CIP-5: Enable Swapping of vCOW to COW

Find the Forum post and discussion here: CIP-5: Enable Swapping of vCOW to COW

Simple Summary

The purpose of this CIP is to gather support within the community for enabling the swapping of vCOW tokens into COW tokens. COW is a standard ERC-20 token which can be transferred and traded freely.

Motivation

This CIP will advance CowAO by allowing vCOW holders to swap vCOW for COW tokens. This will allow the token to become transferrable tradable outside of the CowDAO ecosystem encouraging price discovery of the COW token. Consequently, CowDAO will be able to proceed with additional important proposals such as the Community Grant Program, Affiliate Program Incentives, Solver Incentives, and more.

Specification

It is proposed to enable the swapAll function in the vCOW smart contract by sending COW tokens from CowDAOs treasury into the vCOW contract. The proposed deployment code is available here.

• Before execution, the code will need to be updated with the final amount of vCOW that have been claimed and will be eligible for swapping. This will be known by 25.03.2022 when airdrop claims will officially end.
• The execution transaction will transfer the needed amount of COW tokens from CowDAOs mainnet safe to vCOW mainnet contract
• Additionally the needed amount of COW tokens will be bridged and sent to vCOW contract on Gnosis Chain to enable swapping of vCOW on Gnosis Chain.

Changes to CowDAO voting

As of now, CowDAO is governed by vCOW token holders. Assuming no changes to governance rules, COW token holders will not be able to vote on future proposals. It is proposed to change CowDAOs governance rules and adapt its snapshot space to count both vCOW and COW as valid for voting on CowDAO proposals.

Incorporation of additional proposals for a combined execution

CIP-draft: COW liquidity incentive program As the COW token becomes tradable, the community might want to consider a liquidity incentive program that will reward liquidity providers. The rational for joint execution is detailed in the proposal.

At the moment it is still unknown if the proposal for COW liquidity incentives will be approved. If it will be approved before this proposal, it is proposed to execute them jointly. The proposal for swapping vCOW to COW is independent and will be executed upon approval even if liquidity incentive program is not approved prior.

Safe Transaction Data

The below transaction data is an example including estimated amounts. Final amounts can be added only after March 25th.

[
  [
    {
      "to": "0xDEf1CA1fb7FBcDC777520aa7f396b4E015F497aB",
      "data": "0xa9059cbb000000000000000000000000d057b63f5e69cf1b929b356b579cba08d76880480000000000000000000000000000000000000000016bb35807dac17f86600000",
      "value": "0",
      "operation": 0
    },
    {
      "to": "0xDEf1CA1fb7FBcDC777520aa7f396b4E015F497aB",
      "value": "0",
      "data": "0x095ea7b300000000000000000000000088ad09518695c6c3712ac10a214be5109a6556710000000000000000000000000000000000000000001c84f8a471f4d997418000",
      "operation": 0
    },
    {
      "to": "0x88ad09518695c6c3712AC10a214bE5109a655671",
      "value": "0",
      "data": "0xad58bdd1000000000000000000000000def1ca1fb7fbcdc777520aa7f396b4e015f497ab000000000000000000000000c20c9c13e853fc64d054b73ff21d3636b2d97eab0000000000000000000000000000000000000000001c84f8a471f4d997418000",
      "operation": 0
    }
  ]
]

Tenderly Simulation

Preliminary simulation with estimated amount for the mainnet transfer:

• Send COW to vCOW contract on mainnet

For simulating the next steps you'd need to create a fork on Tenderly as this requires to simulate approval on the bridge contract and then contract interaction.

Rationale

• Encouragement of price discovery of the COW asset;
• Encourage more people to interact with the CowSwap protocol;
• Imbues the $COW asset with value based on supply/demand dynamics;
• Enables the CowDAO treasury to use its native asset for ecosystem growth;
• Allows people the ability to transfer the token between wallets;