Title: ACX Bribes on Aura - Reimburse Risk Labs and Plan Forward
Author(s): Kevin Chan
Submission Date: May 11, 2023
Over the last 5 months, Risk Labs deposited 2.3MM ACX of its own holdings as bribes to Aura Finance to drive emissions to the wstETH / ACX pool on Balancer. This has helped jumpstart liquidity in the ACX token and created a pool that is over $1MM in value. Risk Labs took this action for the benefit of ACX token holders and should now be reimbursed. In addition, the Across DAO should work to implement a process to vote on and execute this bribe itself given a robust governance system is now in place with the deployment of oSnap.
When the ACX token first launched, the infrastructure for Across protocol governance was just forming and not ready for the community; however, there was an immediate need for better liquidity in the token. Instead of using its multisig signing rights on the Across DAO treasury and enforcing a decision to use DAO assets, Risk Labs decided to front its own ACX tokens to incentivize liquidity with the hope that it would be reimbursed in the future.
Starting on December 8, 2022, Risk Labs deposited a bribe to Aura Finance via Hidden Hand of 150,000 to 300,000 ACX each epoch (every 2 weeks) to drive emissions to the wstETH / ACX pool on Balancer. A total of 2.3MM ACX was deposited for this purpose. The ACX was transferred from the Risk Labs multisig to an EOA that executed the transactions. All bribe transactions are summarized and can be verified in this table. In addition, Risk Labs locked its own holdings of BAL and ETH to receive veBAL and has been using that to further boost emissions in the wstETH / ACX pool via gauge voting. The combination of the two have helped to create a liquidity pool that is over $1MM in value and has greatly benefited ACX token holders.
Now that Across protocol has deployed oSnap and optimistic governance is in place, the Across DAO treasury should reimburse Risk Labs for this 2.3MM ACX. The Across DAO has the ability to take ownership of this process to control and execute these bribes as a community. Risk Labs will continue to support the Across DAO to ensure ACX liquidity remains healthy and will assist the DAO in setting up this process.
The current set up of oSnap is not ideal for directly depositing bribes into Aura for the following reasons:
- The Across DAO treasury would need to interact with an external smart contract which has a tail risk of exposing the protocol and its assets.
- The current oSnap parameters are purposely set to be conservative in the initial stages with a 7 day Snapshot voting period and a 3 day dispute window to validate transactions using the UMA optimistic oracle. This is a long time frame given the 2 week epoch for bribes. The intention is to reduce these windows as ACX token holders become more familiar with oSnap.
- With the current rules set in the module, ACX token holders would need to vote every 2 weeks to approve a bribe. The ideal set up would be one vote to designate an entity like Risk Labs to spend a certain amount to directly execute bribes on Hidden Hand. This would require some design work and a change in the rule set.
Over the next few weeks, Risk Labs will work with the Across community to design a process that efficiently implements the desired outcome without putting the DAO treasury at risk and burdening ACX token holders.
In the meantime, Risk Labs can continue executing bribes on behalf of the Across DAO to maintain the emissions for the wstETH / ACX Balancer pool. I propose sending an additional 600,000 ACX to Risk Labs which is equivalent to 4 bribes or 8 weeks of incentives. The bribes of 150,000 ACX each would be deposited on May 25, June 8, June 22, and July 6, 2023. This will ensure there is healthy liquidity in the ACX token over this period. In addition, a vote for this course of action would signify an approval that the community would like to continue using bribes on Aura as a way to incentive liquidity in the ACX token.
Specification & Implementation:
The oSnap module on Snapshot will be used to approve and execute two separate transactions:
- A vote to reimburse Risk Labs for the 2.3MM ACX. This vote will be proposed on Snapshot where ACX token holders can vote to approve a transaction to send 2,300,000 ACX from the Across DAO treasury to the Risk Labs multisig. Once approved, anybody can propose this transaction and then execute it after it passes a liveness period where the UMA optimistic oracle verifies it is legitimate.
- A vote to transfer an additional 600k ACX for Risk Labs to continue depositing bribes on Aura - 4 bribes of 150k ACX each starting on May 25th, 2023. This vote will be proposed on Snapshot where ACX token holders can vote to approve a transaction to send 600,000 ACX from the Across DAO treasury to the Risk Labs multisig. Once approved, anybody can propose this transaction and then execute it after it passes a liveness period where the UMA optimistic oracle verifies it is legitimate.