PSP-BPΔ1: ParaSwap DAO budget for 2022
Treasury, Budget, Strategies
The goals of this proposal are to establish a budget for the $PSP holdings of ParaSwap DAO unvested over a year. To do this, it seeks to lower the current staking rewards, rebalance the risk vs LPs, and establish upper spending limits for other DAO spending categories. This proposal will be split into 8 sub-proposals to validate every line of the budget.
Over the first year, ParaSwap DAO will receive 13.5% of the total supply, for a total of 270M $PSP. This proposal will propose a potential repartition of the ecosystem reserve unlocked.
To make the calculations easier and start claiming the 2nd year allocation in 2023, the 270M will be used from November 2021 to December 31st 2022, so 13.5 months.
The staking reward budget represents 50% of this funds at the current rate, which is why this text will propose a reduction to help the DAO expenses to be more sustainable, and reduce the selling pressure on $PSP price in the long term.
This proposal aims to set upper spending limits for different budget categories, and does not mean that all of the allocated $PSP will be immediately spent on the proposed sub-sections.
The only BP’s that will be immediately applied will be BP1-1 and 1-2, as they are affecting already existing DAO programmes. All other ones will hinge on further viability discussion and votes to ensure further deployment.
This proposal will be split into 8 sub-proposals that will be submitted with specific proposals on each subject :
- PSP-BPΔ1-1. Reduce the staking rewards budget (33M $PSP, 13.88% budget)
- PSP-BPΔ1-2. Increase the liquidity mining DAO budget (42.58M $PSP, 17.91% budget)
- PSP-BPΔ1-3. Curve war & $CVX budget (45M $PSP, 18.93% budget)
- PSP-BPΔ1-4. Gas refund program budget (30.8M $PSP, 12.95% budget)
- PSP-BPΔ1-5. Protocol owned liquidity (POL) budget (11M $PSP, 4.63% budget)
- PSP-BPΔ1-6. Grant-Micro Grant budget (5.5M $PSP, 2.31% budget)
- PSP-BPΔ1-7. Marketing & Partnership budget (4.95M $PSP, 2.08% budget)
- PSP-BPΔ1-8. Contributors budget (5.5M $PSP, 2.31% budget)
This repartition keeps a significant part of the treasury unallocated (59.42M, 24.99% budget) that could be used to farm while including all the points above.
- Accept the potential max spending of 56.78M PSP for February, March and April 2022
- Refuse the potential max spending ok 56.78M PSP for February, March and April 2022
PSP-BPΔ1-1: Reduce the staking rewards budget (33M $PSP, 13.88% budget)
PSP staking policy
As mentioned in the previous $PSP-IPΔ5 discussion, the 5M $PSP/epoch was a choice made by the team to bootstrap the staking module, but the goal was always to reach a more sustainable amount.
- Lower the $PSP rewards to 1.5M $PSP/epoch
If we lower the rewards from 5M to 1.5M $PSP/epoch, it would decrease from 44,4% to 13.88% of the yearly budget allocated for staking, which would leave more $PSP for the following points. With 1.5M/epoch, the APY would still be around 25%, which remains higher than most of the staking rewards on other projects.
On January 31st, the DAO already spent 25M $PSP for only 5 epochs, but we could lower it from the month after this proposal passes, which would create a yearly budget of 33M $PSP (from february to december 2022).
PSP-BPΔ1-2: Increase the Liquidity Mining DAO budget
(42.58M $PSP, 17.91% budget)
Liquidity mining, Rewards, Liquidity pools, Budget
Several liquidity mining programs have already started including Sushi/Balancer Mainnet, and QuickSwap/Cometh Polygon.
Sushi is paid by the DAO every week, and Balancer is also paid by the DAO, but all the rewards have already been sent to the contract. On January 31st, the DAO have spent 3.75M $PSP for these programs.
Cometh and QuickSwap rewards have been started by the ParaSwap foundation, which explains why there is 0 $PSP for the next 3 months on the tab. However, the DAO will need to fund it once the first program ends.
- Increase yearly Liquidity Mining to 42.58M $PSP max
- Start Liquidity Mining programs on BSC, Avalanche, Deversifi, Fantom and maybe other chains
This proposal increases the Liquidity Mining program to 42.58M $PSP: 17.91% of the yearly budget split as detailed below :
Ethereum (17.33M $PSP, 7.29% budget)
The budget for the first quarter on Sushi (LP 50/50) is 5M $PSP, so 20M yearly. I propose to reduce it to 12M yearly (5.05%), so 500K $PSP per epoch could start mid-March.
