Extend Balancer Safety Module liquidity to Matic/Polygon

Research and Discussion Archive
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Now that $PSP is available on the MATIC network, I think it would be beneficial to extend the Paraswap safety liquidity module ( ParaSwap Safety Module — Liquidity Component 🛡️🌊 | by TokenBrice | ParaSwap | Nov, 2021 | Medium ) to the Balancer app on Polygon as well. After all, the lower gas fees will incentivise more people to contribute, securing the protocol even more.

Below, I’ve left a rough draft of how the proposal could look, however, there’s many things I think are worth discussing, since some things could be addressed multiple ways. In theory, we can just make different DAO votes to address each of these (ETH vs Matic, budget), but I thought it’d be better to discuss it here first :smile:

  • Should the Balancer pool be ETH/PSP or MATIC/PSP? The former allows for some price equivalence between the two chains, and an option for another pair in MATIC. However, the latter would mean pairing the component with the network’s native token, and would share similarities to the Sushi/Balancer situation seen in the Ethereum network.

  • Split the budget or introduce new incentives?

  • Would a single slashing vote affect both pools, or would it be better to allow for two slashing votes?

1. Proposal Number & Name

PSP-IPΔXX: ParaSwap Safety Module - MATIC Liquidity Component

2. Keywords

Smart contract development, security, PSP liquidity incentives, parameter update

3. Simple Summary

The current safety module was proposed when PSP was only available on the ETH Mainnet. However, Balancer is also available on the Polygon/MATIC network. This proposal seeks to extend the safety module to this sidechain, and discusses the budget to be allocated to this module.

4. Context

As part of the safety modules, one of the first proposals put forth for the DAO was the Liquidity Component of the Safety Module. In summary, by staking the LP token of a 80/20 PSP/ETH pool, users would be rewarded in exchange for an epoch-long withdrawal period and the risk of slashing as a source of liquidity for compensation.

Now that the $PSP token is available in the MATIC network, this proposal aims to extend the module to the Polygon version of Balancer as well. By doing this, not only are more uses introduced to the token in the Polygon network, but it allows smaller scale investors usually priced out by Ethereum gas fees to contribute the security of the protocol.

5. Goals

To extend the Balancer safety component staking onto the Polygon network.

6. Means

Other than a new PSP budget, the steps of this proposal would mimic those of the original safety module.

7. Metrics

Increase of the total TVL put under safety staking, and facilitation of reaching this goal within a month

8. Forward-thinking considerations

Were this proposal implemented, the DAO will have to consider whether they wish to introduce a single slashing vote, or one that affects both pools equally.

9. Implementation overview

  1. Creation of the pair on the MATIC Balancer DApp
  2. Porting of the contract to the sidechain.
  3. To either allocate a new budget, or redistribute the exiting one.

10. Voting options

  • Safety module ported, new PSP budget allocation
  • Safety module ported, no new PSP budget allocation
  • Safety module not ported.
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Ok, here’s my opinion to each of the questions I brought up at the beginning of the post:

  • Personally, I think a MATIC/PSP Balancer pool would be more beneficial. That way, users who interact with both chains are incentivised to stake in both modules, as opposed to adding redundancy.

  • Considering the importance of the $5 Mil TVL within a month, I believe a new allocation of funds would be ideal.

  • Finally, one single red button to slash both pools sounds like the most sensible solution for me. If two different votes are introduced, users who are staking in one more than the other might vote to slash the other one (yes, I only noticed this now, I’m still leaving the bullet point in the OP)!

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The proposal has been submitted into the governance section now! Other than some proofreading, I’ve decided to go with the changes from my post above, and I have removed the incentive budget re-allocation vote, as the ETH safety module was released since this post was written.

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I totally agree, I share the same opinion

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so do I, agree with this proposal, Matic has huge community, it will be invite them to invest to PSP