ParaSwap DAO

Keywords

Gas Refund Program, PSP incentives, PSP-EP

Simple Summary

To adjust the current reward mechanisms and parameters of the Gas Refund Program to ensure its long-term sustainability

Context

The Gas Refund Program is an initiative spearheaded by the DAO to alleviate the cost of gas for stakers using ParaSwap. As these refunds are done in PSP, three main limits were set during the initial proposal and budget allocation, as well as the later adjustment and renewals in the PSP 2.0 proposal:

• A per-address limit of USD 2500 per epoch
• A per-address yearly maximum of USD 30k
• A global budget limit of 30M PSP

Until now, these limits have been enough to maintain the program sustainable. However, a new surge of activity driven by a small number of wallets shortly after PSP 2.0 has put pressure on the current budget in a way that threatens the exhaustion of the budget well before the end of the year.

While most of this volume comes from a healthy level of protocol growth (such as the doubling of eligible stakers that are part of the GRP), one worrying figure concerns the top eligible claimants of the GRP compared to previous epochs.

In summary, for the first PSP 2.0 epoch, the Gas Refund Program distributed 3.07M PSP, more than 10% of the total global budget. Less than 7% of all refunded wallets got 83% of the total PSP refunded, despite only generating 8.8% of the epoch’s volume.

Were this behavior to continue during the second epoch, over 20% of the total global Gas Refund budget could be drained, with +80% of it going to these small number of wallets.

To ensure the sustainability of the Gas Refund Program, this proposal aims to amend the current limits to a new level that will keep the budget sustainable while not affecting the vast majority of users.

One way to ensure the sustainability of the program is to reduce the viability of the program for users who do not have a long-term outlook for PSP. To do this and to further promote the engagement of gas refunded addresses with PSP 2.0 and the social escrow system, a potential solution is the distribution of sePSP1 instead of PSP. This saves the staking gas costs for users with a long-term outlook for PSP and also makes the claimable sePSP1 be considered as part of the user ParaBoostScore without the need to claim.

In addition, and to ensure the long-term sustainability of the Gas Refund Program, this proposal aims to amend the current limits to a new level that will keep the budget sustainable while not affecting the vast majority of users.

Goals, Means, and Implementation

Due to the time-sensitive nature of these measures, the proposal proposes the following changes to be implemented to the gas refund program before the end of Epoch 2 and applicable to it:

• Reduce the maximum per-wallet limit to $500 per epoch
• Replace the distribution token from PSP to sePSP1 only on Ethereum

Metrics

The success of this proposal can be measured by whether Epoch 2’s PSP Emissions adhere to the expected budget projections for the year or not and have a fair distribution of the total amount of PSP distributed in the epoch.

Forward-thinking considerations

While this new per-epoch limit might be sufficient to mitigate the current emissions, it could be adjusted again if the average network gas emissions rise throughout the network.

Additionally, in the future, the DAO could consider additional measures to limit the opportunistic nature of Gas Refunds.

Voting options

• For
• Against
• Abstain