[Proposal] Authorize and fund xDai base

Below is draft of text for a proposal to formally anoint the xDXdao base on xDai in order to outsource certain activities, particularly worker payments. This proposal also includes a 100 ETH transfer to the developer multi-sig to be converted into xDai and deposited into xDXdao base. Please comment with any suggestions below.

Background

DXdao’s home base is on mainnet Ethereum, but with the rising price of ETH and gas, it has become prohibitively expensive to operate all DAO functions on mainnet. This proposal is meant to identify 0xe716ec63c5673b3a4732d22909b38d779fa47c3f as the DXdao base on the xDai Chain. This base will serve three primary functions:

  • Govern DXdao products on xDai
  • Vote on worker proposal submissions and handle worker payments
  • Vote on signal proposals related to DXdao governance

It should be noted that in any discrepancy, DXdao’s home on Ethereum mainnet supersedes xDXdao in all cases.

Initial funding and worker proposals

Simultaneously, this proposal sends 100 ETH to the developer mult-sig, 0x5F239a6671BC6d2bAEf6D7Cd892296e678810882, which has been used previously for Treasury Authorization proposals and with the 5 owners verified as REP holders with at least 0.5% REP. This multi-sig will be responsible for converting the ETH to Dai, bridging to xDai and depositing it into the xDXdao base identified above.

Moving forward, worker proposals should be submitted to xDXdao under the same process outlined in the Worker Compensation guidelines and the soon to be updated Contributor Guidelines. All base compensation should be requested in xDai; contributors will be responsible for withdrawing the xDai to Ethereum mainnet or another withdrawal method. DXD compensation and REP awards will not be done through xDXdao. Contributors should record these in their proposal on xDai.

REP

  • xDXdao REP is not the same as DXdao REP. How different DXdao bases reconcile REP is outside of the purview of this proposal.
  • There was a lengthy process to deploy xDXdao with a REP distribution based on DXdao home base on Ethereum mainnet. Not all mainnet REP was ported, specifically to Gnosis Safe users; there is a process for mainnet REP addresses to map an xDai address to hold its REP. Any address with mainnet REP is entitled to the same amount of REP in xDXdao.
  • Mainnet REP will remain the source of truth for DXdao. Mainnet REP requests should be noted in xDai proposals, but the actual mainnet REP awards will happen through DXdao home base on Ethereum mainnet and be batched in quarterly or half yearly increments and potentially in rewards to multiple addresses.

Risks and Concerns

xDai is a sidechain, so its risk properties are based on the validator set, which is small. Additionally, bridging assets requires trust from workers to move their funds off of xDai. As a result, the value of assets stored in xDXdao should not exceed $500k.

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I feel that some more time needs to lapse in order to see what happens with gas prices. Why not continue to aggregate proposals to save on gas costs as done with this very proposal under consideration at this time? I would also like to see the quantity of money that the proposal would save. While this proposal makes good sense, there are usually unforeseen consequences with big changes like this. Once we know what amount of savings we would achieve, is the risk of going to xDAI commensurate with the savings envisioned?

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Thanks for replying @finagain, I agree that this does introduce more risk, both because xDai is a less stable chain and because moving the funds to xDai creates additional risk. I think this risk is worth taking given the costs.

