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CryptoEconomic Research

DeFi Protocol Governance Report | March 2022 | Week 4

Compound cuts rewards generated by COMP rewards program, Uniswap adds 1bp fee tier to Polygon, and more!
by Laurence SmithMarch 25, 2022
DeFi Protocol Governance Report
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Compound

Proposal: Risk Parameter Updates for ZRX, MKR, and SUSHI

Created: March 19th, 2022

Passed: Yes,
722,387 COMP For
0 COMP Against 

What does it do: Changes the following risk parameters:

  • Set cMKR collateral factor to 65%
  • Set cSUSHI collateral factor to 65%
  • Set cZRX collateral factor to 65%

Why: The changes are a batch update of risk parameters, in accordance with the Moderate Risk level set by the Compound community. 

Takeaway: The risk and market capitalisation of assets on Compound frequently changes. Changing the risk parameters to reflect this is key. 

Proposal: COMP Rewards Adjustments – Kickstart Rewards: Step One

Created: March 18th, 2022

Passed: Yes
883,476 COMP For
87,585 COMP Against 

What does it do: Cuts the rewards generated by the existing rewards program by 50%. 

Why: The current rewards program has served its purposes – it acted as an effective way to kickstart Compound and reward early users. Now, it is being used for farming COMP and it is diluting users’ share of the protocol without delivering value. 

Takeaway: The COMP rewards program may be going away but it is being replaced by the kickstart rewards program, which will look to kickstart new markets. 

Screenshot 2022 03 18 at 19 08 53

Uniswap

Proposal: Temp Check – Should Uniswap add the 1bp fee tier to Polygon?

Created: March 18th, 2022

Passed: Yes,
7M UNI For
46 UNI Against 

What does it do: Uniswap are adding a 1bp fee tier to Polygon. 

Why: As a part of the pilot of cross-chain governance we are implementing a 1bp fee tier on Polygon. 1bp pools on Ethereum have been very successful and have resulted in a significant increase in Uniswap’s market share since being approved in November 2021. 

Takeaway: Uniswap currenlty has four deployments (Ethereum, Arbitrum, Optimism, and Polygon). The move will look to capture increased revenue and market share for Uniswap and we expect similar to be applied to other deployments soon. 

Proposal: Temperature Check – Should Uniswap v3 be deployed to Gnosis Chain?

Created: March 22nd, 2022

Passed: Not yet but looking likely,
7M UNI For
46 UNI Against 

What does it do: If passed it will deploy Uniswap V3 to the Gnosis Chain (GC). 

Why: Three key benefits are highlighted:

1. DeFi ecosystem with a big potential for growth – Perpetual Protocol is a flagship protocol on the GC and it relies on Uniswap V3. By deploying Uniswap V3 to the GC it will provide growth opportunities for Perpetual protocol to contineu to grow. Many other DeFi projects are also choosing GC as their homebase – a full lisst of which can be found here
2. Allows for Uniswap to experiment with new functionality in a real-value environment – Uniswap can try out new functionality and front-run new features in a real-value environmen. This allows for the identification and remediation of any potential issues caused by important Ethereum updates, prior to mainnet activation. 
3. Close compatability with Ethereum –  GC support many tools, projects, resources, and protocols supported by Ethereum and more are being regularly onboarded. 

Takeaway: Voting ends today, so it’s fairly certain that Uniswap will be deployed on the Gnosis Chain.

Screenshot 2022 03 18 at 19 13 37
  • Aave
  • MakerDAO
  • Rari Capital
  • SushiSwap

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