Co-authored by: Burns, 0xYtocin
Keywords
Governance, PSP 2.0, Accountability, Rewards, Staking
Simple Summary
This proposal clarifies the roles, responsibilities, and membership of the Governance Committee contributors. This governance committee will be in charge of ensuring that the PSP rewards distribution is working as intended, and will meet regularly to monitor this.
Context
First introduced in the PSP 2.0 proposal, the role of the Governance Committee (or GovCo) is to ensure that the systems being introduced remain fair and unbiased, as well as execute Emergency Measures in case a key vulnerability is found (which are exemplified later in the proposal).
This proposal seeks to expand this into a more detailed framework, exploring the structure of GovCo, the responsibilities of members, as well as a list of potential members to be nominated for the first iteration of the committee. Additionally, the proposal introduces a framework for further decentralizing the structure of the DAO in the future, such as the trial of the ‘ParaTroopers’ contributor system.
With the passing of this proposal, the ParaSwap DAO will be equipped with contributors able to monitor the successful implementation of PSP 2.0, which will be needed to accomplish the required goals set in the initial trial period outlined in the proposal. Additionally, this proposal will permit for the experimentation of a contributor-based distribution system.
Goals
The main goals of the proposed Governance Committee are as follows:
- Ensure that the Social Escrow system and PSP 2.0 reforms are working as intended
- When applicable, monitor and report potential vulnerabilities or unintended uses of the Social Escrow PSP system, and trigger Emergency Measures if necessary.
- Report suggestions, improvements, and ideas to the DAO about the Social Escrow staking and reward systems associated with it (meaning revenue redistribution + gas refund rewards).
- Implement bi-epoch checkpoints where the Governance Committee will discuss PSP 2.0 implementation updates, correct rewards distribution, and potential improvements.
- During the end-of-epoch checkpoint, ensure that the rewards are effectively distributed as established in past meetings by the Committee.
Meanwhile, the main goal of the ParaTroopers pilot programme will be to experiment on a framework for a DAO contributor structure. In addition to experimenting with the format of Coordinape, this section of the proposal will also serve to clarify the objectives and vetting process of the first members of the system.
Means I - Structure and Responsibilities of the Governance Committee
Meeting Sessions
Committee members will be expected to meet regularly every half epoch to discuss progress and findings with other members of the Governance Committee. In addition to these compulsory meetings, depending on the urgency of the matters discussed in the last meeting, the Committee can agree to hold an additional session during the off weeks.
Duties of the meetings:
- Review data analytics of current performances of the sePSP system: Staking rates, staker boost performance, gas refund, reward distribution, etc.
- Suggest changes to the current system if necessary.
- Evaluate whether any actors might be acting maliciously (eg exploiting the ParaBoost system for personal gain)
- Ensure the distribution of rewards after an Epoch End.
Emergency and Safeguarding
From the PSP 2.0 proposal, GovCo can decide to implement two kinds of emergency motions, depending on the severity of the issue reported:
-
Tier 1
- Type: Emergency
- Scope: User funds are at risk
- Actions: Immediate intervention by pausing the system, then a community discussion + vote for further actions. Only GovCo can pause the contracts and should release a postmortem.
-
Tier 2
- Type: Emergency
- Scope: Risk on Revenue takeover (egg: Attack on the rev share by exploiting a loophole on the ParaBoost)
- Actions: 24h vote time. If the attack happens 24h before the fee distribution time, the reaction should be immediate and follows the same process as Tier-1. The action should be limited to pausing fee distributions.
In addition to these two emergency powers, the Governance Committee is encouraged to express other non-emergency concerns they might have about the way the system is running during one of the regular sessions.
Finally, in case any of these vulnerabilities were reported by an outside party, the Governance Committee is entitled to manage the PSP bounty present in the Hats.Finance vault if deemed necessary. Vulnerabilities reported from within the committee will be entitled to the bonus Participation reward.
Participation Rewards
We expect committee members to devote a significant amount of time to the Governance Committee, which we understand is a big commitment, as all current candidates are also members of other projects in DeFi.
Because of this, we recommend that assuming all accountability measures are fulfilled, each seat is entitled to up to the equivalent of 1000 USD monthly in PSP per epoch after fulfilling all expected basic duties Payment will be sent to users after three epochs of participation in the program.
The USD to PSP conversion will be done using PSP last 30 days’ average price.
Additionally, GovCo members who report a vulnerability will receive up to the equivalent of 1000 USD in PSP in the epoch the vulnerability was reported.
While we recommend for the Governance Committee to decide what constitutes a valid report, some examples of what could be considered a vulnerability include:
- Actions triggering Tier 1 or Tier 2 Emergency Proposals which, if executed, endanger user funds or revenue takeover.
- Other actions that may lead to the potential gaming of the Social Escrow System or ParaBoost.
The member will be expected to present this vulnerability to the other Governance Committee seats, attaching any relevant information and figures and potential solutions.
The USD to PSP conversion will be done using PSP last 30 days’ average price.
Current Member Candidacy:
As of the release of this proposal, the following members of the ParaSwap DAO and other DeFi protocols have expressed their interest in participating in the committee. In total, GovCo will aim to have 6 seats:
- Enerow
- Balancer
- Avantgarde Finance
- Paladin
- Pascal0x from Jarvis Protocol
- ParaSwap (technical)
Finally, a core team member will hold a technical seat position, and they will be tasked in providing any technical assistance or information needed during the meetings, as well as initiating proposals.
