EGP-29: Hyperdrive Public Testnet Implementation for Element DAO

EGP#: 29

Title: Hyperdrive Public Testnet Implementation for Element DAO

Author(s): DELV

Type: Protocol Proposal

Status: <Assigned by GSC or Forum moderators >

Date Proposed: 2024-03-14

Date Ratified: <yyyy-mm-dd>

References

• Introducing the Hyperdrive Protocol: Fixed and Variable Rates, Reimagined (Blog Post)

• Hyperdrive Security Update: Pre-Testnet Audit Reports are in!

• Open Source Hyperdrive Protocol Codebase

Sentence Summary

DELV is creating this governance proposal to deploy a Hyperdrive Public Testnet Implementation for Element DAO on the Sepolia Ethereum Testnet.

Paragraph Summary

This proposal includes the details for deploying the Public Testnet Implementation to Sepolia Ethereum Testnet and running a Hyperdrive UI for users to learn and get educated about how Hyperdrive works, get familiar with the UX of Hyperdrive, and provide feedback on all aspects of the experience.

Motivation

Hyperdrive is the next-generation AMM protocol for fixed and variable rates in DeFi. Should the Element DAO decide to adopt an instantiation of Hyperdrive as a base protocol on which to build new product offerings, users (of Hyperdrive and the users of Element DAO governance) must learn and understand how it works and be fluent in the process of deploying new markets, integrating yield sources, building new products, and adjusting all the necessary parameters to set Hyperdrive up effectively.

This Hyperdrive Public Testnet will be users’ first chance to experience Hyperdrive firsthand, contribute to its research and development, and provide valuable feedback – all without putting real assets on the line. We read all feedback we receive and take it seriously so we can get things right.

Public Testnet Goals:

• Learn how to manage Hyperdrive from the governance point of view: A public testnet deployed and controlled by the Element DAO and its members gives the opportunity to test-flight the management of a Hyperdrive deployment - such as management of pool deployments, setting of parameters, and setting fee structures.

• Learn Hyperdrive: Familiarize yourself with Hyperdrive and its concepts.

• Provide Feedback: Share your thoughts on the interface, experience, bots, and existing documentation/guides. Feel free to share your thoughts in the Element DAO Discord server.

• Review and test the Hyperdrive Protocol Smart Contracts: The smart contracts are open source and ready for review. Check out the codebase here.

• Run Bots (if you can): We’ve put together a Hyperdrive bots tutorial where you can get familiar with the process and with the open source tools we’ve provided for developing and running your own trading bots.

Once the users (Hyperdrive users and governance users) of the public testnet have had a chance to test-drive Hyperdrive, they’ll be better positioned to design product offerings based on its technology and to create fee structures that make sense for all participants.

This testnet deployment aims for the Element DAO to experiment with Hyperdrive as an additional tool with which to create new DeFi products. Once the testnet is live, DELV will analyze usage data and publicly share insights gathered from this test run. However, it is up to the Element DAO to decide on the next steps.

Important note: DELV will provide logistical and technical support for putting the proposals off-chain (poll) and on-chain (vote), but neither DELV nor DELV Team Members will participate in the poll or vote. Furthermore, DELV engineers will provide technical comments only, when clarity is needed; they will not provide any statements on the wisdom or appropriateness of the proposal.

For Specification, Proposed Code, Test Cases and so on, please read further in the forums:

https://forum.element.fi/discussion/16635-egp29-hyperdrive-public-testnet-implementation-for-element-dao

Next Steps (Voting Outcome Summary)

1. Public Testnet Proposal Posted on Element DAO Forum (March 14). This proposal is currently a Draft.

   1. We welcome all questions and comments over the next week, but please be advised that DELV Team Members will not provide comments beyond formatting and technical commentary.

   2. Once the feedback has been addressed, this will move to be officially Proposed.

2. Once Proposed, there will be a 1 week review period before it moves to the next stage, Offchain Poll (Snapshot).

3. Public Testnet Governance Proposal Testnet Snapshot (Offchain Poll)

   1. On Snapshot, the governance community will vote for:

      1. Yes: You agree that the Hyperdrive Public Testnet should go live.

      2. No: You disagree that the Hyperdrive Public Testnet should go live.

      3. Abstain: You formally decline to vote either YES or NO.

   2. Testnet Snapshot Voting Period Ends (Off-chain Poll). If this proposal passes the Off-Chain Poll, it will proceed to the Onchain Vote, where the vote options will remain the same as on Snapshot.

4. Public Testnet Governance Proposal Onchain Vote

   1. Onchain Voting Period Ends

   2. If this proposal passes, the proposal will officially be Accepted and the code will proceed to the Execution stage (Timelock) where the Public Testnet implementation of Hyperdrive will be queued to go live.

5. Public Testnet Governance Proposal Timelock Execution

   1. Once the Timelock has passed, the Public Testnet Implementation of Hyperdrive will be officially deployed and live on Sepolia!