kpk governance newsletter: May 2025
Your essential guide to DAO governance proposals, initiatives and innovation
Hello, community!
Welcome to the May edition of our newsletter.
If you’re new here, this newsletter dives deep into key development and success stories from the DAOs that kpk serves. Our objective is to give you the scoop on significant developments, and read between the lines of proposals and forum posts to reach actionable insights.
This month sees significant changes to governance frameworks, incentives/funding mechanisms and the trajectory of our DAOs’ governance. The common theme? Innovation. Each of these DAOs understands the importance of strong governance in building effective DeFi. And each is worth taking the time to study…
Let’s talk governance. 🗳️
Headline: Delegation Rising
Delegation in decentralised organisations can be a peculiar thing…
We’ve written previously on how novel delegate programmes are helping to improve DAO governance. But rarely do we see a sudden and direct connection from incoming delegates to significant progress. And yet, for students of DAOs, the correlation is hard to deny: most strong systems of decentralised governance have been bolstered by delegation in one way or another.
Throughout its 5-year history, GnosisDAO has seen varying levels of participation. In the last 12 months, activity had sunk to under 2 proposals per month with ~100 participants on average. After several proposals failed to reach quorum, and kpk proposed a delegate programme, assigning 50,000 GNO from the DAO’s treasury to empower 10 new delegates.
In May, that process kicked off in style, with two closely contested votes:
First—a proposed engagement for Gnosis Guild to steward the DAO’s governance infrastructure—was defeated by a ~5% margin, dividing opinion among delegates over whether the initial price tag was too high; and
Second—a request to honor bonus rewards from a long-retired node operator scheme - also was defeated. The topic split delegates as to whether the DAO should act as a source of compensation for frustrated ecosystem participants, or should seek to avoid a precedent for payouts from treasury in such circumstances.
At the same time, competing proposals for a governance monitoring service and delegate dashboard saw progress halted in the forums. Critics questioned if the proposed solutions would really be the optimal approach to DAO governance analytics. Instead, a new Call For Proposals is under discussion, seeking a unified approach for new proposals on this topic.
This sudden influx of activity for GnosisDAO clearly reflects an evolution of its governance dynamics through the empowerment of delegates. The narrow margins of recent proposals indicate a DAO where open discourse is welcomed. However, critics will note that none of the 4 recent proposals have resulted in any actionable outcome; so far, the DAO’s output remains unchanged.
The question, then, is whether increased activity through delegation is itself a mark of success. Or whether the value of delegation must be borne out in actionable proposals.
Time will tell…
kpk was pleased to work alongside industry leaders at Stablelab in delivering GnosisDAO’s delegation programme. For more about professional standards for delegation, check out Stablelab’s DAO Delegation Handbook.
Key Topics & Proposals
Lido: Dual Governance
In May, Lido DAO introduced LIP-28, a full plan for its novel Dual Governance mechanism. The new system proposes the addition of a dynamic timelock to the Lido protocol, which would allow stETH holders to exit their positions when facing contentious proposals. The system features an escrow mechanism where stakers can signal disagreement with governance decisions and release their assets.
Two key thresholds would govern the new system: a "first seal" (1% of TVL) that extends the protocol timelock proportionally when crossed; and a "second seal" (10% of TVL) that triggers a "rage quit" mechanism, blocking execution until dissenting voters can exit their positions. This design allows for a de-escalation of dissents through escrow withdrawals or proposal cancellation, helping Lido to bypass impasses.
Three specialised committees will be created to handle edge cases in the Dual Governance structure: an Emergency Committee (4/7 quorum required to activate “emergency mode”), a Tiebreaker Committee (structured as a "multisig of multisigs" to resolve disagreements), and a Reseal Committee (5/6 quorum which resets the seals after a disruption).
Community members have praised this design as "one of the most well thought-out governance designs in Ethereum's history.” Dual Governance was approved on 27 May with an overwhelming majority, with rollout expected on Ethereum Mainnet in the near future.
ENS: Programmatic Tooling
ENS DAO has recently been weighing up a new approach to funding long-term maintenance of critical governance infrastructure through “Programmatic Tooling Rewards”. A new discussion topic suggested creating a sustainable incentives stream for developers who build and maintain essential open-source tools that support the DAO’s decision-making processes, such as voting interfaces, delegation dashboards, or analytics platforms
The mechanism would distribute funds in a permissionless and programmatic way, rewarding contributors based on pre-defined, measurable criteria such as usage metrics, reliability, and integration with DAO workflows. Rather than relying on one-off grants or governance approvals, this system aims to automate support for public goods that underpin the DAO’s functionality—ensuring core tooling doesn’t fall victim to neglect or contributor burnout.
The proposal is part of a broader conversation about strengthening the DAO’s governance infrastructure and recognising the value of behind-the-scenes contributors. By embedding this model programmatically, ENS could pioneer a new standard for how DAOs incentivise and fund the maintenance of mission-critical systems.
