PSP-EPΔ03: Adjustment of Gas Refund Values [GovCo Proposal]

Governance Proposals Approved Proposals
1

PSP-EPΔ03: Adjustment of Gas Refund Values

Keywords

Gas Refund Program, PSP incentives, PSP-EP

Simple Summary

To adjust the current reward mechanisms and parameters of the Gas Refund Program to ensure its long-term sustainability

Context

The Gas Refund Program is an initiative spearheaded by the DAO to alleviate the cost of gas for stakers using ParaSwap. As these refunds are done in PSP, three main limits were set during the initial proposal and budget allocation, as well as the later adjustment and renewals in the PSP 2.0 proposal:

  • A per-address limit of USD 2500 per epoch
  • A per-address yearly maximum of USD 30k
  • A global budget limit of 30M PSP

Until now, these limits have been enough to maintain the program sustainable. However, a new surge of activity driven by a small number of wallets shortly after PSP 2.0 has put pressure on the current budget in a way that threatens the exhaustion of the budget well before the end of the year.

While most of this volume comes from a healthy level of protocol growth (such as the doubling of eligible stakers that are part of the GRP), one worrying figure concerns the top eligible claimants of the GRP compared to previous epochs.

In summary, for the first PSP 2.0 epoch, the Gas Refund Program distributed 3.07M PSP, more than 10% of the total global budget.
Less than 7% of all refunded wallets got 83% of the total PSP refunded, despite only generating 8.8% of the epoch’s volume.

Were this behavior to continue during the second epoch, over 20% of the total global Gas Refund budget could be drained, with +80% of it going to these small number of wallets.

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To ensure the sustainability of the Gas Refund Program, this proposal aims to amend the current limits to a new level that will keep the budget sustainable while not affecting the vast majority of users.

One way to ensure the sustainability of the program is to reduce the viability of the program for users who do not have a long-term outlook for PSP. To do this and to further promote the engagement of gas refunded addresses with PSP 2.0 and the social escrow system, a potential solution is the distribution of sePSP1 instead of PSP. This saves the staking gas costs for users with a long-term outlook for PSP and also makes the claimable sePSP1 be considered as part of the user ParaBoostScore without the need to claim.

In addition, and to ensure the long-term sustainability of the Gas Refund Program, this proposal aims to amend the current limits to a new level that will keep the budget sustainable while not affecting the vast majority of users.

Goals, Means, and Implementation

Due to the time-sensitive nature of these measures, the proposal proposes the following changes to be implemented to the gas refund program before the end of Epoch 2 and applicable to it:

  • Reduce the maximum per-wallet limit to $500 per epoch
  • Replace the distribution token from PSP to sePSP1 only on Ethereum

Metrics

The success of this proposal can be measured by whether Epoch 2’s PSP Emissions adhere to the expected budget projections for the year or not and have a fair distribution of the total amount of PSP distributed in the epoch.

Forward-thinking considerations

While this new per-epoch limit might be sufficient to mitigate the current emissions, it could be adjusted again if the average network gas emissions rise throughout the network.

Additionally, in the future, the DAO could consider additional measures to limit the opportunistic nature of Gas Refunds.

Voting options

  • For
  • Against
  • Abstain
12 Likes
2

With the PSP 2.0, ParaSwap has chosen sustainability. Reducing its inflation drastically, while keeping initiatives for its community like the gas refund.

But this type of initiative, although admirable, should not make us fall back into the same pattern. Especially since it seems that GRP mostly benefits a small fringe of users not necessarily in a long-term logic with PSP. This is the opposite of what social escrow represents.

I am in favour of adapting the gas refund to avoid too large and unbalanced $PSP issuance.

It should be noted that the GovCo, shortly after being voted, has already carried out an important analysis and drawn the first conclusions and proposal to make ParaSwap more durable. I look forward to seeing what their other input will be.

9 Likes
3

I think many of us were eager to have a report and analysis of the epoch 1 GRP.

It is clear that the gas refund clearly benefits everyone but that some addresses seem to be pushing the system to the limit.

