Expand DXdao to Arbitrum One [Signal Proposal]

This proposal signals DXdao’s intention to launch a base on Arbitrum One with DXvote, deploy Swapr on Arbitrum One, and commit to moving $2.25m of DXdao’s capital to Arbitrum One. This will be discussed on June 9’s governance call - please provide feedback there or below.

Background

DXdao first began exploring with networks outside of Ethereum last fall with experimental deployments on xDai. In January, as gas costs rose on Ethereum, the community began developing a Layer 2 and Scalability Strategy for the future of its products and governance systems. Following that community discussion, Omen and Swapr were deployed to xDai, Swapr was deployed to the Arbitrum Testnet and DXdao authorized an xDXdao base on xDai to handle worker proposals and other governance processes.

xDai has been an informative experience in the multi-chain world for DXdao governance and its products, but the community is excited about Layer 2 solutions, like Arbitrum One, that offer scalability and maintain the security properties of Ethereum.

DXdao contributors have been working closely with Arbitrum team members for the last several months and have deployed versions of DXvote, a new decentralized governance system that uses DXD for holographic consensus, and Swapr onto Arbitrum One.

Details

This proposal:

  • Authorizes a DXvote deployment on Arbitrum One as an official DXdao base (“aDXdao”). aDXdao features a new voting machine that uses DXD as a staking token in holographic consensus. This base can be used to govern any DXdao product on Arbitrum One and conduct any other DXdao-related business on Arbitrum One. It will use the latest REP mapping from xDai.
  • Authorizes a Swapr deployment on Arbitrum One as official deployment on Arbitrum One. This deployment can be integrated into future Swapr.eth releases
  • Commits $2.25m in DXdao capital to be bridged over to Arbitrum One to be used for liquidity provisioning on Swapr ($2m) and working capital for aDXdao ($250k).

Risks and Considerations

Arbitrum One is a new Layer 2 scaling solution built by Offchain Labs that uses an Optimistic Rollup design. This is new technology that aims to maintain the underlying security of Ethereum mainnet by batching transactions offchain and submitting condensed versions on-chain. A sequencer (or operator) does the transaction ordering and initially this will be controlled by the Offchain Labs team. DXdao assets in aDXdao and Swapr may be susceptible to bugs or other initial problems in Arbitrum One’s initial deployment. Arbitrum One has been on testnet for more than 9 months and received several audits, so this risk should be minimized. Offchain Labs will maintain an admin key for several months in case of a bug.

Bridging assets also represents another risk opportunity. The specifics of how DXdao sends assets to aDXdao are outside of the scope of this proposal. DXdao has been capable at bridging assets to xDai with no problems, so this risk is low and dependent on the security of the bridge used.

Additionally, any assets deployed in Swapr are subject to price volatility and impermanent loss. Trading fees and the benefit to Swapr growth from DXdao liquidity provisioning likely outweigh any risks.

12 Likes

It’s incredibly exciting that Arbitrum is nearly live, it’s been on our minds for such a long time!

I support this proposal and the capital amount outlined in this post.

4 Likes

I support the expansion of DXdao and its products onto Arbitrum L2. The stated capital is a good starting point - it’s going to be important for DXdao to monitor and assess progress as it happens, and adjust from there.

4 Likes

Just wanted to say that arbitrum will be in beta state for the next moths, and it will have a “red button” where the arbitrum team can shut down the network in case is necessary. Should we move all those funds while is in beta stage? or maybe some now and the rest when arbitrum reach a “stable” version?

Something we cant take in count is the amount of funds “locked” in arbitrum L2 as an indicator on how much and when to send funds to arbitrum.

6 Likes

We want to make sure Swapr stays competitive though - I think the opportunity to be one of the first AMMs with significant liquidity can increase Swapr awareness as a whole - not only on Arbitrum.

Doesn’t the “red button” actually give some safety to our funds? i.e. if some exploit is found the devs can freeze funds so nothing malicious happens?

5 Likes

This has been submitted and boosted as a signal proposal on xDai

and Mainnet

Here is the xDai proposal creation transaction and the mainnet proposal creation transaction. You can view the contents on IPFS using this guide.

3 Likes