In the context of ParaSwap willingness to bring more users & volumes as well as improve the ParaSwapPool incentives model which will help make sure the supply side (aka liquidity) is becoming more efficient, a few actions should be taken in order to address the demand side of the equation. As discussed before, we have Gas refund for stakers (TBD) and Fee Sharing with Referrers, which we’ll discuss here.
1. Proposal Number & Name
PSP-IPΔ8: Fee Sharing with Referrers
2. Keywords
Fee Sharing, smart contract development, marketing & communication
3. Simple Summary
Sharing Positive Slippage (PS) fees with referrers in order to drive more volume to ParaSwap. Users will have a sharable URL (egg: paraswap.io/ref/USER_ADDRESS). If PS happens, the referrer gets 50% of the fee while the ParaSwap Protocol gets the other 50% (no change).
4. Goals
The main goal is to bring more volume to ParaSwap, which should impact volumes on ParaSwapPool Market Makers, the latter will depend on how competitive MMs stay.
5. Means
No PSP budget needed.
6. Metrics
Share of volume brought from the referral system. This can be tracked onchain.
7. Forward-thinking considerations
No action from the DAO once this is approved, the split will be automatic.
8. Implementation overview
There will be a need to upgrade the Fee module, which will require dev and audit.
The idea of fee sharing is great. What will be considered as a valid referer? Also, is the reward going to be paid to referral indefinitely or will it have a expiration.
I understand that the motive here is to drive volume to Paraswap but considering the fact that 80% of Paraswap volumes come from institutional users who mostly aren’t refered, will it not be more beneficial to reward holders/stakers with fee sharing instead?
The fact that Paraswap gives the best rate is enough reason to drive volume. It has been our main volume driver since inception and it will continue to deliver if we keep giving the best rate.
My point is that, while I do believe that the motive of this proposal is to drive volume will be achieved to an extent, the impact may not be significant when compared to the cost.
I agree but this will also allow integrations to easily monetize without needing to add a fee on top. The current system allows for third parties to take positive slippage fees but it requires registration from our side, so a side effect of this proposal is making this kind of monetization permissionless.
It’s hard to know how much volume this will bring, but given that there won’t be any expense on the DAO side, I see only benefits. The key is to keep track of data once this is live.
Thanks Mounir for that interesting proposal! I share the idea of creating a referal which is undoubtedly a great marketing prospect.
I wonder more about the metrics of the proposal and in particular the idea that users does not receive a percentage of the positive slippage (unless I didn’t catch your point! ). I would spontaneously consider the following distribution:
ParaSwap: 50% (no change)
User: 25%
Referrer: 25%
But maybe this distribution does not reward enough the referrers. What do you think about it?
Thanks @disiaque.eth, that’s an interesting idea. The only downside is that this will either be expensive in gas or it will require more development where users will claim from a contract later but this also has the downside of being gas expensive for the user if the claimable amount is lower than the gas fee in Ethereum (not a problem on other chains). We’ll give it more thoughts on a technical perspective.
At first, I completely agreed with @starny and @dseeker , but the more I think about it, the more I like this system as an ethical way of spending money on marketing PSP and Paraswap. It doesn’t favour any particular influencers or social media platform, it incurs no cost to the current PSP treasury, and it allows for on-chain tracking.
As long as Paraswap manages to continue delivering great positive slippage, this seems like a sustainable mechanism to encourage marketers and influencers to drop a Paraswap link when they are talking about a new token to trade, for example. This is especially nice if ENS addresses work on the links, makes the URL very memorable.
Only thing I’d add is maybe a ~2hr expiration rate for the referral, to make sure that someone is using the service because of the link. It’s a problem that happens a lot in other services, so I feel we should work on that too.
Doesn’t the 80% statistic kind of prove that paraswap needs to grow more among retail investors though? Even if the benefits aren’t as big compared to super big swaps, other features like persmission management and slippage in small tokens still make the platform worth using.
Hello,
I had a bit the same thought process as 0xYtocin. At first I didn’t see much interest in bringing volume, but when I think about it, it can be a great asset if influencers take it.
The fact that these referrals are fully transparent is a big plus.
I support the proposal.
Thanks for that proposal. I understand the willingness to bring more volume. However, a big strength for ParaSwap is to be the cheapest compared to competition. One reason for often being the best is sharing the positive slippage with final user. Transferring this positive slippage to a third person will certainly create some hype for ParaSwap but I fear that, at the end of the day, being less systematically the cheapest might have pervert effects driving to less volumes especially if people are using an aggregator on top of ParaSwap.
This is surely a naive intervention, but I did not understand why the user addition will be more expensive in gas. Isn’t the positive slippage automatically paid at the moment? Why claim it with another contract later?
). I would spontaneously consider the following distribution: