PSP-IPΔ10: ParaSwap Safety Module - MATIC Liquidity Component

1. Proposal Number & Name

PSP-IPΔ10: ParaSwap Safety Module - MATIC Liquidity Component

2. Keywords

Smart contract development, security, PSP liquidity incentives, parameter update

3. Simple Summary

The current safety module was proposed when PSP was only available on the ETH Mainnet. However, Balancer is also available on the Polygon/MATIC network. This proposal seeks to extend the safety module to this sidechain, and discusses the budget to be allocated to this module.

4. Context

As a component of the safety module, one of the first proposals put forth to the DAO was the Liquidity Component of the Safety Module. In summary, by staking the LP token of a 80/20 PSP/ETH pool, users would be rewarded in exchange for an epoch-long withdrawal period and the risk of slashing as a source of liquidity for compensation.

Now that the $PSP token is available in the MATIC network, this proposal aims to extend the module to the Polygon version of Balancer as well. By doing this, not only are more uses introduced to the token in the Polygon network, but it allows smaller scale investors usually priced out by Ethereum gas fees to contribute the security of the protocol.

The pool will also be paired with the MATIC token (the native token of the network) as opposed to the current PSP/ETH pair. This also opens a new opportunity to existing investors staking on the ethereum mainnet, as it gives an alternative pair to invest in while still receiving the same benefits.

5. Goals

To extend the Balancer safety component staking onto the Polygon network, and provide the stakers with appropriate liquidity incentives.

6. Means

Other than its deployment on a new chain, the steps of this proposal would mimic those of the original safety module.

7. Metrics

Increase of the total TVL put under safety staking , and facilitation of reaching the goal of $5M TVL within a month of implementation of these modules.

8. Forward-thinking considerations

Were this proposal implemented, the DAO will now have two pools to secure the Paraswap network with. It is strongly suggested in the future that if slashing were to occur, a vote would have to bundle both pools together, to avoid people who are only staking in one pool to vote against slashing from a particular pool.

9. Implementation overview

  1. Creation of the pair on the MATIC Balancer DApp
  2. Port the safety staking functionality to Polygon.
  3. Allocation of 1.25 M PSP / 3 months to this pool (identical to the Ethereum budget allocation)

10. Voting options

  • Safety module ported, new PSP budget allocation
  • Safety module not ported.
12 Likes

In my opinion, I think it’s better to wait and see how the staking module will perform in mainnet. The current results are not great in terms of liquidity and volume, although the APY is still very high compared to staking and LM in all chains. It’s better to improve the current incentive programs before launching a new one.

7 Likes

I wasn’t aware that the liquidity module in mainnet was underperforming! In either case, since the implementation timeframe was not specified in the proposal (other than in metrics), I feel that a vote for this simply signals an approval to port the module and provide funds for it. If a reform of the original SM is needed, maybe the 2.0 could be pushed directly to multichain if this vote passes?

5 Likes

I think it would be hard to predict performance on Polygon or Fantom compared to Ethereum since existing ParaswapPool users are less likely to incur the expense as well as inconvenience of waiting 2 weeks to move to the safety module. Users like myself primarily use Paraswap on Polygon, Avalanche and BSC are unlikely to bridge funds to Ethereum to purchase PSP. Whereas the Safety Module on Polygon and Fantom would be far more appealing.

1 Like