As a member of the GovCo who worked on this proposal, my opinion is biased, so I’ll just add this.
Do you think we should continue to give $100K+ each epoch for less than $10K protocol revenues?
Thank you for the info. It is true that it seems to be untunable over time. Let’s study something better for the protocol
This says it all. I’m for retuning and good job GC.
I have understood the need to adjust in order to make the GRP sustainable but what is being proposed here is a solution that will clearly make high volumen participants look other alternatives.
I speak for myself and two other stakers who market bough $PSP and provided liquidity in order to obtain 95% of the refund due to our high level of activity. Getting to this level of refund is in no way a low investment and the GRP was determinant for our choice compared to other aggregators. ParaSwap has a great product and offers top rates but these rates aren’t often that far away from their competitors.
I understand there is a sustainability problem but as others have stated 500$ is a way too low amount. Instead maybe other solutions such as vesting these rewards could be discussed. For example a 1 year vesting for $PSP rewards that have surpassed 500$ (but up to 2500$) would personally be reasonable for me and contribute in reducing sell pressure.
I would ask the participants of this DAO to please consider the importance of high volume traders, the competition in this space in getting more aggressive and we should not take our users for granted.
I agree that 500$ monthly refund on 1M PSP stake is too low, someone said that is 5 ETH (9k) so more than 25% ROI a month.
Why don’t we set a bigger PSP score for max refund like 5M or 10M?
To get more PSP score people need to either:
I understand that whales and algo traders, etc. are opposed to this proposal, but if we look at the GRP in terms of APR:
1M of Paraboost in sePSP2 requires ~10-11k$ of investment. With a limit of 500$ of refund per epoch we are getting a nice 54.5% APR (not bad at all!).
What I propose is to keep the 1M of Paraboost score required to get the 95% of refunds (in order to not impacted current users that got this level), add a cap of max GRP regarding your volume + Paraboost with a start cap at 500$ (that way whales, algo traders, etc. still get good refunds but have to be more involved in Paraswap’s business as the social escrow model requires).
Example:
“there is a difference between getting a bonus by participating in the good of the protocol and exploiting the protocol”
I was for this proposal from the beginning and after reading the post of Enerow, even more.
However, and because nobody seems to know, I suggest that it would be relevant for us to know more about the position of Paraswap in comparaison of other aggregator. (From my side, on Defillama, Paraswap is most of the time not the first one). Because at the end, in few years, it will determinate who will stay alive and who will disapear…
While I still think a reduction to 500$ is a drastic measure, I agree with this approach.
A solution somewhere in the middle could be better. If rewards are now going to be SePSP1 this is similar to having your $PSP vested for a month. We could lower the amount of max rewards per epoch but also include a longer timeframe for them to be claimable. I’m personally in for the long run as much other high volume trades are, so a vesting for 1 year sounds reasonable.
I vote for the proposal
After reading the differents opinions and interests, I think this proposal could be a breakpoint for some users.
In first place, it’s logicall we shouldn’t continue with a GRP that is rewarding with a 100k$ to high trade users when they are generating 10k$, simply it’s not sustinuable.
On the other part, reducing the GRP reward cap from 2500$PSP to 500$PSP in one step it’s a quite rought and could mean that some users with a high stake and trade values will get withdrawed (dumping the price and withdrawing some liquidity).
Also, I saw someone telling that Paraswap usually offer a better price or ratio than others agregators and It’s not always true.
Yes, Paraswap is a good protocol and I want see and participate in their grow, but sometimes errors are generated when we do a trade or the time for call the api is slower than 1inch (i.e.).
For these reasons, I think we could think about this two proposals for the GRP:
1.Reducing the GRP reward cap to 1250$PSP to decrese 50% the sell presure and increse the steps from 50% to 95% refund, doing high % refunds less accesible.
2.Reducing the GRP reward cap to 1500$ and split this into 1000$PSP and 500$sePSP
Your comment is not about finding a solution but just a threat “leave it like that or I leave” even if it’s unsustainable and the entire DAO annual Gas Refund Program budget will be drained within few months.
Also you’re only talking about the GRP like it’s the only purpose of ParaSwap Social Escrow Model, in fact GRP is just the cherry on top of the Real Yield profit sharing distribution to sePSP holders which is the main purpose and is sustainable.
If you bought your PSP at 45c and took advantage of the Gas Refund Program since then at a pace of $2500/month, no doubt you’re in big profit by now. But anyways that’s not the point here.