  • DXdao does not have a system to ‘aggregate proposals’ at this time. We discussed using a multi-sig to distribute funds, but we still need a place to submit and pass proposals, and the multi-sig also has centralization risks. This proposal aims to address worker proposals, which are done monthly.
  • We won’t know exactly how much we’ll save until the next round of Governance Refunds is done. In the Governance Refunds #3, which was from December 1 - 31, DXdao reimbursed 4.4 ETH, Governance Refunds #2 (Oct 17 - Nov 30) was 7.3 ETH, and Governance Refunds #1 (Aug 24 - Oct 16) was 19 ETH. This covered 176 proposals with total reimbursement of 30 ETH. This was all before gas prices doubled and Ethereum more than doubled.
  • Anecdotally, the cost of submission, boosting, voting and then redeeming a proposal (executing it), is around $800 or higher when gas prices spike. This is often more than 10% the amount requested. This proposal would greatly reduced this overhead. We are also onboarding more and more workers, so the monthly proposal process could include ~20 proposals.
  • I worry that we are not practicing good governance because it has been priced out. It’s hard to get signal, when it costs so much.
  • We should tread slowly and carefully. This proposal is intended to be in place for the next round of worker proposals, which tend to occur at the end/beginning of a month.
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Thank you too, Powers, for your concise explanations. It is clear that you really understand your business. I understand more and more as I re-read the threads and gain experience. Your proposal seems adequate to cover the next 3 refunds. If I now understand better, I think that you thoughtfully embedded your worries about poor governance into the proposal and made it practical to induce more worker proposals to grow our product lines and hopefully more income to the DAO. Good work.

3 Likes

Great summary and post @Powers . DXdao formally “anoint”-ing and leveraging additional tools for governance that offer efficient and beneficial alternatives to mainnet are great to experiment with. Given the limits that we are putting in place to ease the risks and concerns, I believe that this will be a very valuable undertaking as DXdao continues to explore scaling solutions for certain use cases while maintaining its core governance and majority of funds on mainnet.

3 Likes

The xDai Authorization and Funding proposal passed yesterday and the converted Dai has been bridged to xDai and deposited into the xDXdao base on xDai, which now has $167k xDai.

All worker proposals can now be done on xDai, saving costs for contributors and DXdao. The same proposal submission process, but done on the xDai base. Here’s an explainer on how to add xDai to your Metamask wallet, and information about bridging assets to and from xDai.

Please list any issues below in case others run into the same thing. You can ping me or @sky, DXdao’s resident xDai expert

Below is a proposal to send 100 ETH to xDXdao base on xDai to be available for worker payments and also used in Swapr liquidity at the discretion of xDXdao base.

Background

A previous proposal authorized the xDai base and funded it with 100 ETH (converted to xDai and bridged over). The first worker payment proposals have also been submitted on xDai and we’re still working through some improvements to the process. There was a request to have the option of receiving payment in WETH on xDai.

Simultaneously, Swapr squad has added multi-chain support and is preparing to launch on xDai. DXdao liquidity could help bootstrap Swapr on xDai. There is a proposal to send 150 ETH to deposit initial liquidity in a WETH/DAI pool; it could benefit from additional liquidity.

Details

This proposal sends 100 ETH to the dev multi-sig address, previously identified as 0x5f239a6671bc6d2baef6d7cd892296e678810882 whose signatories have been verified as REP holders, to be wrapped on mainnet, bridged over to xDai as WETH and deposited in xDXdao base on xDai.

The proceeds are intended for worker payments in WETH and can also be deposited into Swapr xDai pools, ultimately at the discretion of xDXdao.

Risks and considerations

Transfer of these funds relies on the dev multi-sig. xDai also presents risks because security is dependent on its limited validator set. Additionally, cross-chain bridges are still new and not battle-tested.

Assuming the fund Swapr on xDai proposal passes in two days, completion of this proposal will put the total amount of DXdao funds transferred to xDai at 350 ETH, which would be just about $500k at current prices. There should be withdrawals from xDXdao treasury for worker payments while the two funding proposals are being voted on, so we should remain below $500k, which was the loosely agreed upon max for xDai base.

If the proposals go through and the xDai base proves its legitimacy, we should consider revisiting this number, particularly because Swapr on xDai could benefit from treasury liquidity, which was not part of the scope of the original proposal focused on worker payments.

Below is a proposal to send 100 ETH to dev multi-sig, converted to Dai and bridged over to xDai and deposited into xDXdao base for worker payments and also used in Swapr liquidity at the discretion of xDXdao base.

