PIP-XX: Utilizing Aura Finance to bootstrap PSP liquidity on Optimism

Quite the contrary, I think that this must be thought, discussed and decided now.

Apart from the maintenance part and who manages this, the big question is, do we compound forever the rewards with the only goal to just move the already existing POL on Beethoven X to AURA or do we distribute to the sePSP stakers and/or DAO and in what proportion.

Because if the only goal here is acquire AURA token and add another layer of security risk but without distributing anything to the DAO and/or the stakers, I don’t see why we should do it, you get my point here?

Please let me know if I miss anything here.

These questions were not directed at you but to the DAO members, I was also looking at getting insights and the vision from @0xYtocin and @agrosso, without much success at the moment it looks like.

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I’m surprised to see the rush around the Aura subject when crucial questions are still pending.
I was on the lookout because Enerow’s questions were close to mine. But it seems that many of them are still unanswered.

I look forward to reading the answers.
Stikers

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Hi enerow,
I find your concerns regarding the management of emissions and the logistics of it very valid, but think that all of these questions fall within the DAO’s scope of decisions, such as the split of assets or how to manage them.

As @Figue stated above, we have the potential assistance of Paladin if we wish to use them to manage the emissions, which could be added through a follow-up proposal if this one passes. Alternatively, as @jeffery explained these actions seem to be easy to automate, so could be signed manually in the meantime.

Personally (speaking now as a DAO member) I find it strategically interesting to begin building vlAURA to provide a steady stream of emissions for stakers through gauges, while the BAL could be given to stakers, but that is entirely for the DAO to decide. It’s also worth noting that it might be best to begin accumulating these incentives while Aura is running their OP matching incentives, as that maximises the return for the DAO of the PSP being used for this proposal. This is probably why the proposal wants to be put to a vote now, but if the DAO thinks it’s not worth moving the discussion for later, it’s always possible to pause the publication of the vote until these next steps are cleared.

In summary, I think we can address the following steps for the proposal:

  • Assuming the proposal passes, a follow-up proposal could be drafted by DAO members deciding the next steps, such as incentives handling, potential automations or passing control over to GovCo. In the meantime, the wallet currently owning the PoL can begin the signings to expedite the emissions process. We can start by opening a research thread.
  • Until this next proposal is written, discussed and approved by the DAO, we can use the AURA for locking and directing incentives to maximise gauge emissions, and keep any other incentives received from this initiative as part of the DAO treasury

Let me know what you all think!

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Good morning,
as it stands, the idea is to sell $PSP to get other tokens (OP/BAL/AURA) at a discount.
The strategy presented would be to lock up the AURAs to gain voting power and keep the OPs and BALs in treasury.

My questions in bulk:

  • Are we committed to a duration for these payments? Can we stop paying at any time? If so, shouldn’t we set a low ROI limit that would trigger the cessation of payments? (e.g after 1 or 2 voting cycle with less than 1.1 for 1).
  • Do we have any idea how our payments will evolve with the growth of our vlAURA? What target do we have for the quantity of AURA to be locked up?
  • The simplistic and short-termist choice would be to sell all the tokens earned to buy back $PSP with the discount. Is the DAO interested in diversifying its cash position? If so, for what purpose? To pay sePSP stakers? Lock up the DAO’s BALs (or $BAL swapped to AURA increasing the amount locked) to direct incentives to our pools?

I understand that some of the questions are directed at DAO members rather than AURA, but it’s important to have an idea of the direction we’d be taking to know if we want to go down that route. Even if the final decision on this direction would be taken in a later vote.

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Do you think (your personal opinion) it’s better to maximize in the first weeks/month our vlAURA exposure to quickly gain a big voting power quicker, in that case we could convert all incentives in the direction until we meet a predetermined goal, and only then distribute part of the rewards to the stakers? If so, what could be the goal (vlAURA) and how long would it take to get it?

Why not going bigger than $10K/week at the beginning to take maximum advantage of the OP 1:0.5 match and lower afterward? If so, we should write down that schedule right now on that proposal.

A projecting table with all the data for the different scenarios would help a lot the DAO to choose.

I understand that this is a great opportunity for ParaSwap DAO and that we have to move quick but I also think we should come with the best optimized scenario right from the start.

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Really glad to see all this discussion around vote incentives on Aura and this many fair points.
We can help around automation if needed, but in general, the process is pretty straight forward, the only constraint are in efficiency management.

This is a great way to frame it. The way I see it, the goal would be to increase sePSP2 yield in such fashion that the potential price pressure would be totally offset by users coming in the system.

