2024 | Week 3

Published in

Wintermute

4 min readJan 17, 2024

This week’s proposals include Cosmos adding Noble as a Consumer Chain, and dYdX receiving two DYDX liquid staking products; along with votes from Arbitrum to fund a pilot for a long-term incentive program, Uniswap lowering the on-chain proposal threshold, and Osmosis adding Noble USDC as a transaction fee token.

Proposals

Cosmos (ATOM)

Proposal: Signaling Proposal: Approval to Onboard Noble as a Consumer Chain to the Cosmos Hub

Author: Tricky

Summary: This proposal requests to onboard Noble as a Consumer Chain.

Key Points:

One of the largest hurdles new Cosmos chains face is bootstrapping a network with a decentralized validator set and valuable staking token. Without such properties, new chains face potential economic and governance attacks to their chain.
As a result, the Atom Economic Zone was established to help support new chain developments, by allowing them to leverage existing ATOM validators and therefore, inherit the security of the ATOM network.

In exchange, 25% of the new chain’s (a.k.a Consumer Chain) transaction fees are paid to ATOM validators helping secure their chain.
Noble is the premier asset issuance chain within the Cosmos ecosystem and stands as the primary issuer of native USDC for Cosmos/IBC with plans to expand its asset offerings.
This proposal requests to onboard Noble as a Consumer Chain to the Cosmos Hub, allowing Noble to leverage the security of the ATOM network.
If approved, ATOM validators supporting the Noble Consumer Chain will begin earning fees from the network’s activity.

Our Take: This is a great opportunity for both the Noble Team and Cosmos Validators. As one of the premier issuers of USDC on Cosmos, we expect Cosmos Validators to support Noble’s addition as a Consumer Chain to begin earning USDC fees.

dYdX (DYDX)

Proposal: DYDX Liquid Staking by pStake & Stride

Author: pStake & Stride

Summary: Both pStake & Stride have put forward their intention to launch a liquid staking version of DYDX.

Key Points:

Currently, users can stake their DYDX natively and earn USDC from trading fees. However, native staking requires a 30-day unbonding period during which DYDX cannot be used or transferred.
Both pStake and Stride have announced the upcoming launch of their support for liquid-staked DYDX.

Both models will aim to improve the decentralization of the dYdX Chain by supporting validators with smaller voting power as currently 2 validators control more than 33% of the total voting power on the network.
Interestingly, pStake has proposed to introduce a Dual Governance Mechanism which will allow stkDYDX holders to veto any on-chain decisions made by PSTAKE holders if they deem it to be detrimental to the dYdX Chain.
Both pStake and Stride will have auto-compounding mechanisms that will take USDC rewards every epoch, sell them for DYDX, and restake them on behalf of the user.
Lastly, Stride has also hinted at a potential airdrop to stDYDX holders in the future and a novel auction module to allow rewards to be compounded without going through Osmosis.

Our Take: DYDX provides one of the most unique liquid staking landscapes given all rewards are purely USDC. Multiple liquid staking protocols will be a great win for both the issuer and DYDX holders.

Votes

Arbitrum (ARB)

Proposal: Long-Term Incentives Pilot Program

Status: Live.

Created: Jan 10, 2024.

Ends: Jan 17, 2024.

Leading Consensus: Fund program with 45,815,000 ARB — 103M ARB (57.49% of total votes).

Summary: This proposal will act as a pilot for a long-term incentive program on Arbitrum. The pilot introduces a lot of changes to account for pitfalls from the most recent Short Term Incentive Program; namely, an initial grant screening by a council to reduce governance fatigue, applicant advisors to provide feedback, and more flexibility in reward distribution. The budget ranges from ~25.8M ARB to ~45.8M ARB.

Uniswap (UNI)

Proposal: [Temperature Check] Lower Onchain Proposal Threshold

Status: Finished.

Created: Jan 9, 2024.

Ends: Jan 14, 2024.

Leading Consensus: Lower PT from 2.5M UNI to 1M UNI — 21M UNI (100% of total votes).

Summary: This proposal requests to lower the proposal threshold from 2.5M UNI to 1M UNI for on-chain Uniswap votes. This will increase the number of delegates capable of submitting on-chain proposals, therefore, increasing delegate engagement as a lot of accounts with enough proposal power have remained inactive for a long time.