The Governance Burrow and the dYdX Foundation are excited to bring you the mid-Epoch 13 governance report! This report provides a summary of all governance-related discussions, dYdX Request for Comments (“DRC”), and proposals discussed so far in Epoch 13.
Epoch 12 Review
On August 8, dYdX Foundation hosted a discussion on Discord regarding general updates, current governance proposals, and an Epoch 12 review. The dYdX Foundation also summarized highlights for Epoch 12 in a deck and video.
dYdX - Epoch 13 Mid-Epoch Governance Report
Reversion of the Trading Rewards formula change
On August 15, the dYdX Foundation reverted the formula change to the trading rewards formula with feedback from the community. Many dYdX community members expressed that the formula change was unjust because it took place in the middle of Epoch 13, there was insufficient notice and inconsistent information. The trading rewards formula has been reverted.
This follows the submission of an off-chain DIP posted by SLN Capital to formalize the simplification of the trading rewards formula to trading rewards = proportion of total fees paid (w=f) post the snapshot vote. This change will only be effective at the start of Epoch 14, which starts on August 30, 2022 at 15:00 UTC.
A Further Step Towards More Equitable LP Rewards
Change the weights for non BTC/ETH markets to v = 0.6, d = 0.35, and s = 0.05.
Change the weights for BTC/ETH markets to v= 0.8, d = 0.15, s = 0.05.
Reducing the rewards paid for BTC/ETH to 10%/10% rather than 20%/20%, which gives 80% of rewards to the other markets.
The poll ended on August 15 and there was almost unanimous support from the community, where 23M $DYDX (505 voters) voted “Yes” to revise the formula, against 12K $DYDX (40 voters) which voted “No”.
Since this fulfills the minimum requirements for binding snapshot votes, the next steps are for a dYdX community member to formalize the change with an off-chain DIP. The formula revision will likely be effective at the start of Epoch 15, which starts on September 27th, at 15:00 UTC.
dYdX Request for Comments (“DRC”)
DRC: Move the dYdX Borrower Pool to TrueFi
Each Automated Line of Credit (“ALOC”) is a lending pool for a single borrower, where the interest rate paid by borrowers is determined by a configurable interest rate curve. For lenders, ALOCs deliver higher utilization and improved liquidity. Lenders can withdraw idle funds at any time and re-allocate them to the best-performing MMs. Lenders generate returns from interest paid by market makers in USDC, along with $DYDX token emissions.
Here are the potential benefits of this proposal:
Higher utilization of funds and improved liquidity.
Use $DYDX token emissions to allocate capital to the most productive market makers.
TrueFi also participated in an AMA where they clarified the nuances of their proposal, and answered questions from the community. The key takeaways from the AMA are documented in this blog post.
DRC: Hedgie Community Treasury (Multichain Gnosis Safe Implementation)
On July 27, Alucard.eth posted a DRC with support from members of the Hedgies community to establish a community owned treasury. This treasury fund will be utilized for initiatives which promote the hedgie ecosystem. Initiatives include NFT & merch giveaways, event incentives, and promotions of the hedgie community in the wider web3 ecosystem and emerging metaverses. The scope of this proposal is limited to just the creation of this community treasury and does not explore the methods in which the treasury could be funded.
The vote on commonwealth for the proposal passed with most of the community voting to move forward with the proposed implementation. The proposal has been implemented with multi-sigs created using Gnosis Safe on Ethereum, Polygon, Optimism and Arbitrum.
Every multi-sig is controlled by a 4/7 majority consisting of the following 7 Hedgie community members:
Active Discussions and Announcements
Grants v1.5 Fund Mismanagement & Deficit Costs
On 19 August, Alucard posted a thread on Commonwealth prompting discussion on Reverie’s management of the funds for dYdX Grants (DGP) v1.5.
Several dYdX community members complained that Reverie should have diversified funds sooner. See more in the thread here.
Meet the Delegates Series Ep 2
The new “Meet the Delegates'' series by the governance ambassadors helps the dYdX community to get to know their delegates! Following up on the first episode featuring Alucard and AX07, we have Moe_L for this episode, who is an Endorsed Delegate for the dYdX community. See more details on Moe_L on this tweet thread and on this blog post!
The Analytics Burrow has built a native analytics dashboard, https://www.dydxstats.com/, to unify dYdX data into a powerful and user-friendly website.
dYdX Stats holistically captures data from the entire ecosystem and curates it in a way that benefits all stakeholders. dYdX Stats introduces a best-in-class dashboard setup which will be directly integrated into the dYdX online presence, benefiting traders, investors, and broader community members alike. See the discussion here.
Weekly Governance Metrics Update
On a weekly basis, the dYdX Foundation will start sharing metrics around:
Trading and token metrics,
Both the safety and liquidity module, as well as
Voting metrics for both off-chain snapshots and on-chain DIPs.
See the weekly updates here. The dYdX Foundation welcomes the community to provide feedback on what other areas would be worth analyzing and surfacing!
Governance Burrow Venomics Research
The governance burrow is starting a governance research series to create a discussion that will help educate the community more broadly.
Part 1 - The series begins with a deep dive into VeNomics and its utility.
Part 2 - Part 2 covers vemodel pioneers: CRV (a time-weighted voting and value accrual mechanism that stabilizes the price of assets used in defi such as stablecoins and synthetic wrapped assets), FRAX (fractional-algorithmic stablecoin protocol) and their utility.
Part 3 - Part 3 covers an overview of Perp v2 as an iteration of the vemodel with commentary from the Ambassadors. The vePERP (vote-escrow model) is where vePERP is used to vote and a multiplier is received on PERP locked in the Locking Vault.
Part 4 - Part 4 covers Maple Finance to compare an alternative model (xModel) to VeNomics. Additionally governance colloborated with the risk analysis burrow to understand the trade offs in using the vemodel.
As we advance towards dYdX V4 - The dYdX Chain, the dYdX community will have a larger role in the development of the dYdX ecosystem and increasing the utility of $DYDX. So far, we are excited by the level of governance participation. The proposals and dYdX Request for Comments (“DRCs”) featured in this governance report demonstrate that the dYdX community is aligned with the long term success of the dYdX protocol.