Wintermute DeFi Governance Digest — November 2023 | Week 4

This week’s proposals include Astroport reviving vxASTRO with vxASTRO 2.0, Prisma Finance distributing revenue to vePRISMA holders, and ApeCoin discussing the deployment of ApeChain using Optimisms OP Stack; along with votes from 1inch to sell ~2.5M ARB to USDC, Uniswap delegating UNI to underrepresented delegates, Cosmos setting the maximum inflation rate to 10%, and Sushi gauging community interest for their new tokenomics proposal.

Proposals

Astroport (ASTRO)

Proposal: Begin implementation of new vxASTRO 2.0 and accompanying tributes protocol

Author: AstroChad_fi

Summary: This proposal requests to revive vxASTRO and implement an updated vxASTRO 2.0.

Key Points:

• When Astroport governance voted to move the Hub to Neutron, the agreement included resurrecting vxASTRO and launching a generalized voting incentives protocol.
• The initial vxASTRO was inspired by Curve’s veCRV model featuring up to a 2-year lock up of xASTRO tokens, boosted voting power (up to 2.5x) and boosted ASTRO emissions when providing liquidity (up to 2.5x).

• However, there was some concern around the prolonged lockup of tokens and the centralization of voting power being granted to a few large holders due to the voting boost.
• To address these concerns, vxASTRO 2.0 was devised which focused on removing boosted emissions and governance power and replaced them with “tributes” via a generalized voting incentives marketplace.

Specifically,

• ASTRO holders can stake ASTRO for xASTRO and optionally lock their xASTRO for non-transferrable vxASTRO.
• vxASTRO holders vote on future ASTRO emission within 2-week epochs.
• xASTRO and vxASTRO have equivalent voting power.
• xASTRO lock-ups are indefinite and can be unstaked at any time with a 2-week unstaking period.
• No boosted LP emissions for vxASTRO holders.
• Emissions voting would take place on Neutron and xASTRO holders can direct emissions across any chain where Astroport has an outpost.
• Furthermore, a voting bribes market will be created that will allow ASTRO stakers to direct incentives to a pool in exchange for a reward.

Our Take: The vxASTRO model is a unique adaptation of Curve’s veCRV that allows for shorter locking periods and governance access without defined lockups. We look forward to seeing its effect on Astroport’s IBC liquidity.

Prisma Finance (PRISMA)

Proposal: Fee Allocation — A Proposal for the Prisma Protocol

Author: Wavey

Summary: This proposal requests to begin streaming protocol revenue to vePRISMA holders and a new Prisma treasury with an 80/20 split, respectively.

Key Points:

• A core part of the veToken model and therefore, Prisma’s vePRISMA is to incentivize users to lock their governance tokens creating long-term alignment with the protocol’s success.
• One important mechanism to incentivize continued token locks from users is to grant them a share of protocol-generated revenue.

• Since its inception, Prisma has collected ~$3.5M in protocol fees and this proposal requests to begin distributing current and future revenue to vePRISMA holders and a new treasury at an 80/20 split, respectively.
• All non-PRISMA fee tokens will be converted to sp-mkUSD (tokenized stability pool deposits) and will be distributed accordingly, including any PRISMA collected.
• Lastly, the ~$3.5M in protocol fees that have already been collected will be streamed over 6 months or more to discourage a large one-time lump sum distribution.

Our Take: As with many other veToken designs, the distribution of protocol fees to vePRISMA holders is essential to incentivize token locking.

ApeCoin (APE)

Proposal: ApeChain on the Superchain

Author: ben-chain (Ben Jones — Co-founder, Optimism Foundation)

Summary: This proposal requests to launch ApeCoin’s ApeChain on Optimism’s Superchain.

Key Points:

• The ApeCoin DAO has had an ongoing discussion regarding potential avenues to continue scaling the brand and ecosystem, prompted by Yuga Labs’ tweet. Which included launching their own ApeChain.
• This proposal requests the ApeCoin DAO to select Optimism’s OP Stack and Superchain architecture as the underlying infrastructure for ApeChain.

• Optimism’s Superchain L2 architecture is fast, affordable and efficient, providing access to the extensive developer community that has contributed vastly to OP’s development.
• The ApeCoin DAO will be enabled to play an active role in Optimism’s governance system, helping direct the future of the Superchain. Where ApeCoin could receive an OP grant to increase its governance voice.
• ApeCoin’s participation within the Superchain would allow the DAO to return transaction fees generated by its users to the community, enabling ApeCoin holders to allocate revenue towards ApeCoin ecosystem growth, DAO maintenance and other initiatives.
• Furthermore, ApeChain would benefit from all public goods funded by Optimism’s RetroPGF.
• Lastly, ApeChain would be required to contribute 2.5% of sequencing revenue or 15% of sequencing profits to the Optimism Collective to allocate to RetroPGF and other ecosystem projects.

Our Take: Optimism’s OP Stack provides an easy and affordable option for projects looking to launch their own L2. ApeCoin would see immediate short-term and long-term benefits from all the public goods developed through Optimism RetroPGF.

Votes

1inch (1INCH)

Proposal: Swap $ARB Tokens to USDC and Bridge to the Ethereum Mainnet

Status: Finished.

Created: Nov 13, 2023.

Ends: Nov 18, 2023.

Leading Consensus: Yes — 11M UP (92.58% of total votes).

Summary: This vote ratifies the selling of ~2.5M ARB tokens from the 1inch DAO to USDC on Arbitrum. The USDC will then be bridged to Ethereum Mainnet and sent to the DAO’s treasury. The funds will be used to grow the 1inch Network and improve the DAO’s financial position.

Uniswap (UNI)

Proposal: Competition of Delegation of UNI to Active but Underrepresented Delegates

Status: Live.

Created: Nov 18, 2023.

Ends: Nov 23, 2023.

Leading Consensus: 404 DAO, Wintermute, PGov, StableLab.

Summary: This proposal seeks to delegate 10M UNI from the DAO’s treasury to underrepresented delegates. The Top 4 candidates will receive up to 2.5M UNI with the remainder of tokens to be delegated equally to candidates outside of the top 4.

Cosmos (ATOM)

Proposal: ATOM Halving: Set the max. Inflation Rate to 10%

Status: Live.

Created: Nov 12, 2023.

Ends: Nov 26, 2023.

Leading Consensus: Yes — 59.1M ATOM (40.4% of total votes).

Summary: This proposal requests to reduce the ATOM inflation rate from ~14% to 10%. This is the first of three proposals to reduce inflation, provide better incentives for staking, and improve the security of the network.

Sushi (SUSHI)

Proposal: Deploy new tokenomics for Sushi [Signal]

Status: Live.

Created: Nov 16, 2023.

Ends: Nov 25, 2023.

Leading Consensus: Nay — 9.8M SUSHI (99.66% of total votes).

Summary: This proposal acts as a community signal regarding Sushi’s newly proposed tokenomics. The tokenomics proposal focuses on establishing a sustainable growth path and long-term strategy towards aligning all stakeholders within the Sushi ecosystem.