It's GHO time, baby

The Tally Newsletter, Issue 84

Feb 13, 2023

Welcome back to the Tally Newsletter, a weekly publication focused on DeFi and DAO governance. We’ll keep you updated on key proposals, procedural changes, newly launched voting systems, and shifting power dynamics in the Tally ecosystem. We’ll also recommend the most important reads and listens of the week to ensure you’re an informed citizen of web3.

I’m coolhorsegirl, a DeFi native and the newest member of Tally’s newsletter collective. With prior experience at Index Coop, I’m interested in DAO governance and general DeFi innovation aimed at maximizing decentralization.

Well, less drama than last week, but some exciting stuff nonetheless—a new stablecoin is on the scene, courtesy of Aave v3. In this issue, we cover that launch along with a few more on-chain proposals up for voting from Uniswap and Nouns DAO.

🤿 Deep Dive: A new stablecoin on the scene

Ah, protocol-native stablecoins, the hottest topic since last week’s UNI community vs. a16z scandal. On-chain DAO Aave deployed its native stablecoin, GHO, on Ethereum’s Goerli testnet as of Friday. GHO is an overcollateralized stablecoin pegged by an oracle to $1. GHO’s release on mainnet remains subject to community discussion and on-chain approval.

So, how does GHO work? Not so different from Maker’s DAI. Supply is controlled by Aave’s mint-and-burn mechanism: GHO is minted when users deposit digital assets as collateral to borrow GHO. When users repay the loan, the issued GHO is burned, reducing its circulation and returning the underlying collateral to the user. Aave offers discounted GHO borrowing to $AAVE stakers.

Within the greater ecosystem, the launch of GHO represents a trend as more protocols prepare to launch stablecoins. Aave initially passed the proposal to launch GHO in August. DAI maintains a $5 billion circulation. And Curve is on its way to launching crvUSD, its protocol-native stablecoin. The timing makes sense, right: stablecoins may be especially attractive while concerns over crypto lending run rampant (cheers, SBF).

The DAO is an essential factor, too. Aave DAO will determine GHO supply, interest rate, and risk parameters. The DAO will also enjoy all interest fees during the GHO loan period. Aligned with the ethics of decentralization, GHO’s code is public and available on GitHub.

The deployment of GHO is one of the first major developments of Aave’s v3 launch. They’ve also voted to add cbETH, a liquid staking derivative token issued by Coinbase, to Aave V3 market on Ethereum, calling it “an important decision that could help Increase the diversity of validators supporting Ethereum and LSDs on Aave.” We’ll see what’s next. If you wanna learn more, read Aave’s v3 whitepaper here.

⌛️ On-chain Proposals

On-chain DAOs are decentralized autonomous organizations that operate entirely on the blockchain, using smart contracts and other blockchain-based technologies for its operations and decision-making processes. Tally believes that true DAOs operate on-chain.

Uniswap

Enable 1bp Fee Tier for UniswapV3 on Arbitrum

Summary: Mostly uncontroversial, as 1bp optionality has been deployed on other Uniswap v3 developments. Only difference is this is for Arbitrum. Simple: allows users to trade with lower fees, hopefully encouraging more trades.

Voting ends: February 16th

Nouns DAO

Stake additional 5000 ETH in Lido

Summary: The DAO has recently voted to stake 5000 ETH, bringing stETH holdings to 9700. This is a proposal to stake an additional 5000 ETH.

Voting ends: February 13th

Federation

Summary: 225 ETH to fund the continued development of federation.wtf and its ecosystem for at least 6 months. Federation allows communities to directly vote on Nouns proposals onchain (rather than through a delegate). They call this crossDAO governance and have been previously funded by Nouns DAO.

Voting ends: February 16th