The budget for the first quarter on Balancer (LP 80/20) is 1.25M $PSP, so 5M yearly, and considering that the Balancer pool could have more risks because of the safety module, we could easily increase the rewards to 5.33M $PSP yearly (2.24%), so 250K per epoch could start in April.
For the sidechains, I propose to allocate 1.65M $PSP yearly for each pool, and adjust every 3 months depending on the activity on each pool. Another interesting approach could be explored in a few months by creating gauges to start a $PSP war.
Polygon (5.45M $PSP, 2.29% budget)
As mentioned above, Cometh and QuickSwap rewards programs have been started by the ParaSwap foundation, but the DAO will need to fund it after 3 months. A Balancer 80/20 could be created and can be useful if we want to implement the safety module on Polygon in the future.
To maintain 1.65M/pool and because Polygon pools are important, the proposed budget is 200K $PSP/ month during 9 months for QuickSwap and Cometh pools, and 150K $PSP/month for all other pools, on sidechains/L2s.
Binance smart chain (3.3M $PSP, 1.39% budget)
There is a discussion with PancakeSwap and ApeSwap on BSC to create $PSP pools. There is currently no way to create a 80/20 LP on BSC.
The proposed budget is also 150K $PSP/month for each pool.
Avalanche (3.3M $PSP, 1.39% budget)
If the community votes to deploy $PSP on Avalanche, we will start a discussion with Trader Joe and Pangolin DEX to create $PSP pools. There is currently no way to create a 80/20 LP on Avalanche.
The proposed budget is also 150K $PSP/month for each pool.
Fantom (3.3M $PSP: 1.39% budget)
ParaSwap is now deployed on Fantom, so we will start a discussion with SpookySwap and Beets.fi to create $PSP pools. The SpookySwap pool would be a 50/50 LP and the Beets.fi pool can be a 80/20 LP as it’s a Balancer fork.
The proposed budget is also 150K $PSP/month for each pool.
Deversifi (1.65M $PSP, 0.69% budget)
According to the PSP-IPΔ9, ParaSwap DAO made a loan of 2M $PSP to seed a $PSP/ETH pool matched with ETH owned by Deversifi. If the DAO gets 50% of the LP, we could avoid to stake it, ask Deversifi to do the same, and add a reward budget on this pool too.
The proposed budget is also 150K $PSP/month for the pool.
Other chains / Future $PSP pools (8.25M $PSP, 3.47% budget)
As there are many chains where ParaSwap isn’t deployed, we could add an additional LM budget starting in March. The proposed budget is 750K $PSP/month.
PSP-BPΔ1-3: Curve war & $CVX budget
(45M $PSP, 18.93% budget)
Curve War, Incentives, Gauges
This proposal is about diversifying the treasury by allocating 45M $PSP over the next 3 months to acquire $CVX that will be locked and used to create a gauge on Curve V2 for a future $PSP/ETH pool, and influence the rewards by voting. Until then we could also accumulate more governance power and/or yield with bribes earned.
The rewards on Curve are changing every week, and are decided by votes, so we need an important voting power to influence the vote in favor of ParaSwap DAO. As a vlCVX (CVX locked) control several veCRV (CRV locked) but in the future, also other ve tokens like FRAX, we propose to start accumulating voting power with the DAO quickly.
More informations on the Curve war can be found here:
- Diversify the treasury
- Accumulate governance power
- Earn additional yield
- Use the CRV war to influence CRV rewards on future $PSP pools
@Dydymoon will be working on a full proposal with @Jeanbrasse and @tokenBrice to explain all the details, as this proposal is only to vote on the total budget allocated.
However, here is a list of the possible ways to accumulate CVX:
- Gnosis auction
- Balancer LBP
- PSP leverage
- Uniswap V3 pool
- UMA KPI Options
- ParaSwap DAO bonds
The proposed budget is 15M $PSP/month for the next 3 months.