It seems more than necessary to limit the amount of the refund in order to continue to benefit as many people as possible without endangering the $PSP

As for the rewards in sepsp1, this will make sense for those who want to perpetually reinvest their rewards without paying.

The implementation of the gouvco seems to bear fruit. Glad I voted for this proposal.

4 Likes
4

My vote: Against the proposal.

1 Like
5

The problem at hand is clear and the solution proposed is logical.

The efficiency of the proposed solution can however only be analyzed after it’s implementation.

Therefore, I support this proposal.

1 Like
6

Your first post should maybe contains more arguments. It gives the opportunities to every one to understand your opinion ? :blush:

1 Like
7

I came to paraswap from 1inch due to the refund of gas. With this new proposal I will not have incentives to keep making swaps in paraswap instead of other aggregators.
And like me, many others will not come to paraswap with such a low quantity to be refunded per epoch.

I vote against this proposal.

1 Like
8

It’s quite clear that it is absolutely impossible to continue distributing 3M PSP or more each epoch.
For, because it could become much much worse in the future.

2 Likes
9

Many? You speak for 7% of all stakers. Seems not really huge. But it appear that you cost a lot at the DAO.

Do you think these psp will be better used for the community in your wallet?

You say you just 1inch for the gas refund? So that means you come to take advantage of a niche that no other aggreagators offer?
I take it that even $500 will be more than 1inch and therefore you will stay with paraswap? Especially since paraswap often offers the best price for your trades.

11

If you want people to come to your project, you have to give them something different from the others. Better rates, lower fees, refunds, staking…

It is true that sometimes there is a better price in psp than others, but it is not frequent.
Fees are usually a bit higher than others.
Refunds… That’s what we are discussing here, another incentive.
Staking: Although psp is giving a quite good API, others are giving a much higher API (1inch, for example).

And, finally, the behaviour of the app is not differential, it collapses frequently and you have to wait for rates to be updated (this should be discussed in other post).

So, what can make people choose psp and not other aggregators? In my opinion, gas refunds is an incentive that can make a difference between psp and the rest of aggregators. If there isn’t this incentive, people will probably choose another aggregator.

2 Likes
12

You are absolutely right that a product must stand out in order to gain market share.

And that’s what 2.0 has done at PSP, which now redistributes all of its revenue in ETH to its users and the DAO.

As a result you get paid without having a strong inflationary impact on your $PSP token. PSP is the only aggregator to do this.

Furthermore, you raise points that if not shared as you do now cannot be addressed. This is the strength of the dao of tomorrow that PSP is putting in place.

To come back to the main topic which is the usefulness of a gas refund at $500PSP.
How to justify that 7% of the wallets receive 83% of a program that is supposed to support the largest number.
Your reasoning goes in a direction that does not serve the 93% of stakers.
So the question is. Why would the DAO have more interest in paying you than in funding actions that will benefit the protocol?
Do you serve the interests of the protocol and therefore the community enough to justify its 2k5 refund?

2 Likes
13

I totally agree with your point of view.

14

I vote for the proposal.

3 Likes
15

I vote against.
There are people who use paraswap just for this refund.
No other advantage compared to 1inch or uniswap.
These addresses make many trades with very high volume. At least 30% of last month volume. If your exchange do not need that volume, pass the proposal. These addresses will go away and sell all psp that were bought for staking. To get 95% gas refund you need to stake around 5eth. nobody will stake 5 eth to get 500$…I won’t.
So by passing this proposal you will just get huge selloff plus 30% decrease in trades and volume.

2 Likes
16

That is what I am trying to transmit.
With a low gas refund, there will be few things in paraswap that will atract traders.

2 Likes
17

No offence intended. You don’t seem to know your stuff.

The advantages are numerous because unlike uniswap, Paraswap is an aggregator, which gives you better prices than uniswap which is a DEX (just not the same concept). And often better than 1inch too.

Furthermore, the 30% volume figure is wrong because we are talking about 8.8% volume. But if you have any figures to give us other than the govco. I would be happy to read them personally.

