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dear bankless nation,
Metagovernance is an emerging topic that needs to be improved.
In short, metagovernance is about how DAOs use non-native governance tokens to vote on outcomes in other protocols.
The Curve Wars is a perfect example of this. Protocols want liquidity; Curve offers it.
One of the best ways to build liquidity on Curve is to accumulate veCRV, which provides an opportunity to vote on where CRV token issuance goes.
As a result, other DAOs will accumulate a lot of veCRV to vote on forwarding the CRV rewards to their own pool.
Taking it a step further, DAOs will even bribe other people with more money to use their veCRV to vote on their pool.
That’s what [REDACTED] Kartell – a new meta-governance protocol – focuses with their Hidden Hand product.
CENSORED collects governance bribes via various projects for token holders. If you hold the protocol’s voting trustee token, you can vote on bribed proposals, and Hidden Hand will take care of the rest.
And you can earn a pretty solid return on it.
Want to earn bribes for governance?
This is like.
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Tactic Tuesday
Bankless Author: William M. Peaster, Bankless contributor and Metaversal author
REDACTED Cartel is a metagovernance project that aims to increase token rewards for its users by influencing the affairs of DeFi governance. This bankless tactic shows how to use Hidden Hand, REDACTED’s DeFi bribery market.
CENSORED Kartell – a fork of Olympus DAO – is a metagovernance DAO launched in December 2021.
Olympus has used its protocol-controlled value (token owned by the protocol itself) to position its $OHM token as reserve currency.
REDACTED uses its PCV token to “create and extract value through incentivizing governance in DeFi.”
As such, REDACTED is a “Metagovernance” or Governance project. It is designed to garner as much voting power as possible on influential DeFi protocols to – among other goals – increase rewards for its own users.
For example: The Curve Wars, in which protocols battle to channel Curve’s $CRV rewards into their desired liquidity pools, have dominated the DeFi landscape since late 2020. With this in mind, REDACTED is looking to fill its treasury with tokens central to curve wars, such as Convex Finance’s $CRV and $CVX, so the project can impact reward flows for its users.
💥 Catch up on the curve wars? Check out these bankless resources:
So how does REDACTED actually collect tokens for its treasury?
The answer to this question depends on which version of the protocol is involved. V1 used a short-term, Olympus-like bonding approach to load the REDACTED treasury. V2 – currently in a phased rollout – will steer the project away from tie-in towards ongoing revenue from bribes to governance.
Understand CENSORED V1 and V2
REDACTED V1 is all about bonding. This system allows users to endow the protocol with key governance tokens such as $CRV and $CVX in exchange for discounted $BTRFLY, REDACTED’s rebasing governance token. A “rebase” token is a cryptocurrency that uses an algorithmic system to maintain its price.
The tied assets have been REDACTED to PCV in the treasury, so $BTRFLY cannot be redeemed for that PCV, but the token provides holders with governance exposure to a set of assets in the project’s treasury and a cut in revenue that generated by the project treasury.
In particular, REDACTED V2, which is currently being rolled out in parts, will migrate altogether from bonding and $BTRFLY rebasing.
This is because V2 will instead rely on revenue from REDACTED’s latest offerings such as Hidden Hand and Pirex. Additionally, if passed through governance, V2 will introduce new tokenomics with a fixed supply cap of $BTRFLY 5M. A new staking format will also allow holders to stake $BTRFLY into $glBTRFLY (governance benefits only) or $rlBTFFLY (revenue benefits only).
CENSORED products
REDACTED is currently working on three main products: Racket, Pirex and Hidden Hand.
Racket, which is still in development, aims to “stabilize DeFi governance networks by incentivizing self-regulatory behavior” once live.
Further back is Pirex, which should appear every day now. Pirex will be the first DeFi platform to allow people to collateralize their $clCVX (vote-locked $CVX) to earn more with governance bribes, leverage their previously locked tokens, and so on.
Finally, there’s REDACTED’s Hidden Hand offering, which launched softly in April 2022. The Hidden Hand is a veToken marketplace where protocols can bribe token holders to vote a certain way on important DeFi governance matters.
This is where you can make the money.
How to use the hidden hand?
Hidden Hand is REDACTED’s first product available for DeFi, so we’re going to focus on that platform and explore how you can try it below.
First things first, it’s good to get a bird’s-eye view of how the marketplace works. To that end, the REDACTED team created this insightful visual explanation:
As you can see, there are three main processes that lie at the heart of the Hidden Hand. The first is external DeFi protocols coming to market to offer token rewards in exchange for voting rights, the second key process comes when veToken holders delegate their tokens to receive bribes, and the final process is earmarking Transaction Fees + Profits for $rlBTRFLY holders.
REDACTED currently has voting rounds underway for DeFi projects Balancer, Frax, and Ribbon. The balancer bribes are the highest yielding opportunities right now, so I’ll focus on the DEX here.
In order to receive bribes on Hidden Hand, we need voting tokens deposited in trust. In the case of Balancer, that means we need veBAL. First, go to Balancer’s veBAL interface and follow these steps:
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Click the Get B-80BAL-20WETH button and invest in Balancer’s 80-20 BAL-ETH pool to get Balancer Liquidity Provider Tokens (BPT).
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Navigate back to the veBAL user interface.
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Enter how many BPT you want to block and how long you want to block them. Note that you will earn the most veBAL with the longest lock option of 1 year.
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Press “Preview”, complete the approval transaction, and then complete the final lock transaction. You will then be credited with veBAL.
Once you are done with your veBAL, go to Hidden Hand’s balancer page and connect your wallet. Then you could browse the available bribery markets to find an opportunity that suits you. Once you have done that, click on your desired opponent’s Vote button, after which you will be redirected to Balancer’s external veBAL voting center.
Now scroll down to your chosen opponent’s liquidity pool and press vote. A user interface will appear in which you can enter how much of your veBAL elective service you want to use, e.g. B. 100%. Note that this vote will cost you gas and your vote allotment will be locked for 10 days.
Voila! Hidden Hand takes care of the rest. At that point, you would simply wait for the current voting round to end, and then another 1-3 days after the end of that round for your bribes to come through.
After the dust settles, head to the Hidden Hand’s Claims dashboard to claim your reward deals. Just remember that gas costs can exceed your earnings, so be mindful.
Conclusion
Metagovernance is an emerging theme in DeFi and central to REDACTED operations. Over time, the REDACTED community will coordinate via $glBTRFLY to become a kingmaker in the Curve Wars, the Balancer Wars and so on for the project to have optimized rewards, new types of governance infrastructure, DAO-to-DAO can offer collaborations and more.
Of course, REDACTED is barely six months old, but the project is poised to become a DeFi force to be reckoned with if it can continue to realize its vision.
But one can also imagine how metagovernance issues could lead to flashpoints in DeFi if this type of infrastructure or newer projects are seized by more nefarious forces in the future. In the meantime, we’ll have to wait and see how things play out, but REDACTED is definitely a premier gateway into this brave new world of metagovernance right now.
action steps
Author Bio
William M. Peaster is a professional writer and creator of Metaversal – a new bankless newsletter focused on the emergence of NFTs in the crypto economy. He has also recently contributed content to Bankless, JPG and beyond!
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