Keywords
Gas refund, staking, Front-end upgrade, Smart contract development, Marketing & communication
Simple summary
This proposal is about deciding the budget for the $PSP-IPΔ11, the discussion can be found here : Gas refund for Stakers
Context
The idea is to reward users based on their total staked amount on ParaSwapPool and Safety Module (and other future staking programs).
Rationale
I propose to allocate 11M $PSP yearly to the gas refund program. The discussion about this proposal is still up, you can participate and discuss the features and restrictions using the link above.
The proposed budget is 1M $PSP/month allocated to the gas refund program.
Voting options
Accept the Gas refund program budget (11M $PSP, 4.63% budget)
Refuse the Gas refund program budget (11M $PSP, 4.63% budget)
Abstain
Should we allocate a gas refund budget ?
Accept the Gas refund program budget (11M $PSP, 4.63% budget)
Refuse the Gas refund program budget (11M $PSP, 4.63% budget)
The proposed 11M $PSP is in my view insufficient to reach the desired outcomes.
In January alone, the Paraswap v5: Augustus Swapper Mainnet contract registered c. 400 ETH of transfer gas for swappers, which would stand for 60% of the proposed annual budget (c. 690 ETH at current PSP/ETH price). On a 12m run-rate basis, the budget would therefore cover 14% of the gas paid on that contract only, which is negligible. And that’s assuming no growth in volume.
To both drive trading volume and incentivize PSP staking, then we should stick to the initial 30M suggested by @Lup. My proposal was designed to optimize the budget utilization by transferring the unused refund capacity (of the stakers) to traders in order to attract volume. If the budget is too low, the impact on trading volume will be very limited in my opinion.
We should view this budget as a leverage for Paraswap to gain market share and build volume stickiness (the NFT proposal). We should allocate accordingly.
This is true, however you dont take into account any restrictions here, i mentioned a few ideas on the initial proposal, this might reduce the eligible transactions.
How much PSP do you think we would need for this program ?
The 30M PSP discussed previously is a good number given how important that program is for the success of ParaSwap. I think we should be open to increasing that number if the total volume goes up.
My main assumption is that volume will be more driven by Traders than Stakers in my proposal since they don’t put capital at risk (not subject to PSP price variation) while can still benefit from sizable rebates. Large traders will continue to benchmark the aggregators once the program is launched, and factoring in the “staking risk” in their pricing benchmarks is not something they will probably do. As such, I expect that the gas refund program will be primarily allocated towards Traders.
For the sake of simplicity, I initially assumed that 50% of the 30M PSP budget (3k PSP for 4-6k unique addresses) would be used by the Stakers provided the limitations (refund %, daily limit). Although we shouldn’t USD mark-to-market that budget (I’m bullish PSP ), we should however anticipate further adverse movements that could burn the budget more quickly (i.e. if PSP plummets, then more PSP would be used for ETH equivalents). As far as Traders are concerned, as just outlined, 50% of the budget used is conservative and we should be prepared to extend that budget as suggested by @LupIF the GRP proves successful.
Overall, if we all agree that the GRP is strategically important for Paraswap, I suggest that we take the following approach to budget the allocation:
Allocate an initial 30M budget;
Define success metrics (eg. trading volume growth, staking growth, # of new addresses, etc.);
Decide on a quarterly basis if that budget should be reduced (if GRP failed or if PSP price increased dramatically) or extended (if GRP is not enough vs. positive outcome or if PSP price decreased dramatically).
I agree that traders would benefit most of it if there is no restriction or them, but i guess one of the key condition to be eligible on the gas refund should be to stake at least x PSP, also we should have ways to limit traders (for example a max tx/day, max swap amount eligible/day/week…)
I’ll share a revised proposal in the coming days with a 30M PSP budget for the gas refundc program
Stake X amount of $PSP to be eligible for the Gas Refund goes against the very idea of the market we are trying to create.
The goal is to attract as many traders as possible and thus as much volume as possible. So I don’t understand why we should limit trades.
The maximum number of trades will be self-regulated by the number of $PSP stake and the issuance of $rrPSP.
There seems to be a global consensus around this proposal so I agree with @sebastien-S3B and @Lup that we should adopt an inital budget of 30M PSP and especially define evaluation metrics.
I think it is very important to relate $PSP staked and gas refund. This will give value and utility to $PSP. If you open the gates with no counterparts, traders will simply dump $PSP as they earn and we will have the exact same issue that we have now.
I discussed this problem with @Lup earlier this week.
To date, current staking architecture don’t allow direct redirection to staking pools (PSP has to be converted to SPSP_PPX tokens beforehand making it too costly).
I understand that the team is working on a V2 that could enable what you suggest.
As you probably know, the roadmap for the GRP has been put to a vote , discussing the block-by-block direction of this ambitious proposal and giving the team the green light to start developing the first step.
Considering that this proposal also hinges upon the budget proposed, it’s basically also an approval for this budget allocation, so make sure to vote on this Snapshot as well!
), we should however anticipate further adverse movements that could burn the budget more quickly (i.e. if PSP plummets, then more PSP would be used for ETH equivalents). As far as Traders are concerned, as just outlined, 50% of the budget used is conservative and we should be prepared to extend that budget as suggested by