The crypto ecosystem as a whole dumped hard, and as you like to mention 1inch, their token also lost 95% of its value.
sePSP2 stakers where rewarded on average with Real Yield in $ETH around 32% APR for Epoch 1.
Epoch 2 with the current volumes will generate at least 2 times more rewards.
Doesn’t sounds that miserable to me, but yeah compared with the 300% (12 x $2500, $30 000 for $10 000 staked) you currently gets from the GRP with it’s current limit, I guess it is…
This is not a paraswap team proposal but a GovCo one, committee that has been formed in a decentralized manner, appointed by the DAO to monitor and ensure that the social escrow model runs as intended and to take action in case key vulnerabilities are found, which is the case here.
Agree with point 1. :
Decrease gas refund step-by-step, less drastic decrease
Scale refund by Score starting from $X (<500$), complainers can keep their gas refund by buying more PSP or doing more activity.
500$ MONTHLY on a minimal stake of 10K (60% YEARLY, fee sharing EXCLUDED) is even crazy, someone tell me where you can get this guaranteed ROI anywhere?
Might even want to tone down thse numbers, considering this.
In fact 1inch has a 10k$/months limit but it’s not the same tokenomics you earn 1inch token not real yield in Eth. You are pointing that 28d of freeze is too much but 1inch using something similar staking system as veToken with a locker time up to 2 years and you currently need 45k$ of 1inch token .
500$ represent 94% of user refunds.
Why usual/retail users do not need refund? They need it as you need it… And retail have a higher percentage of probability to keep those PSP and event put in sePSP than you dumping those PSP for the quick shot
This is useful context, thank you for sharing @enerow.
I think what’s missing from the proposal above is exactly what you added here - it would be good to have a second shart, with the same categories of USD refunded on the X axis, and on the Y axis you can show the protocol fees generated for the cost we’re paying for these refunds to illustrate that they’re clearly unprofitable. Essentially this is toxic liquidity we don’t want to be paying for.
Awesome then let the “toxic liquidity “ leave without having to wait for their funds to be available. You wanna change what was established in the first place, fine then. So nobody thought when proposing and voting for the GRP that some people would actually get to the $2500 limit? I didn’t see any complaint when this was discussed.
One of the biggest problems of changing the stablished rules in the middle of an epoch is that creates a lack of confidence between users. Nobody would trust any promise given. I supose the GovCo are proposing to implement the changes in the following epoch (3rd).
That’s true, we can discuss and accept the changes that we all vote (if someone is for or against, it’s a personal opinion and the main goal is do the protocol sustinuable), but it would make sense that they should apply that on the next epoch, not in middle of one.
The bad result of the proposal where the cap limit was setted to 2500$PSP shouldn’t fall on users.
Apply the result of this proposal at the current epoch could break the confidence between users and protocol.
Part of the point of PSP 2.0 was to embed mechanisms (GovCo and EPs) that recognizes that we’re in uncharted territory with the need for close monitoring and iterative solutions to problems that crop up from PSP 2.0’s implementation. There shouldn’t be any complaints that we’re discussing a situation exactly as envisaged by these mechanisms.
I just read your previous posts above to understand where you’re coming from. I appreciate that you’ve made the investment into staking PSP, but you also agreed that the current state of affairs is unsustainable if we look at Paraswap as a business. We are essentially paying more than the revenue generated.
Now part of the issue here is how competitive aggregators are. While you are not generating fees yourself (and I’m just being straight here as you admitted you’re one of the market makers earning the GRP), perhaps the other thing that would be useful to understand is how your liquidity provisioning helps attract the retail users that are profitable. You could potentially be a loss leader for Paraswap.
I’m not enough of an expert into how Paraswap’s business works to answer the above. But I do think the loss leader vs. toxic liquidity scenarios need to be fleshed out more to really understand the cost-benefit tradeoffs. Perhaps @enerow and @0xYtocin can share more information on this.
Is difficult to understand that with only 7% of user earning more than 500$/epoch, the system is unsustainable. When the GRP was made long time ago… nobody though that someone would achieve the 2500$?
Let’s think if more big users would have come to psp… What would have happened if the 7% was a 17%?
when in a budget the inputs are less than the outputs, the easiest solution is reducing the the outputs… but what could we (all) do to increase the inputs? What could we do to elevate the amount that dao obtain for not reducing the refunds?
such drastic reduction in the middle of the game is a total lack of confidence in the promises given by the project…