PSP-BPΔ1-4: Gas refund program budget
(30.8M $PSP, 12.95% budget)
Gas refund, staking, Front-end upgrade, Smart contract development, Marketing & communication
This proposal is about deciding the budget for the $PSP-IPΔ11, the discussion can be found here : PSP-IPΔ13: Gas refund for Stakers
The idea is to reward users based on their total staked amount on ParaSwapPool and Safety Module (and other future staking programs).
I propose to allocate 30.8M $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 2.8M $PSP/month allocated to the gas refund program.
More information here : https://gov.paraswap.network/t/psp-ip-13-gas-refund-for-stakers/319/41?u=0xytocin
PSP-BPΔ1-5: Protocol owned liquidity (POL) budget (11M $PSP, 4.63% budget)
Protocol owned liquidity
The liquidity mining is not sustainable long term from a protocol treasury perspective. We could explore the OHM pro option (or another protocol) that would allow the DAO to buy most of the liquidity from the users using a bond mechanism.
If the PSP-BPΔ1-2 is voted, the yearly budget for Liquidity Mining is 16.67%. By adding 4.68% for this program, we could probably reduce the Liquidity Mining by a lot next year, considering that most of the liquidity will be held by ParaSwap DAO.
- Increase the $PSP liquidity owned by the DAO
- Reduce the liquidity mining programs in the coming years
There will be a detailed proposal about this program, as this one is only to vote on a budget.
It can be seen as a double spending with the liquidity mining budget, but the idea would be to reduce or stop the incentives in the next few years.
The goal would be to start it in mid February/early march, which is why there is 0 $PSP allocated for the first month on the table.
The proposed budget is 11M $PSP yearly with a distribution of 500K $PSP/epoch for the bonds rewards.
PSP-BPΔ1-6: Grants budget
(5.5M $PSP, 2.31% budget)
Community involvement, Rewards, Improve ParaSwap decentralization
This proposal is about to start a Grant program to fund ideas submitted by the ParaSwap community with a focus of bringing more dev skills to the ParaSwap DAO. It could also be used to reward community members that handle a proposal from the idea to the execution with micro grants.
This proposal will help support the community work and external projects building on top of Paraswap.
- Provide resources to fund community ideas/projects/involvements
ParaSwap DAO can allocate 2.31% of the yearly budget to fund growth and community initiatives with a grant program. Starting a grant program can help increase the involvement of the community and can be very useful to sponsor or participate in projects, integrations and initiatives from DAO members.
ParaSwap DAO could elect a grant committee that would check if the requirements for the funding requests are met and help the members/projects to create the proposal.
Depending on the feedback and votes on this proposal, there will be a full proposal about the Grant program.
The proposed budget is 500K $PSP/month max:
PSP-BPΔ1-7: Marketing & Partnership budget
(4.95M $PSP, 2.08% budget)
Marketing, Contests, Events, Partnerships
Allocate a marketing monthly budget handled by a community multisig.
Creating a budget dedicated to marketing and partnerships would allow the DAO to move quickly on small expenses.
This proposal is about creating a budget easily accessible by the community. This could concern several points :
- Twitter contests. Increase the followers of the project and kick start a partnership to link two communities (for example, a twitter contest “Like, follow & RT and try to earn X $PSP” or “ Follow X Project and ParaSwap, Like & RT x tweet and tag friends” etc
- Trading contests. We could do trading volume contest on new chains for example, and reward with $PSP
- Rewards for AMAs. By creating partnerships with other projects, we will participate in AMAs, events and this is good occasions to rewards the community for the best questions
- Partnerships with other projects. It can be useful to use part of this project to start partnerships with other projects by creating short term incentives
The community members on the multisig should be decided with a DAO vote.
It might be worth considering low expenses handled by the multisig without a DAO vote, for example below 3000$.
Higher expenses should follow the regular DAO process with a Snapshot vote.
The proposed budget is 4.95M $PSP yearly with a distribution of 450K $PSP/month maximum for the marketing budget.
PSP-BPΔ1-8: Contributors budget
(5.50M $PSP, 2.31% budget)
Reward involved contributors
Make ParaSwap DAO autonomous with salaries for involved contributors
Several types of contributors are working on ParaSwap DAO: Scribes, Moderators, Ambassadors, Delegates… The goal of this proposal is to reward each one of them to decentralize the DAO at the maximum.
This proposal is different from the grant program which will reward punctual help on a dev side, or a project building on top of ParaSwap, as it will reward active contributors.