PIP-XX: Enable ParaSwap Foundation to facilitate $ARB and $OP incentives

Governance Proposals
1

Proposal Number & Name

PIP-XX: Enable ParaSwap Foundation to facilitate $ARB and $OP incentives

Abstract

ParaSwap DAO received 450 000 OP destined for Development grants, OP-PSP liquidity, and DexLib integrations as part of the OP grants program. Despite this, a large portion of the grant remains unutilized: for example, 100% of the DexLib portion is still available, and only one proposal has been related to Development.

To facilitate the use of these grants for the development and betterment of the protocol, this proposal requests to enable the Foundation to allocate the remaining portion of the $OP grants for the uses initially assigned in the Grant Application, as well as leveraging the $ARB grant for the uses of Research and Development.

Goals & review

Of the initial OP Grant application, 75% of it was allocated for Grant and Integrations, with 15% of this being specific to DexLib integrations. Despite this, as of the time of writing, a total of 0 OP have been requested for DexLib grants, and only one application has been made related to the technical development of the protocol. This contrasts greatly with the amount of Pull Requests being submitted and collaborated with on the GitHub repo, where over 500 requests have been made, many of which are being initiated by people currently not involved in the ParaSwap Core Team.

One year after the approval of the grants, we have identified that the current method of requesting Grant Amounts through the DAO has the following limitations, which make it less attractive to developers:

  • Slow turnaround time from initial request to implementation
  • Challenging navigation through the DAO proposal procedure, with most developers preferring to interact with a traditional BD team
  • Difficulty working on projects currently in the process of Research and/or Development, as they are not ready for public presentation to the DAO.

If the ParaSwap DAO wishes to remain accountable and eligible for future grants from other DAOs, it is essential to be able to allocate the remaining grants for the relevant purpose as soon as possible.

Means

The DAO can quickly resolve all the issues listed above by using the ParaSwap Foundation as a facilitator of development-related grants. Not only is the foundation obligated to follow the scope outlined in this proposal, but they will also be able to directly navigate applicants through the process, facilitating the onboarding process to bring more talent to improve the protocol.

Implementation Overview

The following proposal enables the ParaSwap Foundation to become a facilitator for the remaining 268,756 OP assigned for Development and DexLib and the remaining 242,597 ARB.

The foundation will be able to facilitate these balances for grants related to the following purposes:

  • Maintenance of DexLib integrations
  • Research and Development for solutions to further Decentralize the ParasSwap Protocol
  • DAO tooling and automation solutions
2 Likes
2

Thanks for the idea.
It’s hard for me to believe that all the assets that enable the DAO to have a liquid portfolio should go to the foundation.

What are your objectives with this sum? What added value? In the short or medium term?

How can the DAO attract service providers when its entire liquid portfolio is already empty?

You’ll have to be more explicit about your needs and intentions before such a measure can be considered, in my opinion.

3

Hey @stikers

What are your objectives with this sum? What added value? In the short or medium term?

The objectives, as stated by @agrosso, are:

  • Maintenance of DexLib integrations
  • Research and Development for solutions to further Decentralize the ParasSwap Protocol
  • DAO tooling and automation solutions

The foundation & the core team have been doing a great job of making ParaSwap one of the leading DeFi protocols with the lowest means compared to its competitors. Since early this year, ParaSwap has consistently positioned itself as the second-largest aggregator by volume and proved over time that it can process billions of $ with an ATH of 574M in 24h and over $53B in total volume so far.

To fund the future evolutions of ParaSwap, making every single initiative a public matter won’t be efficient. At the same time, every competitor operates as a traditional startup where ongoing work & plans are kept secret until ready to be publicized.

How can the DAO attract service providers when its entire liquid portfolio is already empty?

Service providers use the available tools to publicize their services, if it’s a DAO forum, they use a DAO forum, if it’s a core team, they reach out to core teams… The space is small, and everyone knows each other :slight_smile:

4

What I want to say is that if our DAO only has PSP and a bit of eth in reserve. It will be complicated for a service provider to position itself. PSP is not liquid enough to be considered an attractive asset as a means of payment.

In short, I’m in favour of leaving some of the arb and op, but not our entire wallet.

By leaving $150k, you allow the DAO to see things through.

There’s nothing to stop you asking for the rest later.
This will also allow us to take stock of the investments financed with the arb/op and the benefits you have derived from them.

1 Like
5

I agree with @stikers even if I’m sure you, @Lup, will use the money in a very smart way.
I would go for enabling Paraswap Foundation to become a facilitator of the rounded amounts, which means:

  • 200K OP
  • 200K ARB

And so leaving 68756 OP and 42597 ARB to the DAO that may need it.
We can’t distribute a lot of unstaked PSP for now since the price is low, so liquid assets such as a few OP and ARB may become necessary.