Balancer: Incentive Innovation
Balancer DAO is continuing to position itself at the forefront of incentive innovation, driving novel mechanisms to refine and perfect how the different roles across its ecosystem are rewarded and encouraged for their contributions:
Boosted Pool Rerouting - A new framework was adopted to help streamline how external incentives from protocols like Aave or Morpho are routed into Balancer’s boosted pools. Under the new system, any incentives exceeding $150 per week are automatically redirected, ensuring consistency and reducing inefficiencies from low-value rewards. The proposal seeks to boost adoption by mitigating inconvenience in incentive management.
Alliance Expansion - In May, Balancer passed two proposals to include Lido and Rocket Pool in its new Alliance Program. These strategic partners will receive shared revenue streams in exchange for deepening their long-term alignment with veBAL incentives. The aim is to reinforce partner engagement and liquidity through mutual governance participation, forging tighter integrations between Balancer and partners representing core DeFi primitives.
As ever, kpk is excited to continue supporting Balancer in its ongoing attempt to iterate on incentivisation at the forefront of DeFi.
dYdX: Reduce Validator Set
In May, the dYdX community approved a proposal to reduce the active validator set for the dYdX Chain from 60 validators to 50. This change followed concerns around the inactivity of some validators and a recognition that the bottom 10 nodes represented just 0.14% of staked DYDX, meaning minimal incentive to engage with the protocol.
By streamlining its validator set, the network is expected to benefit from improved block propagation, faster consensus and more efficient finality. With fewer validators to coordinate, the system can reduce communication overhead and latency, thereby increasing the stability of performance during periods of high activity. Indirectly, the reduction may also strengthen security by increasing average validator engagement, thereby reducing the network’s operational and attack surface.
In pursuing a centralised-exchange-like experience, these improvements reflect the DAO’s firm focus on enhancing user experience. As we’ve written previously, dYdX’s staking program is a textbook example of building an effective staking programme from scratch.
Arbitrum: Strategic Refinements
Following our headline piece on the future of Arbitrum DAO last month, we’ve been following eagerly as the DAO continues to refine its strategic direction and governance processes. Two further proposals in May continued the theme:
Constitutional Quorum Adjustment - A new proposal called to reduce Arbitrum’s constitutional quorum threshold from 5% of supply to 3.5%. This change aims to make the governance process more accessible with lower participation, while maintaining the legitimacy of this process. It targets persistent quorum challenges that have proven to be a blocker for governance, in the hope of optimising the throughput of new proposals.
SOS Framework - The DAO also explored a new Strategic Objectives Submission (SOS) framework, aimed at aligning future proposals with Arbitrum’s long-term mission. The system invites contributors to tie their work to the DAO’s core strategic pillars—including user growth, ecosystem development and DAO resilience—with the goal of driving more purpose-driven initiatives. Having struggled with an increasing divergence of direction among key initiatives, the SOS framework is a clear step towards a more aligned approach.
At a Glance: The DeFi Treasury Network
Check out the latest metrics showcasing kpk’s impact across our network of partner DAOs.
kpk: The Permissions Layer
Following our poll last month, we were honoured to see readers requesting more alpha about kpk in this newsletter. We’ll be happy to oblige, using this penultimate section for updates each month.
In May, we spent time shining the spotlight on our Permissions Layer technologies, and how they support organisations to safely manage assets onchain. Permissions act as a wrapper around an organisation’s treasury account (e.g. a Safe), strictly constraining what logic can be passed to the account or executed. With permissions, all management transactions (e.g. deploying or withdrawing assets) must be pre-approved before they can be executed.
This achieves a simple-but-powerful protective layer around the managed assets. No unexpected (malicious) calldata can be submitted to the treasury without first grappling with the Permissions Layer. In that sense, onchain permissions are a perfect solution, that give latitude for offchain activities and onchain experimentation, confident that all assets are already shielded.
Though the concept of onchain permissions has been around for a long time, the difficulty in implementing it at institutional scale has constrained adoption. However, kpk is focused on building technology to streamline the process of generating and managing permissions, removing the need for each treasury to reinvent the wheel.
We think it’s a budding revolution, that’s quietly preparing DeFi for large-scale injections of institutional capital 👀 And we’re only just getting started!
May Edition - Done ✅
Many thanks for reading, and continuing to show us your support. We’ve been thrilled to see the steady growth of this newsletter, and the loyal readers who’ve taken time every month to learn with us. We appreciate you!
Want to show your appreciation? Drop your feedback in the comments, so we can keep iterating and improving. Or leave a like if you’re loving things just as they are!
Or, if you’d like to take things even further, why not consider joining our team? We have a range of open positions perfect for DeFi delinquents or governance gurus. Or reach out to us through our website or social media to talk more!
See you next month.
👋
Read More
Gnosis: Delegate Program | Gnosis Guild Debate | Call For Proposals
Lido: Explainer
ENS: Proposal
Balancer: Rerouting Framework | Lido Alliance Proposal | Rocketpool Alliance Proposal
dYdX: Discussions
Arbitrum: Quorum Reduction | SOS Framework
Permissions: Article | Carousel Post