On Rotating and Protocol Seats
If a seat is clarified as a ‘Rotating Seat’, it means that the seat is assigned to a protocol rather than an individual, and the individual itself can potentially change at the discretion of the protocol. Regardless of the number of people representing this seat, they will still be entitled to only one vote.
This process of seat rotation occurs purely on the Protocol side of things, and will only require a vote from the entirety of the Governance Committee if they wish to replace their protocol seat entirely (see the next section for more details)
Seat Replacement and Additions
For security measures, the Governance Committee will always require at least five active seats for functioning, with a currently budgeted maximum of up to 8 seats.
For the inclusion of a new GovCo seat, the candidate’s nomination will be discussed during one of the regular meetings, and afterward, a vote will be made regarding the inclusion. For the candidate to be included, a supermajority of at least two-thirds of all votes will be required.
If a seat member wishes to stop being part of the Governance Council, they must give at least one whole epoch’s notice to allow member preparations. The seat member must then also assist in finding a replacement for the seat unless other Governance Committee members agree to reduce the number of seat members.
Metrics - Accountability
Baseline Metrics
- Attendance threshold for each seat of at least 75% of the meetings mentioned in the ‘Meeting Sessions’ section.
- Ensure the proper distribution of rewards during the post-epoch reward period.
- Setting group KPIs after each meeting to resolve issues that might have been brought up during the session.
Vulnerability Reporting Metrics - (Bonus Compensation Only)
- Provide a risk assessment and clear explanation of the issue being brought up
- Communicate during the GovCo meeting the issue found, with any relevant accompanying data or evidence.
Means II - Introduction and planning of the ParaTroopers Contributor structure
Definition, Purpose, and Role
Part of the PSP 2.0 Trial period is to include a compensation structure to reward active community members in a contributor system dubbed ParaTroopers. These DAO contributors will be champions for ParaSwap with a mission to further the decentralization of the protocol and be responsible for:
- Being an interface for those looking to learn more or integrate with ParaSwap Protocol
- Assist with governance proposals before posting to the forum
- Provide technical support
- Manage contributors to the DAO and its surrounding community
Structure
As a first step in a compensation model, a Coordinape circle is to be set up with contributors delegating “Give” to each other in line with their levels of contribution for the epoch.
The initial setup of the ParaTroopers contributor system is proposed to be a joint effort by Burns (Balancer Grants Co-lead) and Oxytocin (ParaSwap) to monitor and guide it through a trial period, with the intention of it becoming a self-sustaining group that continues to learn and evolve. Part of this will be defining communication processes, initial onboarding, setup tooling, and other general processes to create a sustainable system.
A long-term goal is for specific DAO roles to emerge and be compensated accordingly, with the Coordinape circle serving as a “bonus” for long-term, highly engaged contributors and the possibility of immediate compensation for any new contributors.
Genesis Onboarding
There is proposed to be ~5-10 initial ParaTroopers with this number to be assessed as the trial progresses.
Onboarding for the founding ParaTroopers and the associated Coordinape circle will be via self-nomination through a submission form, followed by an interview by Burns and Oxytocin, to begin with, and then other ParaTroopers. Future additions will be via a case-by-case basis, nominated by one ParaTrooper and assessed by existing members.
As this initiative is also part of the PSP2.0 trial period, the structures and processes of the system may be subject to major alteration and improvement as a result of further experimentation and iteration. At the end of the trial period, the ParaTrooper contributor system and its participants will be assessed by the community to determine whether to continue, iterate or dissolve the initiative.
Participation Rewards
For the first epoch, the ParaTrooper Coordinape circle will have a max ceiling of $350 usd paid in PSP per contributor with the multiplier discussed below to be added on top. This would have a max budget of $5250 per epoch once max multiplier is reached after 3 epochs (10 paratroopers @ 1.5x).
To encourage long-term holding and commitment to reducing token sell pressure amongst ParaTroopers, the trial will include an sePSP2 ‘streak’ compensation multiplier. This increases compensation for locking tokens for multiple epochs in a row, up to a maximum of 1.5x. However, if an unstake is made on the previous epoch, the streak will be lost and the compensation will revert to the standard rate.
| Streak (# of Epoches) | Multiplier |
|---|---|
| 0 | 1.0x |
| 1 | 1.125x |
| 2 | 1.25x |
| 3+ | 1.5x |
Examples:
- If a contributor is awarded $350 USD by their peers through the Coordinape circle and has been staking continuously for the previous 3 full epochs, they will be compensated @ 1.5x = $525 paid in PSP .
- The same contributor unstaked their sePSP2 in the last epoch or has no staked sePSP2, they will have a 1.0x multiplier = $350 USD in PSP
The USD to PSP conversion will be done using PSP last 30 days’ average price.
Metrics - Accountability
Baseline Metrics
- Growth of Discord members, weekly communicators, and new member retention
- Qualitative increase in community communications
- Governance forum and voterparticipation
- Relationship between ParaTroopers and other DeFi communities
Forward Thinking Consideration - Further Decentralisation Steps of the DAO
This is the first step of decentralization, and a first-time experiment for the ParaSwap DAO. As the DAO matures, however, it is important to begin delegating more and more features to be running entirely through the DAO. In addition to the current Governance Positions, we could explore other methods of management from similar DAOs.
Implementation Overview
- Election of Governance Committee members
- Appointment of Genesis ParaTroopers
- Setup DAO tooling and contributor compensation structure
Voting Options
- For the creation and election of GovCo members and ParaTroopers
- Against
- Abstain
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