Incorporating UMA KPI Options into ParaSwap

As part of our strategy to develop the DAO, over the past few weeks me and a couple of our ambassadors have been brainstorming some ideas with the amazing team from UMA to assist us with measuring the performance of our DAO and reward our members appropriately.

Now, I am delighted to share the current results of the discussion with all of you. I believe that some of these options could prove to be very powerful to align the interest of DAO members , but as always, I am looking forward to seeing what great discussion comes from this :slight_smile:

About UMA and KPI Options

As stated on their page, UMA is an optimistic oracle which is able to read data on-chain. By using this oracle, the UMA team has created some products specifically for DAOs.

Of the many solutions offered by UMA, this thread will focus mostly on KPI Options, which are synthetic tokens that pay out more rewards when a target is reached before a certain time. Again, you can read more about it in their docs:

Recently, PSP has been approved as a potential collateral , which allows us to use PSP directly to implement within these options. This allows us to utilise our budget’s PSP directly to mint the options. Thanks to this, we can use KPI Options as success indicators for the protocol, and reward users in PSP whenever targets are met.

KPI Option - Monthly Positive Slippage Accrued

Whenever a trade is made on ParaSwap, a price is quoted prior to the actual trade execution. If ParaSwap executes a trade that is better than the initially quoted price, part of the slippage is redistributed to the DAO, with different addresses assigned to every chain.

Due to this being the main external revenue source of the protocol, the positive slippage accrued is a great indicator of protocol success, and one that every DAO member should strive to increase. Because of this, it would serve as a great indicator of success, since, as we work on improving the protocol, this should be reflected positively in increased slippage.

One of the most promising uses of this option would be as a payout token in a future contributors framework. Since pretty much any person working on the DAO seeks to increase this number, it is a flexible measure that we can base our performance on. For example, we could measure the estimated annual revenue of slippage right now, and depending on how much above or below target we are performing, the option could give a varying amount of PSP once it expires.

Next Steps and Implementation

If we were to implement this Slippage option, our main concerns would be success metrics. What specific metrics would we use? What would the rewards be?

Additionally, maybe some other DAO members can think of potential KPI options that could improve the protocol. What other metrics can we quantitively measure that DAO members have a direct impact on? Looking forward to your thoughts!


Chandler from the UMA team.

I’ve worked with @0xYtocin and others on this proposal and would love to hear the community’s thoughts.

The initial starting KPI option program is aimed at increasing the positive slippage events. This proposal is meant to be the start of a smarter rewards program. Once the initial metric has been agreed on and the program runs over a period of time, tweaks to the rewards program can be made to take on the learnings of previous rewards cycles.

The intention here is to lay a foundation for a mutually beneficial rewards program that adapts to the protocol.

As an added benefit, KPI options can be used to reward DAO contributors for their work in helping develop Paraswap. An example of this has been part of our brainstorming, the details of which are still in the works and will be shared in a separate thread.

The UMA team and community are excited to help the Paraswap team reach positive outcomes.

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