PSP-IPΔ16 - Activate PSP/BNT Dual LM campaign on Bancor 3

Governance Proposals Approved Proposals
1

Proposal to activate PSP/BNT Dual LM campaign on Bancor 3

Keywords

Protocol Owned Liquidity, Liquidity Mining, Rewards, PSP, BNT

Simple Summary

A proposal to deploy PSP funds from the treasury on Bancor has recently seen a positive response from the community.

Bancor 3 will address some of the concerns around Dual LM rewards sustainability, and implement a Dual LM program whereby any PSP committed for rewards will be matched with BNT in dollar value, up to 50,000 BNT ($138,000 with BNT at $2.76 or close to 1M PSP).

This proposal seeks to commit 1M PSP for the Dual LM campaign and benefit from 1M worth of PSP provided by BancorDAO. The rewards are auto-compounded gaslessly and become immediately available as trading liquidity.

Context

If PSP-IPΔ15 is Passed 1M PSP for Liquidity Mining Rewards (worth 50,000 BNT, $138,000 with BNT at $2.76 or close to 1M PSP) will be committed to the Bancor 3 PSP pool.

Goals

  • Incentivise $PSP Liquidity protected against Impermanent Loss on Bancor 3.

  • Better utilise the DAO funds for LM by leveraging the Bancor 3 dual LM program, which doubles the rewards up to 50,000 BNT worth of PSP.

Rationale

The PSP Pool on Bancor currently holds 3.5M $PSP in Liquidity of which 2.5M PSP belongs to the DAO. The pool currently has an APR of 58.94%. It is now the second deepest pool, with the PSP/ETH 1% Univ3 pool being the deepest at $1.72m TVL.

As mentioned in PSP-BPΔ1-5 by @dydymoon Liquidity Mining is not sustainable long term.

Bancor 3 aims to address the Liquidity Mining problem:

  • Funds committed for Liquidity Mining campaigns become immediately available as liquidity and can be used for swaps.

  • Rewards auto-compound gaslessly and are not sold for the pairing asset - users don’t need to claim or restake rewards.

There is also currently a Dual LM program for Bancor 3 whereby:

  • Any PSP committed for rewards will be matched with BNT in dollar value, up to 50,000 BNT ($138,000 with BNT at $2.76 or close to 1M PSP).

  • The BNT LM rewards will me emitted over 24 months and with a decay emission model, but the PSP rewards can be emitted over any period and can use a constant and decay emission models.

  • This means that the Paraswap DAO can commit 2M worth of PSP (1M in PSP, 50k in BNT) for the cost of 1M PSP, and incentivise the pool on Bancor 3.

Means

The Proposed Budget is 1,000,000 $PSP to be committed to dual LM rewards on Bancor 3.

Voting Options

  • Accept the use of 9% of the POL Budget (1,000,000 $PSP) to commit to Dual LM rewards on the Bancor 3 PSP pool.

  • Reject the use of 9% of the POL Budget (1,000,000 $PSP) commit to Dual LM rewards on the Bancor 3 PSP pool.

  • Abstain.

6 Likes
2

Considering that the LM value of this incentive will be matched with BNT, we will get a lot more bang for buck compared to other mining incentives, so that alone doubles the utility of the PSP spent in this IMO.

However, as I am not familiar with the Dual LM campaign, what is the approximate time we could expect these 1M PSP rewards to last? Is there any current predicted value for how often this Dual LM would have to be renewed? I’m mostly just wondering this to make it fit within the budget!

3

Hey!
The PSP is up to our own discretion, we could give it out in the first week if we wanted to the only time constraint is on the BNT which is released over two years. As far as the Timing we can expect it to be around beginning of next month after the B3 beta.

4

If this is good with everyone I’ll put it up to a vote tomorrow.

2 Likes