Once again, you claim that the gas refund is the only incentive to be on paraswap. You have therefore missed the 2.0 which is at the heart of the paraswap project much more than the gas refund…

Moreover, each month the addresses in question dump their refunds, 2.4m psp each month in selling pressure for what result ? 8.8% of the volume…

So I repeat. Why should the DAO have less legitimacy to use these 2.4m $PSP via investment proposals voted and discussed with the community than single users who take advantage of an incentive niche that no longer has any place with such amounts.

2 Likes
18

The major point of discuss here is the sustainability of the GRP. The GovCo after analyzing the data from the first epoch of psp2.0 discovered that at the current rate, the 30M per annum budget allocation of PSP for the GRP will be exhausted long before a year. Rather than creating further inflation by increasing the budget they have proposed to block a huge leackage in the system where 7% of wallets siphon over 80% of the allocation.

Be reminded that one of the main objectives of psp2.0 is to drastically reduce inflation, therefore every action that reduces inflation without affecting the majority of users is beneficial. If nothing is done now, there’s every tendency that the inflation will further increase in the future.

The points you raised about product stability is important and should be addressed separately.

Also, GRP is just a single component of the psp2.0. There are many more incentives that makes users choose Paraswap… the greatest being better rates at lower fees.

Conclusively, when the GRP proposal was being discussed, the DAO already predicted the possibility of abuse through fee farming or other exploits and stated that the GRP proposal shall be amended upon discovery of such. This is a case of choosing 93% of users over 7%.

2 Likes
19

In general I’m in favour with this proposal, but I would like to know if this part :

Take into account the gas refund for sePSP2 migration? Which will be remove after the end of the current epoch.

Regarding this point :

I would also like to have a way during the 7d after the epoch end to add some Eth and directly have sePSP2 instead sePSP1

Edit: the point highlighted above would be handle if the PSP-IPΔXX : sePSP1 Upgrade Module is approved.

1 Like
20

Why would a person choose Paraswap instead of choosing 1inch (i.e.)?

  • The dapp is slower
  • The dapp gets sometimes blocked thinking
  • No refresh of ammount
  • No way to fix the fee value prior to executing the swap
  • cannot see the price of the change
  • fees are higher (although it is said that are lowers). Sensitively higher that in 1inch for same gas figures introduced in metamask for priority and gas
  • not possibility of gasless swaps
  • less routes
    …

So, why choosing Paraswap?
Yes, sometimes (sometimes) for certain pairs, rate is little bit better. Sometimes.
But the MAIN reason nowadays, for me, is GAS REFUND. Maybe in the future, with some more improvements, would have more reasons to choose Paraswap. But not today.

You are right in one thing, if the psp waste soon, no more gas refund will happen. Maybe yes, the max had to be reduced from 2500. But, from 2500 to 500, is a wide range. Could be 2000, or 1500, but 500? this is not an incentive to use Paraswap.

In may case, I will use paraswap some few days a month… just up to reaching the 500. The rest of the time, I will use other dapps. Is clear. And other dapps have gasless swaps, that maybe is not the best option, but with the actual prices of gas, using paraswap with a high paraboost for high level of gas refund was a must. If I don’t have this gas refund, few things remains for choosing Paraswap.

I look for my interests, as everybody do. Thanks for reading.

Proposals: reduce up to 1500. incentivize the people with low level of paraboost to increase their gas refund. Incentivize keeping the psp after the refund in the wallet instead of selling (no idea about this), maybe with staking, or more paraboost. Maybe payment in SSP1 but not sure about this, will just only add a delay of 28 days. And more fees for the user.

2 Likes
21

Thank you for your suggestions for the proposal! For people replying, I’m just dropping a reminder to please keep the discussion in topic to what the Governance Committee is trying to solve, which is the sustainability of the Gas Refund Programme and solutions to ensure the most productive trades and actions are rewarded.

I would also like to point to people what is being said at the end of the proposal:

While this new per-epoch limit might be sufficient to mitigate the current emissions, it could be adjusted again if the average network gas emissions rise throughout the network.

Additionally, in the future, the DAO could consider additional measures to limit the opportunistic nature of Gas Refunds.

This suggests that the current measures are only immediate to solve the issue before the end of Epoch, and in the future if the situation ameliorates or new solutions are found the limit could be lifted again.

3 Likes