The Weekly Yax #16: DAO Governance

  • Olympus DAO and Frax Finance collaborated to mutually increase the liquidity and demand for their respective products
  • Badger DAO decided to claim + stake CVX and cvxCRV, rather than sell them, for its new Convex Finance vaults. Badger believes this approach is more mutually beneficial both for themselves and Convex. An approach similar to this was discussed in Week 15’s Ya Herd?.
  • Olympus DAO voted to deploy some of its treasury funds into Convex Finance and maintain a CVX position, setting up a “meta governance” scenario, as we also discussed in Week 15’s Ya Herd?.
  • Sushi’s raise, which prompted community concerns that VCs were simply attempting to give themselves a 30% discount, as opposed to the original intent of treasury diversification.
  • Uniswap’s funding of an opaque DeFi Education Fund, resurfacing concerns over the robustness of Uniswap’s governance.
  • Direct Voting, whose process usually involves a proposal > review period > voting period (usually with some type of quorum, in which 1 token = 1 vote)  timelock deployment if the vote passes.
  • Representative Democracy, which involves tokenholders electing members of a committee that vote on protocol changes on their behalf. These elected members are usually prominent and knowledgeable members of the project’s community. Synthetix’s Spartan Council provides an example of this model.
  • Consensus Governance, which is grounded in the Rule of Non-Opposition, such that the decision to proceed with any changes is based on the prevalence of “no” votes. Keeper DAO provides an example of this model.
  • Starting with governance rather centralized and gradually turning over more power to the community.
  • Initiating project changes with a discussion in forum-like environment > community approval > forum proposal > some method to determine consensus (three outlined above) > execution upon consensus.
  • Implementing a timelock before project changes are implemented.
  • Incentivizing quality contributions from community members to decentralize the project’s contributor base.
  • More centralized = quicker-moving and avoids governance apathy issues, but less secure and more fragile.
  • More decentralized = slower-moving, but more secure with greater antifragility, reliability, and longevity.
  • How and when to make the shift to greater decentralization is something with which every project must wrestle. Most projects tend to wait until they are in a “stable” state with an established Lindy before handing over greater control to the community. For instance, Compound Finance waited a year from its last major code changes to cap off its multi-year process to decentralize.
  • More decentralized = issues with management of core contributors to implement changes approved by governance.
  • Some leadership structure within a project still appears needed to facilitate coordination, but this leadership’s power over the project should be limited.
  • yAxis’s weighted voting formula to helps mitigate the impact of one individual actor.
  • YIP-09 allocated funding for the project’s current operations and emission schedule.
  • One funding component is the Champions Programme & Bounty Board, which incentivizes community contribution and helps decentralize the yAxis’s contributor base to foster agility and resiliency.
  • yAxis governance votes on strategies and major project changes.
  • yAxis governance develops Forum suggestions, proposals, and discussions, such as the recent Era 2 Emissions Discussion.
  • Gauges in v3 will enable YAXIS stakers to vote to direct emissions to their desired vaults.
  • DAO-directed fund management with on-chain voting enabled by automation through the planned integration of Chainlink’s Keepers.
  • Approving new asset support.
  • Dictating an insurance event.
  • Staying up on recent developments in the DeFi ecosystem empowers community members to generate well-informed suggestions that help yAxis stay nimble and flexible.
  • Creating yAxis Forum discussion posts with suggestions and/or adding to other existing discussions. A potential discussion topic could be detailing and vetting a potential new yield strategy.
  • Fostering partnerships with other communities by making governance discussion posts about partnering with yAxis and using our upcoming v3 product launch.
  • MetaVault TVL $5.2 million.
  • YAXIS staking 76% APY (57% APR) and LP 53% APY (44% APR).
  • Nearly 430 YAXIS bought back with MetaVault revenue this week for distribution in The Great Harvest.
  • Over 80% of the YAXIS supply has been continuously staked for more than two weeks for the first time in project history.

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