PSP-IPΔ4 and PSP-IPΔ6 established the first frameworks for the functioning of the ParaSwap DAO governance process.
With the arrival of Social Escrow and sePSP, the PSP-IPΔ22 - PSP 2.0 - Revised Voting Edition updated partially this process by changing the tokens considered for voting power, their weights as well as the vote weights to make it compatible with the new system.
Below will be listed the different parameters currently at play in the governance process, then, for each point, their current state will be shortly stated, their advantages/disadvantages and possible modifications to be made.
1/ The proposals
2/ The proposal journey
3/ The proposal framework
4/ Standard proposal vote time
5/ Standard proposal implementation delay
6/ Minimal sePSP voting power required to submit proposals on snapshot
7/ Quorum
8/ Delegation
Disclaimer: AAVE and Balancer DAOs will be often used as a reference. Albeit their situation not being the same as ParaSwap (with the first one having an almost finished token distribution and for the other one a voting token with a lock system),it may be interesting to make a comparison with perennial DAOs even if we have to adapt to ParaSwap.
Despite these differences, both of these DAOs are closely associated with ParaSwap, and can be used as positive examples of a functioning DeFi DAO
Feel free to add comparisons or good practices from other DAOs.
Have a good read.
1/ The Proposals
There’s currently two types of proposal:
*PSP-IPΔ: ParaSwap Improvement Proposal
*PSP-EPΔ: ParaSwap Express Proposal
(PSP-EPΔ has reduced pre-proposal discussions and expedited voting time according to the severity of a situation, details on the PSP-IPΔ22)
The epoch system sometimes requires that one solution be applied before the end of the epoch or the other begins.
The discussion process can sometimes be lengthy and PSP-EPΔ have made it possible to implement important changes in a short time.
We can also see in other places differentiation between proposals according to their consequences: for instance AAVE has two types of proposals, one for actions with “small consequences” and the other with “long term” consequences, each with different criteria (quorum, ceiling to create the proposal, etc). However, I think it is necessary to make the current system more robust before further diversifying the types of proposals.
For the reasons outlined above, I’m in favor of keeping it as it is for now.
2/ The proposal journey
As specified by @disiaque.eth in the PSP-IPΔ4 discussion, the current journey of a proposal is:
- Discord. Birth of the idea and first signalling. This step is optional for a proposal, and mostly used for informal brainstorming.
- Forum. Work space and argued discussions.
- Snapshot. Vote of at least 5 days for PSP-IP, with a reduced vote time for PSP-EP .
I am personally aligned with this path, I will add a few comments:
-
It is not clear/defined when it is necessary or not to go through a governance research or directly on a proposal on the forum after the discord phase.
I see the research phase necessary for heavy, large and critical topics.
It probably weighs down the process unnecessarily for simple topics.
It seems natural to skip this step for PSP-EPΔ. -
Added to the governance process is the forthcoming arrival of ParaTroopers, contributors to the DAO, whom I imagine (among others) as interlocutors and facilitators for the said governance process.
-
There is currently no specified length of time to consider that a proposal has been sufficiently discussed in the governance forum.
This is rather logical given the variety of discussions, as it could prolong or unnecessarily shorten topics.
A message in the governance forum on the proposal thread should be written prior the proposal goes to vote and also shared in the discord governance channel as a “Temp check” or sentiment check and to confirm that the discussion is closed and to remove any potential blocking point.
Snapshot vote could be created 24h after this temps check is published (or on the predefined weekly date if the “temp check” was done more than 24 hours before). -
Idea raised by @stikers , to improve communication about the governance process, votes could be set on a specific date each week (each tuesday for instance). The start (tuesday) and end (sunday) of votes would then be known by the whole community and communication on votes by the DAO would also be simplified by grouping them.
(Only PSP-IP would be concerned by this regular vote time).
3/ The proposal framework
The structure of a proposal has been defined by the PSP-IPΔ4 and concerns all proposals (PSP-IP and PSP-EP)
After discussions with @0xYtocin and other members of the DAO, it seems to me that it is necessary to review the structure of proposals in order to:
- avoid redundancies
- simplify it to allow a better understanding and facilitate the handling of this tool by as many members of the community as possible.
On a different note, but still in the spirit of simplicity, it would seem appropriate to update the names of the proposals:
PSP-IPΔXX would become PIP-XX
PSP-EPΔXX would become PEP-XX
(by by annoying tiny triangle)
It is important to remember that respecting the framework of a proposal is a mandatory criterion.
I propose the following modifications:
- Proposal Number & Name
A number to identify the proposal, based on the order of submission and name (=snapshot vote title).
Ex: PSP-IPΔ0: ParaSwap Improvement Proposal Framework
The number is chosen at the time of the snapshot vote, at the time of the discussions on the forum of governance, it will preserve the “XX” to keep a logic of chronology of the votes. Governance post name will be updated with the snapshot going live.
