PSP liquidity incentives, Synergies
Provide PSP incentive to long-term committed suppliers of the PSP/ETH Sushi pool using Alchemist’s Crucible.
PSP liquidity on mainnet DEX is lacking and dispersed across several Uniswap 1% pools, SushiSwap and Bancor. To complement the upcoming 80% PSP/ETH Balancer pool coming up shortly, another sustained and more balanced liquidity source is required.
The PSP/ETH SushiSwap pool has been growing and already processes a neat volume: this three months incentive program will help to grow it to a decent TVL.
This proposal will establish a sustained and significant liquidity source for the PSP token on mainnet. SushiSwap was chosen because of the existing incentives + even liquidity distribution, preferable for the main liquidity source.
Having the reward program on Alchemist’s Crucible enables a sensible alignment of the reward structure:
- User deposit LP tokens into their Crucible NFT
- They can subscribe to reward programs to earn tokens.
- Exiting the program resets the multiplier.
All tokens earned are delivered upon exit, no claim is possible.
- 5M PSP budget coming from the Ecosystem Reserve for a 3 months program, which can be renewed at the PSP holder’s discretion.
- Additional SUSHI incentives pending SushiSwap’s team answer (see below)
⇒ Supplied to the Aludel (Reward Contract) for the PSP/ETH SushiSwap pool
The main KPI is the TVL of the PSP/ETH SushiSwap pool, with an objective of 10M PSP + ETH equivalent supplied, two months after the launch of the program.
Governance should also monitor the volume of transactions processed by the pool to measure its effective contribution to PSP’s overall liquidity.
- This proposal initiates a 3 months liquidity incentive program. Using the data available over the first reward period, governance will need to decide what to do for the next 3 months period with an upcoming vote.
- With a decent SushiSwap pool, a strategy based on Procol Controlled Liquidity could also be implemented, with PSP bonds to enable the DAO to accumulate PSP/ETH SLP.
- While this program was designed with the Sushi LP as the entry token, the crucible is agnostic and could support any LP needed in the future (such as PSP-ETH Curve Pool V2 LP tokens when available).
- The acquisition of CVX or CRV tokens can also be considered by the DAO to prepare the means to sustain our liquidity on Curve V2.
The implementation effort is minimal:
- Alchemist deploys the PSP reward program contract (Aludel) with the parameters given
- Change ownership to PS team
- PS DAO funds the reward contract
- Integration on Alchemist Crucible’s website
- The reward program is live and available to all
And here are additional implementation details related to the Crucible:
- Deposit token: Accepts PSP/ETH SLP
- Duration: 3 months program
- Boost Factor: x3 max boost, reached over 3 months
Funded bi-weekly at the end of each PSP staking epoch.
3 months program, extensible by DAO vote. If there is an extension; no action will be needed from already subscribed LPs (who can potentially benefit from the max x3 multiplier from the first day of the second period).
We’ve reached out to the Crucible team and are in contact with them, they are supportive. They have the bandwidth to support ParaSwap’s crucible implementation in the wake of the PSP holders vote.
We’ve reached out to the SushiSwap team and presented this project to them - we’re waiting on their answer regarding additional SUSHI commitment for the program.