Research Summary
The report discusses the governance actions and implications of Arbitrum’s Short Term Incentive Program (STIP) Round 2 Working Group, dYdX’s locked staking and fee restructuring, and other governance actions from various cryptocurrency projects. It also provides an analysis of the potential impact of these actions on the respective projects.
Key Takeaways
Arbitrum’s STIP Round 2 Working Group
- Creation of a New Working Group: Following the successful allocation of 21.4 million ARB to 26 projects building on Arbitrum, a new working group is proposed for STIP Round 2. The group aims to improve the results of STIP Round 1 by optimizing allocation guidelines and reducing the workload for delegates.
- Increased Chances for Round 2: The establishment of a more structured framework increases the likelihood of STIP Round 2 taking place. Prominent applicants for this round include Y2K Finance and Ondo Finance.
dYdX Locked Staking
- Changes to Fee Structure and Staking Incentives: dYdX v4 includes changes to the protocol’s fee structure and staking incentives. Transaction and trading fees will now be fully distributed to validators and stakers instead of being collected by the protocol.
- Impact of Locked Staking: Enabling locked staking increases the stakeable supply and dilutes fees. If the locked investors component is included, the stakeable supply would increase to 536 million dYdX, which places effective dilution of fees at approximately 36%.
dYdX v4 Trading Fee Restructuring
- Proposal for New Fee Restructuring: CipherLabs, an Endorsed Delegate for dYdX, has proposed a new fee restructuring for dYdX v4 to encourage high volume and user base growth. The proposal aims to reduce the thresholds, increase maker fees at lower volumes, and reduce taker fees.
- Implications of Fee Restructuring: The proposed fee structure, similar to v3, will enable dYdX to maintain current fee levels. This should result in maintaining volumes despite v3 transaction and LP rewards stopping in early 2024.
Other Governance Actions
- Capital Deployment and Protocol Changes: The report also discusses various other governance actions from different projects, including 1inch, Apecoin, dYdX, GMX, Redacted, Yearn, Aave, Astroport, Atom, and Optimism. These actions involve proposals for capital deployment, protocol changes, and tokenomic changes.
- Other Proposals: Other proposals include Arbitrum’s proposal for a new native experimental incentive system for active DAO delegates and Ethereum’s discussion on combining EIP-2938 and ERC-4337 to implement Native Account Abstraction.
Actionable Insights
- Monitor Arbitrum’s STIP Round 2: Stakeholders should keep an eye on the developments of Arbitrum’s STIP Round 2 Working Group and the list of applicants in the Arbitrum forums.
- Understand the Implications of dYdX’s Changes: Stakeholders should understand the implications of dYdX’s locked staking and fee restructuring on the stakeable supply and fee dilution.
- Assess the Impact of dYdX’s Fee Restructuring: Stakeholders should assess the impact of the proposed fee restructuring on dYdX’s trading volume and user base growth.
- Stay Updated on Other Governance Actions: Stakeholders should stay updated on the various other governance actions from different projects as these actions could have significant implications on the respective projects.
