PSP-IPΔ13: Gas refund for Stakers

[Lup]

As a continuation of the ParaSwap DAO strategy to bring in more users & volume (see referral program), I propose to create a Gas Refund program in all supported chains. This should have double side effects: Encourage system participation (more Staking on ParaSwapPool, Safety Module…) as well as solidify the alignment of interest between the ParaSwap DAO and stakers. This will result in both parties are incentivized by this program: More volume for ParaSwap and gasless trades for system stakers.

1. Keywords

Gas refund, staking, Front-end upgrade, smart contract development, marketing & communication

2. Simple Summary

The idea is to reward users based on their total staked amount on ParaSwapPool and Safety Module (and other future staking programs).

The structure looks like this:

500 PSP staked: 25% gas refund

5,000 PSP staked: 50% gas refund

50,000 PSP staked: 75% gas refund

500,000 PSP staked: 100% gas refund

All kind of transactions should be considered: Trading, allowance, staking… Even reverted tx (conditions TBD).

Minimin staking period is 30 days, where users will lock their staked tokens (sPSP, stkPSPbpt…) on a contract. The rewards can be claimed at the end of each period: Gas-Staking-Epoch.

Rewards will be distributed in PSP.

Anti-abuse rules have to be addressed by either community guardian (TBD) or setting up a Kleros case, or maybe a mix of both.

3. Goals

The main goal is to bring more volume to ParaSwap.

4. Means

Up to 30k USD in PSP per user, and a maximum budget of 30M PSP

5. Metrics

Share of volume brought from the gas staking system + increase of stakers using ParaSwap. All can be tracked onchain

6. Forward-thinking considerations

• DAO can be the judge for spotting abuses. Systems like Kleros can be used.
• The budget can be adjusted depending on the success of the program or PSP market price variation in both directions.

7. Implementation overview

There will be a need to build few contracts + audits

8. Voting options

“For”, “Against” and “Abstain”

[dydymoon]

Thanks for this great proposal, I’m really excited about this feature, and I actually wanted to propose it in the budget proposal I’m working on, however i assume that 30M PSP is a yearly budget, and it’s probably too much imo

Up to 10M PSP yearly might be enough, especially if we limit the feature, for example :

• reduce the program to a few days/month
• 1k$ limit for daily gas refund
• Tx daily limit to avoid bots gaming it
• Minimum transaction amount to be eligible (on mainnet) ?

The staking option is really cool too, however it’s more a lock period right ?

[starny]

Great proposition!
I wait a little to see the opinions of other people before advancing in the discussion

@dydymoon already asked the questions i was wondering

[booriraa]

I am getting more and more excited about the project !

[nasmod.eth]

It seems good to me. new experiences are welcome.

[Tenzent]

1inch did this to great success, i think adding other chains is also a real good choice, i do think we should tweak the budget tho.

[Xavafrica]

I just love this proposal

[masstinsan]

I agree with first reply about introducing a limit (daily or weekly) for gas refunds. But i propose to add another layer to this structure.

How about stakers of psp who are eligible for this gas refund are allowed to ‘delegate’ their allowance for reward to outside non staking participants (eg traders). This is to eliminate the inefficient reward allowance due to many psp stakers who for whatever reason wont trade or make use of their allowance.

They are allowed to delegate their gas reward allowance for normal paraswap traders, who in turn get psp reward share (ratio between trader and staking delegator can be debated and adjusted; say 50;50?). The psp reward to traders should be vested or claimable upon meeting certain psp/volume ratio eg 1psp claimable per 100 usd transacted (just an example)

This system would ensure more participation in paraswap pool trading by outside traders who dont want to buy and hold psp. Also allow stakers more options in how they can exercise their allowance (by themselves or delegate it if they wont make use of it).

Probably make ‘delegation schemes’ for delegators/traders to choose from, based on reward ratio. Eg 10% to trader / 90% to delegator or 50% to trader / 50% to delegator. Traders will choose which scheme to use for their trades. Less reward for them → less vesting or volume needed for claim vs if they choose more reward, they get more vesting and more volume required.

[Dashwood]

Thank you for this proposal Mounir, I love it,

• Bringing more volume,
• Increase of stakers,

it is good for the growth of Paraswap.

