The Tally Newsletter

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The Tally Newsletter, Issue 17

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The Tally Newsletter, Issue 17

monetsupply
Feb 3, 2021
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The Tally Newsletter, Issue 17

newsletter.tally.xyz

Welcome back for issue 17 of the Tally Newsletter, a publication focused on all things decentralized governance. We’ll keep you updated on key proposals, procedural changes, newly launched voting systems, shifting power dynamics, and anything else you need to know to be an informed citizen. 

This week, we cover:

  • Balancer teases v2 exchange features

  • Compound considers increasing WBTC borrowing power

Plus, brief updates from around the ecosystem!


Balancer Announces Forthcoming v2

TL;DR: Balancer v2 will offer greater gas efficiency, and also enable pool managers to lend funds and participate in metagovernance.

Balancer Exchange offers a flexible AMM framework, permitting up to 8 separate assets per pool with custom weights and trading fees set by the pool creator. These unique features have made Balancer a key player in defi over the past year, with Balancer pools frequently used for index fund management, new token listings, and liquidity incentive programs. 

But while Balancer offers features that other AMMs such as Uniswap and Sushiswap can’t, it also has some severe drawbacks that have hindered adoption. First and foremost, as the price of ETH and gas fees have ballooned this year, it has become ever more expensive for users to trade on Balancer.

Twitter avatar for @BalancerLabs
Balancer Labs @BalancerLabs
Following a $BAL governance vote this past weekend, Balancer Exchange Gas Reimbursements are now live! We are incredibly excited to offer users a chance to try our improved exchange UI without bearing the full burden of network congestion.
medium.comExchange Gas ReimbursementsBalancer v1 was designed with security and explicit-ness in mind which unfortunately comes at the expense of higher gas costs. With the explosion of DeFi this past year gas has continually become…
10:58 PM ∙ Jan 25, 2021
130Likes34Retweets

Last week, BAL governance voted to begin reimbursing gas expenses for certain trades made through the Balancer front end. But this is just intended as a stopgap solution to support usability until Balancer v2 goes live. 

V2 will bring several improvements in efficiency that should help Balancer capture more retail trading volume. 

Twitter avatar for @BalancerLabs
Balancer Labs @BalancerLabs
Introducing Balancer V2 - the protocol for generalized AMMs Balancer V2 is flexible, secure, and efficient. Here’s what you need to know. 👇 medium.com/balancer-proto…
medium.comBalancer v2: Generalizing AMMsBalancer v1 exceeded our expectations by evolving liquidity provisions and attracting a robust, engaged community. Today, we’re proud to share Balancer V2, an upgrade which will bring us closer to…
4:21 PM ∙ Feb 2, 2021
762Likes254Retweets

In contrast to existing AMM implementation, where funds for each liquidity pool are held within separate contracts, Balancer will hold all liquidity together in a single protocol vault and record individual pool balances virtually. This will reduce friction for trades flowing through more than one pool, as any intermediate trades between pools don’t require a token transfer. 

Twitter avatar for @BalancerLabs
Balancer Labs @BalancerLabs
2/ Gas Efficiency ⛽ While trades can use multiple pools, only final net token amounts are transferred - saving a significant amount of gas. V2 features internal token balances which are extremely useful for high-frequency trader efficiency.
Image
4:21 PM ∙ Feb 2, 2021
57Likes6Retweets

Trades can make use of virtual balances as well, either receiving delivery of the output asset (and paying gas for the accompanying token transfer) or leaving the output liquidity on the exchange as a virtual balance for future trades. 

Twitter avatar for @cburniske
Chris Burniske @cburniske
👀 "This means tokens not being used for trading can be used in DeFi lending protocols." 👀 @BalancerLabs laying the foundation to become a capital efficiency powerhouse for LPs.
Twitter avatar for @BalancerLabs
Balancer Labs @BalancerLabs
4/ Asset Manager 🤓 Asset Managers are trusted external smart contracts that can utilize the underlying tokens a pool has deposited in the Protocol Vault. This means tokens not being used for trading can be used in DeFi lending protocols. More details coming SoonTM! https://t.co/SNmtOtpAfh
8:41 PM ∙ Feb 2, 2021
81Likes5Retweets

Balancer v2 includes features that can vastly improve capital efficiency. Specially designed pools can delegate authority to a manager contract, which can then remove some of the pools liquidity to be used in external defi applications. Much of the liquidity within AMM pools only gets utilized at extreme ends of the price spectrum, so managers could safely supply a portion of pool funds to lending protocols or use for metagovernance while maintaining sufficient trading liquidity. 