I’m in favour of selecting specific control parameters enabling us to to pause / stop the process if not necessary.

The efficiency rate is reflexive of how crowded the incentives will be for Balancer OP gauges. The higher it is, the more we dilute it. This means these strategy are capped at a certain amount of incentives.

In addition we could also buyback PSP with the part of the rewards that belongs to the sePSP Stakers and distribute in sePSP1 to mitigate the price pressure even more what do you think?

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That’s actually a pretty powerful atlernative, would just need to scope the work needed to make it happen.
Another method I liked a lot is Maker buying back, pairing and burning the LP, thus growing liquidity. Not sure if Paraswap needs more liquidity, but always good to see what others do: makerburn.com

Another question/idea for you, we have about $200K in $ARB token sleeping doing nothing, If I’m not mistaken there is no specific guideline on how we have to use the ARB airdrop.

Wouldn’t it be better to use it to bootstrap the vlAURA voting power instead of burning 500 000 PSP/week (at today price), what do you think?

source : https://arbiscan.io/address/0xfe98240ddAEDF78E278C28F1EdD690ee1a774e66

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I support @enerow idea, I think it’s a good idea to use a part of $ARB token for that.

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Like this idea. Liquidity is a major point.

It all depends on the numbers of course, but personally the sooner we manage to accumulate gauge voting power the better, as that transitions from a voting-incentives based emissions to the DAO being able to allocate resources ot itself every epoch without incentives.

Perhaps we could establish a goal of gauges covering a % of the average epoch redistribution? This would allow for a ‘baseline’ APR of sePSP2 emissions even before taking into account protocol redistributions.

Since $ARB is on Arbitrum and this campaign is running on Optimism, it would add complications for briding and conversion if it wants to be used for voting incentives. We could explore OTC possibilities with other DAOs like AAVE did in a follow-up proposal to ‘double down’ on these gauge emission perhaps?

The discussion seems to be at a standstill, even though we don’t need much to finalize the proposal.

I have retained the following points:

Who manages PSP payments by epoch?
For how long do we participate?
How are rewards used? Just one option, or can we consider several?

Once these are answered, I think we can consider a vote?

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I believe this could fall within the mandate of GovCo. As mentioned previously, I have no problem in preparing the payload and providing the required analysis.

If the goal is to create a new sustainable way to incentivise liquidity, my advice is to keep the farmed AURA and redistribute the BAL & OP to sePSP2 holders to increase the lock rate. This way the cost of the campaign progressively lowers until a point where external incentives aren’t needed anymore.

My gut feeling is that most well capitalized projects aren’t keen on doing OTCs anymore in this market as they are more desperate for price appreciation than actual capital, but keen to explore if possible (would also be more “expensive” as the OTC would be paid in stables / ETH and not PSP).

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We can bridge + swap at the end of every epoch (every 4 weeks) aligned with the DAO signing sprint of the sePSP revenus distribution.

If possible, I’m all for it.

Sounds great

I’m aligned with that.


About the redistribution, what should we do?

  1. Buyback $PSP with the BAL & OP at the end of each epoch and reward stakers in sePSP1
  2. Swap BAL & OP for $ETH and add them the current distribution system
  3. Distribute BAL & OP
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Either 1 or 3, I feel like 2 is overkill. The first option is extremely interesting as it creates an interesting flywheel into tokenomics.

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Great


Now last point if think we need to agree on is :

  1. Do we use only $PSP to bootstrap the voting power (vlAURA)?
  2. Do we use the $ARB airdrop?
  3. Do we use both $PSP+$ARB to ‘double down’ on these gauge emission?

I think that if we chose to double down PSP+ARB (3) then we’ll have to go with the buyback psp+distribute in sePSP1 (1) the rewards to stakers to compensate the selling pressure.

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Hi guys,
Sorry, I’m late on that interesting proposal.

Thank you for clarifying a lot the proposal with the last discussions, that was helpful.
If I had to give my opinion about the last questions @enerow asked, I would go for:
“Buyback $PSP with the BAL & OP at the end of each epoch and reward stakers in sePSP1”
&
“both $PSP+$ARB to ‘double down’ on these gauge emission?”

I hope we can vote this proposal soon.

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Except if there is a use case already identified for $BAL or $OP,
I’m in favor of doubling down (as long as we can regarding the cap mentionned here) + buyback for staker distribution. (while AURA getting locked)

It’s great imo if GovCo can be the managing organ for the assessment of this strategy.

The subject is becoming clearer!

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Cap is 25K $OP per week which is ~$36K at today price ($1.45), so we’re good in the case we grant $10K in $PSP + $10k in $ARB per week.

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