ParaSwap DAO

PSPΔBP2 - Protocol-owned Liquidity Budget - 100 M PSP Allocation

Key Goals

Treasury, Budget, Liquidity

Simple Summary

To allocate a new set of PSP to ensure healthy liquidity across all chains.

Context

Earlier this year, PSP-BP1 passed, setting a maximum spending limit for different categories of PSP. While this allowed for exploring potential spending uses of PSP, many functions did not address present problems in the PSP ecosystem.

One of the most recurrent issues of the first budget concerned the area of tokenomics. The high-emission schemes set to provide liquidity led to highly mercenary liquidity, which drained the assets as soon as the short-term emissions were over. Overall, this resulted in an unstable liquidity policy.

Following the successful Olympus Pro liquidity capture scheme, the main goal of this proposal will be to allocate a one-time amount of PSP that is significant enough to cover the liquidity needed for this rapidly increasing excitement on PSP 2.0 . Due to the substantial nature of the reforms of PSP 2.0, all other previously allocated PSP is best discussed in the upcoming PSP 2.0 proposal and framework.

Goals

Increase the amount of liquidity available directly owned by the DAO following the successful pilot.

Budget Categories and Allocations

Protocol Owned Liquidity Budget - 100 M PSP

The most significant change reflects the change in our liquidity strategy. Rather than focusing on liquidity mining as a form of acquiring liquidity (which leads to inflationary and ineffective tokenomics), we will be allocating a significantly higher amount of PSP towards establishing a permanent source of liquidity. This can be done through bonds and directly pairing the liquidity to other assets.

Since liquidity is something that requires to be present from the beginning rather than monthly, we propose to allocate 80M PSP to use in pairing to other assets for our desired liquidity, as well as allocating 20M PSP for bonding, to capture assets that will be used to pair with PSP. Budget Approval Restructuring

As we focus on allocating PSP more efficiently, if passed, this proposal would override the old vote’s protocol-owned liquidity budget emissions, becoming the unique valid source of truth for POL budget.