Improve gas refund incentives

PS Research
1

Keywords
Tokenomics, staking, Gas Refund

Simple Summary
Since early April, the ParaSwap DAO started refunding PSP to ParaSwap users who staked on ParaSwapPool or the Safety Module. The goal is to grow our user base, increase the trading volume and encourage more participation in staking.

PSP staking has given 3 big benefits:

  • Making ParaSwap Protocol more efficient & competitive
  • Earning auto compounding rewards on ParaSwapPool
  • Getting gas refunds on top

We noticed some possible improvements based on these inconveniences:

  • with only 500PSP you can get heavy refunds if you trade actively without being at much risk regarding your investment
  • PSP price was far higher when this program was designed (around 0.10$)
  • reaching a higher step of refung through holding seems tough

Proposal
To address those issues, we propose adjustments could be applicable in the epoch 25, so we would need to vote before.

The new fomula is LOG_10(PSP_Balance - 2000) - 2.3 ) * 0.25.

new_rates
new_rates1278×438 48.6 KB

In summary this would give these new thresholds (though these % would be dynamic) :
2 000 PSP: 0%
4 000 PSP: 25%
25 000 PSP: 50%
200 000 PSP: 75%
2 200 000 PSP: 100%

And for the previous thresholds:
500 PSP: 0%
5 000 PSP: 30%
50 000 PSP: 59%
500 000 PSP: 85%

Goals
This would still be a really nice compensation system, though preserving the value for long term holders, and would add even more incentive to hold PSP rewards.
Moreover the potential result for actual stakers could even improve if they were compounding rewards since they staked for a threshold.

The main goal is to ensure the Gas Refund is healthy and contributes to the growth and sustainability of the ParaSwap DAO.

Please let us know what you think!

Voting Options

  • For
  • Against
  • Different formula but good idea
  • Abstain

Pre-vote

  • For
  • Against
  • Different formula but good idea

0 voters

More discussion about it: Adjusting gas refund rates - #4 by Bach
Thanks Mouph for the first proposal about fixing gas refund.

2 Likes
2

I really like the idea. I think the rewards should be dynamic in the way you propose. I agree that they are too generous at the moment.

3

I agree with this proposal.

I also think we should make round numbers.
19222 PSP to get 48% refund is not really user friendly. Let’s make it 20k. Same for the others.

I will add that the refund is still not live in Optimism & Arbitrum (it’s been a few months now). Even if the token is not live on these L2, we should register tx fees and airdrop PSP refunds to those that traded on it for months.
Not getting these features on the attractive L2 is not really smart imo.

1 Like