Of course you have to motivate / attract new stackers but we also have to encourage them to stay and hold and prevent them from taking advantage of the opportunity.

it may be necessary to add the following conditions:

• Reward the stakers only after a staking period of 2 epochs
• The first 2 epochs of refund gas would benefit only to old/first stakers, those who stake from the start.

[CZhead]

I love it + this is a must have to fight competitor communication.

[disiaque.eth]

I completely agree with Dydymoon, that kind of proposal is inseparable from a global reflexion on the budget! Before voting on this, I would be in favor of discussing the global budget in the PS Research section.

(nevertheless the proposal seems very exciting to me)

[cryptologycate]

great idea thanx @Lup … don’t forget to add big social marketing …its huge and generous

[0xYtocin]

Super exciting idea! Of course, the details on budget and eligibility might have to be tweaked, but a gas refund not only on swaps but staking and even claiming will encourage people to use protocols that might usually be too expensive on mainnet.

I wanna throw a couple ideas out there myself, tell me what you all think of them

Refund a higher percentage of the gas in lower-gas chains?
In relatively low fee chains like MATIC or AVAX, a 25% gas refund could barely be saving a few cents (or fractions of a cent) at best, making even 500 PSP not worth it. Additionally, many holders in these chains usually have a lot less in assets.

I feel that more generous incentives for these chains would barely make a dent on the budget on the grand scheme of things, and it would encourage smaller investors to stake with us.

Slightly increase refund for long-term stakers?
I’m less sure about this one, but it could be a nice incentive to keep the funds locked up long-term. Maybe, after a certain amount of epochs, a ‘loyalty’ rate could be added. Something like after X epochs, stakers of 5000 PSP receive 52% instead of 50%. Encouraging long-term locking of funds could get people interested in the DAO and voting, and make people more hesitant of unstaking after significant price actions.

Edit: The second idea might be best as a separate proposal, but I think the former could definitely be included!

[jake]

I agree with this proposal.

This provided further utility for staking PSP, and can encourage some big PSP buys for those looking to take advantage of the gas reduction that this will afford.

I assume it will be difficult to model the impact of this incentive scheme, so it might be worth adding an option to review the PSP per user at the 30/60/90 day point to ensure that we are meeting the stated objective without creating some sort of distorted rewards structure.

[Mangix]

I agree with the first opinion, I think adoption in low fee chains is paramount and adding a few more incentives for these low fee chains can incentivize users to use Paraswap ,since 25% or 50% percent gas refund is nothing in these chains.
In terms of slightly increasing refund for long-term stakers:
I think this is also a great idea since although staking and unstaking already takes a lot of time. This incentive can fully negate DeFi mercenaries with more incentive for long-term staking.

[Joselito]

@disiaque.eth

agree with Dydymoon

Agree with Dydymoon and disiaque

[starny]

i can’t say more :’)

Agree with Dydymoon and disiaque

[sebastien-S3B]

I am very excited by this proposal.
I have some comments/proposals though:
1/ Staking threshold vs. Linear model: The problem I have with the proposed threshold model is that the levels are too high to incentivize fee restaking for regular users. I would be in favor of a linear model where 1 marginal PSP staked provides additional fee rebate. Concurrently, I would enable a “Claim & Stake” function to facilitate this (ideally receiving sPSP would be more optimal but not sure it can be implemented here). As such, we would reduce the PSP selling pressure by creating more incentives to restake the fees.
2/ Market inefficiency paradox: 30 days lock-up to be eligible to rebate might reduce the market signaling efficiency between PMMs. I would not adopt this “whole or nothing” approach, but use penalties instead. Eg. if unstaked at 15 days, then 50% off the claimable fees. This allows capital to flow more freely (given current PMM APYs, there are clearly arbitrage situations for large players).
Happy to hear your thoughts!

[0xBen]

Nice proposal and i agrre too with disiaque for discussing about glabal budget before voting.

[sebastien-S3B]

A 3rd idea that I think would be worth to consider: What if PMMs shared part of the gaz incentivization effort?
Since fee rebates are here to drive volumes and incentivize staking, Mounir’s proposal is a leverage on their overall return: a win-win for them.
Financing part of the gas rebate by a small PSP tax on their return instead of full inflation is something that sounds acceptable to me. These PSP would be redirected directly to the fee rebate pool to be claimed.