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.
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.
- 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).
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.