DELETE
2. Keywords
One or multiple choice: Front-end upgrade, smart contract development, marketing and communication, security, PSP token upgrade, PSP liquidity incentives, PSP staking policy, parameter update, integrations, and synergies.
3. Simple Summary
Clear and layman-accessible one or two-line summary of the proposal.
-
Abstract
(merged with 3. Simple Summary)
Comprehensive overview of the issue being addressed and the solution proposed (~ 100w). -
Goals & review
(merged with 7. Rationale)
What are the main goals of the proposal? Briefly list the main objectives & and the metrics that will be used to evaluate the success of the proposed implementation. -
Means
What the proposal requires to come to life: PSP budget, additional development on the ParaSwap product, external development, etc.
DELETE
7. Rationale
How will success be measured? What metrics will be used to evaluate the success of the proposed implementation?
8. Forward-thinking considerations
With this proposal implemented, what are the next steps to consider? Does this proposal include any new parameter the DAO can adjust? Does it call for a revision of another subcomponent of the system?
- Implementation Overview
(merged with 8. Forward-thinking considerations)
What happens if this proposal goes through? A high-level overview of the main steps required for its implementation as well as potential future considerations.
4/ Standard proposal vote time
The case of urgent proposals is handled by the PSP-EP, which I think should be left as is.
Looking back, the length of the snapshot was never a problem when it came to involving the community at large.
PSP-IPs currently have a duration of 120 hours or 5 days.
This seems appropriate and I see no reason to change it.
5/ Standard proposal implementation delay
The history and diversity of DAO votes shows us that it is difficult (impossible) to pre-define a timeframe for the application of a vote as the requirements (technical, partnerships, etc) are so different.
Therefore I‘d see the “Timeframe for implementation: Specific to each vote” (as already the case).
Personally, I even wonder whether this criteria should be retained.
6/ Minimal sePSP voting power required to submit proposals
PSP-IPΔ22 changed the minimum amount of PSP needed for a proposal from 5400 to 10.000 PSP, to account for the 2x boost given from sePSP2. (Only staked PSP are accounted for).
With the recent out-of-framework votes and governance attacks created on the DAO snapshot, it is clear that this threshold is not appropriate and needs to be raised.
PSP-IPΔ12 had already tried to raise the standard for snapshot creation but the vote was rejected, mainly because it was felt that the chosen amount centralised governance too much and cut off a large part of the community, at a time when a delegation solution was not perennially in place.
That being said, I’m in line with the fact that only staked PSP are taken into account, as it is done for voting power, and I see the raise of PSP amount as essential.
Observing the top stakers on sePSP1 and sePSP2 pools and taking account that:
1 sePSP1 = 1 PSP
1 sePSP2 = 5.5 PSP (at the time of writing)
As the delegation organisation is not yet in place (see point 8), I propose to make a first increase pf the voting power required to 200K PSP.
When looking at the PSP holders in the sePSP1 and sePSP2 pools, this amount allows the first 50 stakers of sePSP1 and first 60 of sePSP2 to create a vote, i.e. 4% of the 2500 stakers (at the time of writing).
The percentage may seem small but I think that this amount (10K dollars equivalent at the time of writing) is necessary to avoid the creation of out-of-framework votes and that a delegate system must be put in place to facilitate the governance process at this level.
This 200K PSP amount both gives the power to create a vote to a significant part of the DAO, while limiting the possibility of “off-framework” or non-argumentative voting creation.
Other DAOs have higher requirements (200K veBAL (2%) for Balancer and 80K AAVE (.5%) or 320K AAVE (2%) depending on the implementation), but they also have a delegate system well in place.
This is clearly a metric that will need to be monitored and updated by the DAO according to:
- Delegate system put in place
- PSP price
7/ Quorum
The current quorum for a ParaSwap DAO vote is set at 4M PSP.
My estimate of the current % of token supply liquid is 46.12% or 922 400 000 PSP.
This seems consistent with the figure displayed on CoinGecko.
(There is nothing more accurate than the Paint + ruler combo)
But I make a distinction between the released/liquid supply and the available supply because a part of the PSP is currently in the DAO treasury without any particular allocation (except for the GRP if I am not mistaken).
Hereafter, PSP voting history since PSP2.0:
A quorum of 20% of the supply is rather common in other protocols (e.g. AAVE or Balancer).
However, we can see that the current participation in the DAO votes does not allow to follow this path for the moment.
I think it would be interesting to raise the quorum to half of the vote with the lowest participation: 15M PSP
(The amount accounted for is the one after the x2.5 boost from sePSP2)
8/ Delegation
The subject of delegation is in itself a very important subject in my opinion.
It will have impacts on some of the criteria mentioned above in a second phase.
I propose to open a discussion in another thread of governance.