With such proportions you’ll have almost 80%, which is a lot.

1 Like
6

Thanks guys for your thoughts. The goal is to set a scope for investing the funds on R&D only and not on incentives. I think the latter is very early and won’t be significant anyway, but building a scalable protocol has proven to be the best bet for ParaSwap, as we can see in the numbers shared above.

This doesn’t mean the funds will be spent or claimed all at once. We can think of ideas like setting a limit, for instance: up to $200k can claimed per month.

7

I support this proposal but like @stikers and @Paradigme I think we need to keep some liquid dry powder to run the DAO.

I especially think we should not giveup on the AURA proposal, so I just posted a lower-revised proposal from the orginal [10K $ARB/week until no more $ARB in DAO treasury] to a lowered [$5K $ARB/week for 10 weeks ($50K total)] here.

Which would still let most of the $ARB treasury (200K $ARB) for the Foundation’s R&D.

Do you have any ETA? When $ARB and $OP treasury will be empty, do you also plan to ask for $ETH treasury if R&D is still on-going?

3 Likes
8

Following the last discussion regarding Aura rewards, I guess we all agree to allocate a $50k in OP. Can we agree on an amount in $OP instead of USD ?

Do you have any ETA? When $ARB and $OP treasury will be empty.

No specific date but the ideal is to execute the proposal once approved to simplify things.

Do you also plan to ask for $ETH treasury if R&D is still on-going?

It’s possible but not part of this proposal.

If I may share my humble opinion, a DeFi protocol with less than a $1M in treasury should not be in the business of assets management, all we should maximize for is product and adoption.

Cheers

2 Likes
9

Hi all, thanks for sharing your thoughts.
To recap, and aiming to start the ‘Temp Check’ period for publishing the vote next Tuesday:

Of the remaining 268,756 OP, two ongoing proposals will keep being funded:

The Foundation will become a facilitator for the remaining 208,000 OP, following the use cases outlined by the initial grant criteria.

Of the available 242,597 ARB, one ongoing proposal will keep being funded:

The Foundation will become a facilitator for the remaining 233,150 ARB.

A monthly cap of $200k will be set for spending these funds.

10

Why not establishing a limit as proposed:
200k ARB + 200k OP
?

11

I don’t think you’re aware of the requests.

It has been written that we would like to retain control of liquidity. We don’t have an extensible treasury, so IMO 100k$ ARB/OP per month seems like a good start.

Bearing in mind that we’re talking about claims and not a transfer of funds. So the DAO retains the liquidity but allocates you up to 100k$ ARB/OP per month as needed. A bit like a bank paying your bills as you receive them. At the same time, you’re left with a greater degree of opacity, since you don’t want to divulge your intentions for fear of being copied.

In three months’ time, we’ll be able to take stock of the situation and possibly continue financing if the results are convincing. Conversely, payments will stop.

I am totally opposed to your request for payment of funds.

12

I have mixed feelings about this proposal.

On the one hand, the foundation has the experience and network to facilitate (as stated in the proposal) the attraction and connection to service providers.
And I agree with the observation that the DAO is ineffective in some cases (a more general observation, not unique to ParaSwap).
On the other hand, the role of facilitator does not, in my view, dispense with accountability.

What is planned to account for the expenses incurred via this grant application? Beneficiary? Amount? Action taken? Benefit to the DAO? For the protocol?
The three areas for improvement are clear, but not enough to know what we’re doing with the money.

Regarding the amount and the impact on the DAO’s cash flow, I partially share Lup’s opinion:

But the DAO is supposed to manage its cash flow, whatever the amount. And fortunately it did so during the revision of PSP2.0.
Using the foundation as a facilitator is OK, under certain conditions. Discussions in recent proposals have shown that $OP and $ARB are prioritised for grants (in particular to avoid selling pressure on the $PSP). Does cutting us off entirely from this means that we will be more cautious about allocating grants? That we’ll have to refer anyone requesting a grant on the forum to the foundation?

TL;DR

  • I’m in favour of transferring some of the funds to the foundation as a facilitator to make ParaSwap’s development more agile.
  • This MUST require a detailed account of expenditure (even after the event for sensitive subjects), a minus $500K line for the DAO with nothing behind doesn’t suit me.
  • I’m in favour of leaving a minimum amount in the DAO’s treasury.
6 Likes
13

I support this proposal. The core team has consistently proven its capacity to build one of the best products in the space with their own limited means.

The foundation & the core team have been doing a great job of making ParaSwap one of the leading DeFi protocols with the lowest means compared to its competitors.

I am not sure why this is not enough for you guys? Their competitors raised $100M - $200M (potentially 2-3x with OTC deals) and you’re making all this back and forth for dust money ?

I’m in favour of leaving a minimum amount in the DAO’s treasury.

To do what ? We need to build & grow, not to give away free money…

2 Likes
14

Hi everyone,
I have been following the discussions of this proposal and wanted to share my opinions as the author of the original Phase I Optimism Grant proposal.

As others have mentioned, both the Optimism and Arbitrum governance proposals have enabled our DAO to pass proposals that otherwise would not have been possible. Some of my personal favourites include bringing PSP liquidity to a low-gas Layer 2 , enabling staking for users who cannot afford to do it on mainnet, and giving some of our most talented DAO members the ability to research ways to develop the protocol.

Because of the importance of these incentives however, I find it very short-sighted not to search for ways to accelerate reaching the promised deliverables from these tokens. Despite receiving the OP almost a year ago, I would like to reiterate some of the points shared by @agrosso before, such as 0 OP of the 67 500 OP have been used for DexLib almost a year later. Instead, all integration requests have gone directly through the core team due to integrator preference.

In the meantime , most other Phase I applicants have used their OP allocation , with some even applying for follow-ups . If we want to keep receiving incentives from these DAOs, such as applying for further Growth Experiment grants from Optimism or Arbitrum incentives programmes, we have to be able to deliver on former allocations, which is a role the Foundation is strongly equipped to accomplish.

With over 2 years of cooperation between the DAO and the Foundation, personally I believe they have shown to be working in the protocol’s best interest, placing ParaSwap consistently among the top 3 aggregators! I’ve been shown the reason they are requesting this Research & Development grant and believe this to be an incredibly promising development. However, to accelerate the viability of this new development all resources possible are needed, which is the reason they wish to allocate part of the Foundation’s mission towards R&D.

2 Likes
15

I totally agree and think we need to move on to the voting process this tuesday.
DAO have 20% of the protocol revenue in ETH to finance DAO’s projects.

1 Like
16

The truth is that the content makes sense, but the form is really bad.

I think you have the DAO’s full confidence, but you shouldn’t think that they have to accept all your proposals.

Accepting a payment schedule, a maximum amount per month or, failing that, having to reapply quickly, should be the norm. You’re going to tell me that this is a waste of time, but I’m telling you that it’s a gain for the future.
A gain for the image of Paraswap’s technical teams, who work behind the scenes and will need DAO’s resources on a regular basis.

Presenting things in a different way would have made it easier to meet demand.
For example: We don’t want to sell our PSPs at low prices, as this would increase selling pressure unnecessarily, while the DAO has OP and ARB.
We think it would be a good idea to use DAO funds. Can you suggest an amount to allocate to us?

In short, you shouldn’t take for granted money that belongs to the DAO. I’ll vote for it because I know it will help Paraswap’s positive development, but please mind your manners.

17

The proposal makes sense to me.

However, there are some points I would like to highlight:

Even though everyone may be doing their own integration, as I did for Jarvis, and I have assisted other projects behind the scenes to make their pull requests, I believe none of them was aware of this grant. Moreover, the core team’s approval is necessary to be live. I would like to this in this proposal that the grant reserved for DexLib to actually benefit DexLib and to address the bottleneck in the approval/merge process.
I am not placing blame, but it’s worth noting that some PRs are more than six months old, as seen in this GitHub pull request.

More Dex implies more volume, which in turn implies more DAO revenues.

I am also against selling PSPs for this purpose, as it sends a negative signal if the DAO were to sell a significant amount of its own token.

Finally, if we proceed with this proposal, I would expect transparency regarding the expenses, the roadmap, and the payment schedules. Perhaps using a streaming app for this, like Sablier, would make sense.

3 Likes
18

Thanks for your feedback. Even though there are 75 open PRs, but 475 were closed so far, generating +$54B in total volume.

More Dex implies more volume, which in turn implies more DAO revenues.

I wish it was as simple as that :slight_smile: The volumes depend on various aspects, where DEX integrations are one of the main components. Other factors are gas optimization, protocol integrations, user acquisition… In a context of scarce skilled technical resources & limited timeframes, the Pareto principle applies very well, where only a few DEXs have enough liquidity to attract volume; some niche DEXs, like in the PR you shared, have a very specific user base but not high enough to prioritize compared to more general/liquid protocol.

1 Like