While Balancer v2 offers a lot of potential to traders and liquidity providers, it also offers the first opportunity for the BAL token to begin capturing value from the ecosystem. V2 enables protocol fees for trades, LP withdrawals, and flash loans, with values to be determined through the governance process after launch. 

Twitter avatar for @BalancerLabs
Balancer Labs @BalancerLabs
6/ Protocol Fees 🔮 V2 implements the option for protocol fees controlled by BAL governance on: - Trades - Vault withdrawals - Flash Loans Trade and withdrawal fees are off at inception, while Flash Loan fees will start small. All protocol fees will be kept in the Vault.
4:21 PM ∙ Feb 2, 2021
36Likes1Retweet

Compound Considers WBTC Proposal

TL;DR: Proposal 36 would raise WBTC’s borrowing power from 60%-75% of asset value.

While Compound was one of the first lending protocols to support WBTC, lately it has begun to fall behind competitors offering more favorable terms. For example, MakerDAO offers WBTC backed loans for up to 66% of collateral value, and Aave offers loan amounts up to 75% of collateral value. 

WBTC liquidity has improved markedly through the second half of 2020, largely as a result of generous incentives offered to decentralized exchange liquidity providers. But despite improving market conditions, no action has been taken to adjust WBTC risk parameters since the collateral factor was raised from 40% to 60% in October. 

With Compound now lagging far behind other defi lenders, community member Getty Hill organized a community autonomous proposal to close the gap.

Twitter avatar for @getty_hill
Getty Hill @getty_hill
The CAP has been upgraded to a full proposal, 36, please vote! compound.finance/governance/pro…
Twitter avatar for @getty_hill
Getty Hill @getty_hill
Community Autonomous Proposal (CAP) to increase the Collateral Factor (CF) of @WrappedBTC from 60% to 75% on @compoundfinance Please delegate your votes if you agree https://t.co/r7YBQzdFMh
12:25 AM ∙ Feb 2, 2021

Proposal 36 will increase WBTC borrowing power from 60 to 75% of collateral value, putting it back on par with the competition. While the proposal has received fairly broad support so far, a somewhat inexplicable mishap is upstaging the final day of voting.

Source: withtally.com

Gauntlet Network, one of the largest COMP voting delegates, promptly voted in favor of the proposal when it was first submitted. But a day later, they released a statement coming out against the proposal due to potential insolvency risk for the protocol.

Twitter avatar for @gauntletnetwork
Gauntlet @gauntletnetwork
We ran stress tests, and the current parameters for WBTC are pretty aggressive. Most of the risk of insolvency in the protocol comes from large WBTC positions:
Image
1:27 AM ∙ Feb 3, 2021

While this is a sensible reason to oppose a proposal, their explanation of the initial yes vote is implausible to say the least. 

Twitter avatar for @gauntletnetwork
Gauntlet @gauntletnetwork
We made a mistake yesterday when casting our vote and are unable to change it. We’re building infrastructure now to ensure that future votes are always verified and cast as intended.
1:27 AM ∙ Feb 3, 2021

While the proposal has already met the minimum quorum requirement and is on track to pass, Gauntlet has hinted at a future proposal to adjust all assets’ collateral factors, so any increase in WBTC borrowing power may be short lived. 


In Brief:

  • Yearn passes proposal to mint 6,666 additional YFI:

    Twitter avatar for @bantg
    banteg @bantg
    YIP-57: Funding Yearn's Future has passed with 83.47% in support and 50% turnout. Let the minting commence!
    snapshot.voteSnapshot
    7:25 PM ∙ Feb 2, 2021
    212Likes23Retweets
  • Curve considers raising liquidity amplification parameter in response to MakerDAO’s peg stability module:

