Trustless, onchain Guardian Setup for MetaMorpho Vaults

Summary

Aragon has been working with Steakhouse Financial over the last few weeks to create an improved and replicable guardian setup for vault owners & curators that reduces legal risk, reliance on trusted intermediaries, and increases transparency. We are offering this V1 setup and hands-on support to onboard any vault wanting to upgrade their guardian setup. This setup and future iterations will give your vaults a competitive advantage in reducing risk and thus helping depositors feel more comfortable choosing your vault.

Aragon

Aragon builds full stack DAO technology, enabling organizations to govern their protocols and assets onchain. Aragon deployed the first DAO framework in 2017. Since then Aragon’s tech stack has powered the creation of over 7500 DAOs and secures the governance of over $40b in value for leading projects like Lido, Decentraland, API3, and now some Metamorpho Vaults! Aragon provides out of the box solutions and also custom governance development and ideation services, so your team can focus on your products.

Why this matters to you, the vault owner and curator:

The V1 version of the Aragon Guardian setup for MetaMorpho Vaults, ideated and implemented with Steakhouse, is easy to set up and maintain. It allows the vault curator to work optimistically, but, gives depositors the ability to veto a malicious proposal and opt out. This ultimately shifts responsibility to depositors without compromising the ability of curators to work quickly and effectively. It also improves vault security and increases depositor confidence by removing trust assumptions. A win-win situation.

The intended outcome of this first guardian deployment provides a more robust and effective solution to govern as shown below. The Steakhouse vaults are now fully onchain and verifiable, have the fastest activation speed, longest timelock, are trustless, and only 1 guardian UI to monitor.

Guardian Fully onchain Activation Speed (days) Timelock (days) Trusted Intermediaries # of UI’s
Aragon yes 1 7 (Steak chosen) 0 1
oSnap no 3 4 3 (incl owner) 2-3
None no n/a 1 1 (owner) 0

Implementation of Aragon App for any MetaMorpho Vault

The setup process is easy and customizable. We can use Steakhouse as a general example, and find their explanation here.

Setup:

  1. Launch a DAO on the Aragon App and choose your governance parameters.

    1. Import an existing token. FYI: Because the tokens are not ERC20Votes they are not onchain governance compatible and thus you have to wrap or lock your token. This can easily be done no code and can be wrapped or unwrapped at anytime in our UI. V2 of this build will allow for locking (more flexible) instead of wrapping.
  2. Change Guardian permissions (via Morpho).

  3. Optionally make the DAO have immutable governance. Using the instructions in a test DAO we created, you can use our smart contract composer to remove the ability for any token holder to propose changes to the DAOs governance. You can always change the DAO’s UI settings (logo, links, etc.).
    Here you have detailed instructions from our team in a sample DAO. The information is within the proposals in this DAO.

    Here you have a description from Steakhouse under “Making the DAO Immutable.”

For Depositors:

Overall, it remains simple, you go on the DAO page, make a proposal or vote on one that already exists that will call a revoke function of the MetaMorpho contract. The voting period is one day, leaving plenty of time for users to react (as the timelock is seven days). This is customisable.

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Token Wrapping:

A wrapped version of steakETH, called gsteakETH (and the same pattern for all vaults) is what is used for voting. This allows adding sybil resistance that is not present on the MetaMorpho tokens. Wrapping and Unwrapping can be done at any time. This is a requirement as the Metamorpho depositor tokens are not ERC20Votes.

In order to create a proposal, one needs to wrap the tokens (Aragon UI automatically proposes the wrapping). Tokens need to be wrapped before the start of the proposal. We recommend delaying the start of the vote by one day to let time for other participants to wrap their tokens. Nevertheless, a small minority of users, usually only one, is enough to protect the vault.

Overall the experience is painless and located all in one UI. This increases transparency for depositors.

Future developments

We are already working on a V2 of the current version of Aragon Guardians for Metamorpho Vaults in collaboration with Steakhouse Financial and look forward to sharing this. If you are interested in learning more, please reach out below or email me at anthony at aragon dot org. This new guardian setup would be custom built and will be even easier to use and more flexible. It would remove the need for wrapping. Similar to V1, users will only have to use one UI, the solution will be fully onchain, and will be trustless.

Conclusion

We have created an extremely user-friendly experience that is also trustless and fully onchain reducing risk for depositors and curators. We believe these are the types of differentiating factors that will support vaults in onboarding new depositors. We propose alongside Steakhouse Financial that other vault curators match this leading 7-day timelock and consider a migration from oSnap or multisigs to Aragon. Please don’t hesitate to reach out if you have any questions about the current solution or want to hear more about the V2 solution, we are here to help.

Thank you for any feedback, questions, and to the teams who have worked with us thus far!

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