Background

A previous proposal authorized the xDai base and funded it with 100 ETH (converted to xDai and bridged over). A separate proposal sent 100 ETH to xDXdao base. Over the last three weeks, six worker proposals, totaling $42,000 have been submitted.

Outside of reimbursements and liquidity deposits, almost all DXdao payments have shifted to xDai, so it’s important that it’s well-capitalized. Funds might also be needed for depositing on Swapr.

Details

This proposal sends 100 ETH to the dev multi-sig address, previously identified as 0x5f239a6671bc6d2baef6d7cd892296e678810882 whose signatories have been verified as REP holders, to be converted to Dai on mainnet, bridged over to xDai and deposited into xDXdao base.

The proceeds are intended for worker payments in Dai and can also be deposited into Swapr xDai pools, ultimately at the discretion of xDXdao.

Risks and considerations

Transfer of these funds relies on the dev multi-sig. xDai also presents risks because security is dependent on its limited validator set. Additionally, cross-chain bridges are still new and not battle-tested.

There is currently $500k in xDai base ($270k WETH and $230k xDai). $150k of this is slated to be deposited into the Swapr xDAI-WETH pool in two days, to bring the total DXdao liquidity in Swapr xDai to $220k and the $350k in xDXdao base. There is an additional 250 ETH ($450k) to be deposited into Swapr on xDai that is still in main net proposal queue. If this proposal were to go through, it would bring the total amount in xDai base to ~$500k and the DXdao liquidity in over $600k. This represents just over 2% of DXdao’s assets.

As gas prices rise on mainnet and xDai liquidity grows, having funds on xDai is a strategic advantage for DXdao.

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This governance call is underestimated. Well done by the team. :+1:

Below is a proposal to send 100 ETH to dev multi-sig, converted to Dai and USDC and bridged over to xDai and deposited into xDXdao base for worker payments and also used in Swapr liquidity at the discretion of xDXdao base.

Background

A February proposal authorized the xDai base and funded it with 100 ETH (converted to xDai and bridged over). A separate proposal sent 100 ETH to xDXdao base. And a third proposal sent 100 ETH converted to xDai, executed on March 29. These funds have been used to pay DXdao contributors and other expenses and are in need of being replenished.

Currently, there is $148k xDai and 98 WETH in xDXdao base, putting the monthly outflows from xDai treasury at around $100k a month (DXdao’s burn rate is slightly higher because of delayed proposals). Periodic deposits are needed every 4-6 weeks depending on activity.

The community has also requested that some USDC be sent to allow some contributors and contractors to request it on xDai.

Details

This proposal sends 100 ETH to the ETHrelayer contract, identified as, 0xb9C11a239CEb03626b439dDeD95AC51ffe000795, which will relay the ETH to the dev multi-sig address, previously identified as 0x5f239a6671bc6d2baef6d7cd892296e678810882 whose signatories have been verified as REP holders, which will convert the ETH 50/50 in Dai and USDC, bridge these assets over to xDai and deposit into xDXdao base.

The proceeds are intended for worker payments in Dai and USDC and can also be deposited into Swapr xDai pools, ultimately at the discretion of xDXdao.

Risks and considerations

Transfer of these funds relies on the dev multi-sig and the ETH relayer. By the time this proposal passes, the ETH relayer will have been tested using previous proposals. xDai also presents risks because security is dependent on its limited validator set. Additionally, cross-chain bridges are still new and not battle-tested.

There is currently $410k in xDai base ($268k WETH and $148k xDai). Addtionally, DXdao has around $1.3m worth of liquidity in Swapr on xDai. There is an additional 400 ETH to be deposited into Swapr on xDai that is still in main net proposal queue. If this proposal were to go through, it would bring the total amount in xDai base to ~$650k and close to $2m in total on xDai including Swapr LPs. This represents just over 3% of DXdao’s assets.

xDXdao has proved a useful tool for lowering the cost of governance and processing worker payments. Swapr on xDai is building up a user base, so the increase exposure to xDai is justified by the potential opportunity.

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