Twitter avatar for @CurveFinance
Curve Finance @CurveFinance
Since @MakerDAO implemented PSM for $DAI, it become significantly more stable. We propose to increase amplification coefficient by factor of 3 in 3pool, thereby increasing effective liquidity for DAI, USDC and USDT over there by factor of 3 as well.
gov.curve.fiCIP#48 - Ramp 3Pool A Parameter to 600Summary: This is a proposal to increase the 3Pool A parameter from to 200 to 600 in seven days. Abstract: More information regarding the Amplification Parameter can be found on the Curve white paper: https://www.curve.fi/stableswap-paper.pdf Motivation: DAI has become less volatile and is…
11:31 AM ∙ Feb 3, 2021
120Likes17Retweets
  • Alameda Research acquires Ren development talent:

Twitter avatar for @renprotocol
Ren @renprotocol
We’re excited to announce that the Ren development team will be joining Alameda Research!
medium.comRen + AlamedaToday, we’re excited to announce that the Ren development team will be joining Alameda. Together, with our collective experience, expertise, and communities, our two teams will be able to contribute…
10:08 AM ∙ Feb 2, 2021
1,079Likes223Retweets
  • Investment firm Grayscale potentially setting up trusts for UNI and AAVE:

Twitter avatar for @JacobShiach
Jacob Shiach (ʃeɪ) @JacobShiach
DeFi Trusts 🤔👻🦄
Image
Image
1:37 AM ∙ Jan 29, 2021
260Likes54Retweets
  • Whale wallet 0xB1 proposes revised compensation plan for Compound DAI users:

Twitter avatar for @0x_b1
0xB1AdceddB2941033a090dD166a462fe1c2029484 @0x_b1
Modified Prop 32 1/ We said we’d be back with a modified COMP Prop 32 as we believe the original proposal had the right intention, but ultimately failed because it sub-optimally compensated all affected users without focusing on correcting excessive risk-taking behavior.
7:47 PM ∙ Feb 1, 2021
59Likes7Retweets
  • Synthetix Spartan Council freezes trading in sXAG synthetic silver amid meme fueled rally:

Twitter avatar for @kaiynne
kain.eth @kaiynne
What looked low risk in the past now looks a little quaint in 2021. Based on the expected abnormal volatility in markets like silver and gold or basically any market at this point the Spartan Council decided it was prudent to apply the same market closer mechanism universally.
12:47 AM ∙ Feb 1, 2021
  • Aave votes to add BAL token:

Twitter avatar for @lemiscate
Marc 'TetraBilly' Zeller @lemiscate
AIP-8 passed and is now on timelock. We will welcome $BAL from @BalancerLabs as collateral on @AaveAave tonight at ~10pm UTC.
Image
8:54 AM ∙ Feb 2, 2021
183Likes41Retweets
  • Cream Finance adding support for Uniswap and Sushiswap LP tokens:

Twitter avatar for @CreamdotFinance
Cream Finance 🍦 @CreamdotFinance
Announcing the addition of SushiSwap and Uniswap LP tokens as collateral for borrowing and lending on C.R.E.A.M. 🍣🦄🍦 🍣🦄🍦 🍣🦄🍦 🍣🦄🍦 🍣🦄🍦 🍣🦄🍦 @SushiSwap @UniswapProtocol
11:20 AM ∙ Jan 29, 2021
522Likes112Retweets
  • Alpha Finance launches Homora v2, supporting additional assets and LPs:

Twitter avatar for @AlphaFinanceLab
Alpha Finance Lab @AlphaFinanceLab
Alpha Homora v2 has now officially launched! This marks the beginning of the migration process & ending of meme competition. To celebrate the launch, we're distributing Alpha Homora v2 NFT to selected users! 🧵👇 blog.alphafinance.io/alpha-homora-v…
blog.alphafinance.ioAlpha Homora V2 has launchedAlpha Homora v2 [https://homora-v2.alphafinance.io/] has officially launched! This marks the beginning of Alpha Homora v2 migration and the ending of meme competition. To celebrate the launch of Alpha Homora v2, we are going to distribute Alpha Homora v2 NFT [https://app.rarible.com/token/0x5ab81e38b14faa61a699af1bccd1fe5ecab20fae:32:0x891181a601412593d686439116b32a468441757f?tab=details…
1:02 PM ∙ Feb 1, 2021
584Likes172Retweets

Thanks for joining us for this week’s Tally Newsletter! Be sure to check out the Tally governance app, and join us on Discord for the latest updates!

Anything we missed? New developments or protocols you’d like to see covered? Drop us a line at newsletter@withtally.com

Best,

Nate, Tally

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The Tally Newsletter, Issue 17

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