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CryptoEconomic Research

DeFi Protocol Governance Report | January 2022 | Week 2

Aave's Risk Parameter Update Fails, Synthetix is Moving to Optimism, and More!
by Mattison Asher, Laurence SmithJanuary 14, 2022
Governance JAN2022 Week 2
Compund logo


Proposal: Migrate Contributor Streams to Sablier

Passed: Yes

  • 433,551 For
  • 0 Against

What does it do: Transfers all existing contributor streaming payments, which are currently indefinite, over to Sablier for one year terms from the start date.

Why: Sablier allows for an easy streaming payment service for DAOs. Moving to Sablier will allow DAOs to pay their contributors more efficiently.

Takeaway: Compound looks to utilize Sablier as their payments solution.

Proposal: Update cSUSHI cTOKEN Implementation

Created: January 6th, 2022

Passed: No

  • 375,984 Against
  • 0 For

What does it do:

  • Upgrade the Solidity version of the cToken and related contracts to 0.8.6 – all contracts in the repo were changed to 0.8.6 but only the cTokens will be upgraded as part of upcoming governance proposals. This is due to the complexity of having multiple Solidity versions in the same repo.
  • Remove the usage of SafeMath and CarefulMath in favor of Solidity 0.8’s checked math – Solidity will now automatically revert when math errors occur (overflows, division by zero, etc)
  • Remove the custom errorCode return values in favor of reverts and custom errors – this allows for a more structured way to deal with errors rather than enum or string comparisons.

Why: Removes errors in code.

Takeaway: I honestly don’t know why this did not pass or what happened with this proposal.

Proposal: Risk Parameter Updates for ETH

Created: January 10th, 2022

Passed: Not yet, but looking like it will

  • 100,003 For
  • 0 Against

What does it do: Set cETH collateral factor to 82.5%

Why: This proposal is a batch update of risk parameters to align with the Moderate risk level chosen by the Compound community. 

Takeaway: Another routine risk parameter update based on Gauntlet’s modelling.

aave logo


Proposal: Risk Parameter Updates 2021-12-29

Created: January 6th, 2022

Passed: No, failed to meet quorum

  • 114,947.51 For
  • 0 Against

What does it do: Adjusts nine (9) total risk parameters across seven (7) Aave V2 assets including LTV, Liquidation Threshold, and Liquidation Bonus.

Aave 12 29

Why: Gauntelt’s risk model tells the protocols to make these switches.

Takeaway: I would say that Gauntlet is now a critical piece of infrastructure to both Compound and Aave. 

rari capital logo

Rari Capital

Proposal: Whitelist Babylon Finance Multisig as Pool Creator

Created: January 7th, 2022

Passed: Yes

  • 141.58 RGT For
  • 0 Against

What does it do: Whitelists Babylon finance multisg address as a pool creator. Babylon is an asset management protocol run by the community that allows users to create investment clubs (known as gardens) to invest in DeFi as a collective. The governance token behind the project is BABL. 

Why: By whitelisting Babylon finance we will see a BABL fuse pool created, where users can deposit BABL as collateral and borrow from it. In the future, there are plans for further integrations between Babylon & Rari & Fei. 

Takeaway: Babylon finance is now a pool creator and Rari users can begin borrowing and depositing BABL. 

Proposal: Create Local Community

Created: January 10th, 2022

Passed: Not yet

  • 289.09 RGT For
  • 0 Against

What does it do: Creates local communities in (1) Vietnam, (2) India, and (3) Indonesia

Why: Rari is going global. 

Takeaway: As Rari continues it’s impressive growth, we’re seeing the protocol branch out into new geographics, although we’ll be waiting until the end of February for an outcome on this poll. 

Proposal: Whitelist StakeWise as a Fuse Pool Creator

Created: January 13th, 2022

Passed: Not yet

  • 0 RGT For
  • 0 Against

What does it do: Whitelists StakeWise DAO safe as a fuse pool creator, verifies existing pool 149, and gives StakeWise the ability to create new verified pools. StakeWise are a fast-growing liquid Ethereum staking solution that allows users to stake without the traditional hurdles, such as having 32 ETH or the expertise for maintaining staking infrastructure. 

Why: Pool 149 allows for the collateralisation of StakeWise’s staked ETH tokens (sETH2) in order to borrow FEI. In the future, other verified pools will enable yield bearing opportunities for sETH2 holders. Additionally, StakeWise will promote awareness of the FeiRaRi protocol and the use cases of Fuse pools and FEI. 

Takeaway: If whitelisted, this move provides FeiRaRi with a boost to marketing, as well as provide users with new ways to earn yield on their staked assets. 

Synthetix Banner


Proposal SIP-192: Moving Council Dilution to Optimism 

Status: Passed. Vote finalized  on Jan 13, 2022, 6:00 AM EDT


What does it do: Deploys the CouncilDilution.sol contract on OVM, Optimism’s Layer 2 Optimistic Virtual Machine. This will significantly reduce the cost and time for SIP/SCCP proposals to be created and stored to be voted on.

Why: High Gas fees on layer-1 are add a lot of friction to the Spartan Council’s governance. 

The cost has caused proposal creators to either

  1. pay a large amount of ETH for fast confirmation
  2. setting a low gas price and letting the tx sit in pending

Both scenarios led to longer wait times for proposals to be voted on.

Takeaway: Synthetix is migrating to Optimism’s layer-2 for lower gas fees, so this move makes sense.

no protocol updates
  • Uniswap
  • Yearn Finance
  • SushiSwap
  • MakerDAO

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