Weekly Governance Update

Governance Process
2

Week of May 29, 2023

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:hourglass: Key Points

The Compound community has passed three proposals during the past two weeks - Proposals 160, 161, and 162. Voting on Compound Proposal 163 is now live.

In the forum, Gauntlet gave an important update on Compound v3 migration and deliberations continued regarding adding two different Polygon staking tokens - MaticX from Stader and stMatic from Lido - as collateral assets.

:ballot_box: Recent Proposals

  • Gauntlet <> Compound Incentive Optimization (Compound 163)

    • Summary: A proposal to formalize and expand Gauntlet’s existing work with Compound on continuous incentive optimization for Compound’s rewards.As part of the engagement scope, Gauntlet will provide Compound with a quantitative framework to evaluate the success or failure of incentive optimization. Gauntlet will leverage its Incentive Optimization Platform to provide recommendations adjusting incentives across Compound V2 and Comet markets to drive sustainable, efficient growth.The service fee structure is a $300K fixed fee, paid in $COMP tokens, as well as a variable performance fee. This proposal only implements the $300K fixed fee portion. Full proposal and forum discussion
    • Proposer: gauntletgov.eth
    • Status: Voting Now

  • Interest Rate Curve Updates for Ethereum Compound v3 USDC (Compound Proposal 162)

    • Summary: A proposal from Gauntlet to adjust seven Interest Rate Curve parameters. Specifically, this proposal puts forward two solutions - (1) flatline the “Borrow APR” past the borrow kink and (2) adjust the borrow/supply kinks and slopes to incentivize efficient and appealing equilibrium APRs - to solve two identified problems the protocol is facing: (1) stagnant protocol growth/migration amid poor borrower UX and (2) the current negative net protocol profit, i.e. (USDC reserve growth - COMP distributions). The forum post outlining the full details of Compound Proposal 162 can be found here and an explanation of the motivation of the proposal is outlined below in “Forum Highlights.”
    • Proposer: 0x7B3c54e17d618CC94daDFe7671c1e2F50C4Ecc33 (Gauntlet)
    • Status: Passed

  • Risk Parameter Updates for Polygon Compound v3 USDC (5 9 23) (Compound Proposal 161)

    • Summary: A proposal from Gauntlet to adjust the supply cap parameters for three Polygon Compound v3 USDC assets - $WBTC, $WETH, and $MATIC - and increase the $COMP rewards distribution. Compound 161 was meant to “incentivize larger USDC borrowers to join the protocol in its early stages” and to “ensure new USDC borrowers’ collateral supplies won’t be restricted,” after lackluster adoption was observed “despite the appealing positive Net Borrow APR.” According to Gauntlet, with these changes, a quadrupling of the USDC supplied and tripling of the USDC borrowed on Polygon is feasible.
    • Proposer: gauntletgov.eth
    • Status: Passed

  • Initialize cUSDCv3 on Arbitrum (Compound Proposal 160)

:writing_hand: Forum Highlights

  • Gauntlet provided an update on comp.xyz regarding their ongoing work shepherding the Compound v3 migration. They report continued “stagnant growth and migration” to v3 and “hypothesize that the reason … is a combination of inefficient reward allocation relative to the currently unappealing v3 IR curves.” In order to mitigate the risk of losing v2 users that have not yet migrated to v3, Gauntlet has decided to pause migrating rewards to v3 - as originally planned and outlined in their Migration CIP Timeline - and shifted their focus to towards optimizing incentives. As such, Compound Proposal 162, is the next phase in their altered migration plan. Gauntlet noted that after Compound Proposal 162 is passed and implemented, the community “can assess migrating more rewards from v2 to v3 after observing how users respond to the IR curve changes.”
  • Forum user Oiclid has taken over responsibility for the Compound Monthly Report. The March 2023 Report was posted in the comp.xyz forum on May 9th. The report can be viewed here.
  • Stader Labs, a liquid staking provider, posted a proposal on comp.xyz to add MaticX as a collateral asset on Compound. Thus far, reception to the proposal has been positive. MaticX has already been listed on Aave and Balancer, where it has seen success as a collateral type.
  • Discussions continued about the proposal to add another Polygon liquid staking token - stMatic from Lido - as a collateral asset. Respondents in the forum have reacted positively to this proposal as well.

:newspaper: Stakeholder News

  • FranklinDAO (aka Penn Blockchain) announced that they are switching their franklindao.eth delegate profile to a hard wallet: 0xCc878369b26127BD4bC1B0B465bC8bE9b92a4c62. If you are currently delegating to FranklinDAO at 0x070341aA5Ed571f0FB2c4a5641409B1A46b4961b, you have until June 15th to re-delegate your tokens.

Click here to re-delegate your tokens on Boardroom.

:telephone_receiver: Developer Community Call Summary

Compound’s most recent Developer Community Call was on May 3, 2023. Click here to listen to the recording. Here’s what was discussed:

  • Harsha from Compound Grants called attention to the most recent report from the grants program and asked for community feedback on recent proposals.
  • Paul from Gauntlet gave updates on Gauntlet’s work, including its Value at Risk methodology adjustment and its proposal to formalize and expand Gauntlet’s work on incentive management with a one-year contract. (Note: This proposal is now live.)
  • Uma from Succinct gave the community a summary of Succinct’s Telepathy protocol, which leverages zk-proofs to verify Ethereum consensus, and pitched it as a solution for Compound governance messages to deployments on other chains. She highlighted Succinct’s grant proposal to deploy Telepathy to Compound v3 and answered several questions from community members about how it would work.
  • Scott from Compound Labs discussed Compound v3 deployments on other chains, including the launch of Compound on Arbitrum and the plans to launch on Optimism and Base, which are dependent on its Bedrock upgrade. Scott also discussed Compound Proposal 158 and 159.

:date: Upcoming Events

The next Compound Developer Community Call will be on May 31, 2023 at 12pm ET in the Compound Discord.

:crystal_ball: Upcoming Votes

There are no upcoming votes, besides Compound Proposal 163.

Quick Gov Links: Governance Overview | Governance Docs | Compound on Boardroom

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