Abstract

The primary goal is to launch a a Delegate Incentives Program over a 6-month period. This program will gather feedback and insights from the community to design a second cycle more closely aligned with the ParaSwapDAO, should the community decide to proceed. Additionally, the program aims to encourage active participation in ParaSwap governance and professionalize the role of the involved delegates.

To achieve this, appropriate incentives should be established that do not compromise the treasury’s health. This means no disproportionate allocation of funds. Instead, as the program and the DAO evolve, governance will assess the most suitable and sustainable incentives.

Goals & Review - Motivation

Please read this section at this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048#p-5165-goals-review-motivation-5

6-months ParaSwap Delegate Incentives Program (DIP)

With the results analyzed above, understanding that the delegate trial program has been a success and has more than fulfilled the objectives pursued, we propose to go a step further and propose the launch of a 6-month ParaSwap Delegate Incentives Program (DIP) starting in March 2025.

In DAOs, it is common to face voter apathy, lack of active participation over time, and poorly informed decisions. If we aim for delegates to meet these and even higher standards, professionalize, and remain consistently active in the DAO, it is essential to provide them with adequate incentives/rewards. In this sense, experience shows that the delegate system alone cannot achieve the desired results, as it is unrealistic to expect a group of individuals to voluntarily dedicate the significant effort required for active and high-quality participation in governance (at least not to a great extent). Therefore, the incentivized professional delegate system has been gaining traction in the most important DAOs, achieving results such as increasing the participation of informed, responsible, and renowned actors in governance.

We are also aware that incentives can attract the wrong actors, send the wrong message, or demotivate those who are truly aligned with the values of ParaSwapDAO. We do not want that to happen, as it would represent the worst-case scenario. Therefore, we propose implementing this program, with the goal of refining and perfecting it through feedback, ensuring it serves the best interests of the DAO.

Specifications & General Parameters

The following parameters of the DIP are flexible and open to discussion, with the goal of gathering feedback from the community. Additionally, please note that the program may be canceled at any time.

Duration

The program’s first cycle will last for six months, as it is designed as an experimental foundation.

Number of Delegates to Receive Incentives

Given the number of delegates participating in the delegate trial program -12-, the current number of delegates -13-, and the participation metrics reviewed above, we believe it is appropriate to set the maximum number of delegates for the first 3 months of this first DIP at 10.

At the program’s midpoint, in month four - June 2025 -, applications will reopen and will remain open until the end of the program for delegates who meet the requirements and are eligible to apply at any time and be included into the second half of the DIP, with a maximum of 15 total delegates.

Requirements to Participate

Please read this section at this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-requirements-to-participate-5

Regarding delegates’ KYC (TBD)

Ideally, participating in the Incentive Program and receiving rewards should require completing KYC verification, both for compliance issues and to avoid sybil attack.

Incentive Budget

To read the full section, please click on this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-incentive-budget-7

On the basis of this comparative analysis and ParaSwapDAO’s own characteristics and current activity, we believe that a maximum of $2,500 per month is an adequate compensation to reward active ParaSwapDAO delegates in this first cycle. This amount can be ratified or modified by more or less if, at the end of the program, it is decided to continue it.

Payment method - Vesting

In order to ensure commitment and skin in the game by delegates participating in the program, compensation will be paid on a monthly basis but with a 30-day vesting **, which can be executed for example through Superfluid platform.

We suggest and encourage delegates to put the amount of rewards received into sePSP2 staking, which will benefit the protocol and the price of the token, as well as benefiting the delegate by receiving rewards in ETH and increasing their voting power.

Evaluation System for Delegates’ Feedback

Please read this section at this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-evaluation-system-for-delegates-feedback-8

Details: Terminology, Symbols, and Formulas

Please read this section at this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-details-terminology-symbols-and-formulas-9

• Payment USD (PUSD): The final amount of USD in PSP tokens that the delegate will receive in each month is based on his TP% and his Tier.
  • Tier 3: TP ≥ 75% and < 85%. Compensation range: up to $ 1,500.
  • Tier 2: TP ≥ 85% and < 95%. Compensation range: up to $ 2,000.
  • Tier 1: TP ≥ 95%. Compensation range: up to $ 2,500.

Parameter summary

To read the section, follow this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-parameter-summary-10

Administrative Budget

In this Cycle 1 we do not propose allocate any operational budget to administering this ParaSwap Delegate Incentives Program.

Program Manager Details:

Please read this section at this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-program-manager-details-12

Final Evaluation

Prior to the 6 month due date, results and impact of the program will be presented in order for the DAO to assess it’s renewal, deprecation or modification.

If the DAO decides to continue with the program, we suggest evaluating the incorporation of services provided such as Karma, to automate the tracking of delegate participation metrics.

KPIs

• Achieve an average Total Participation (TP) of 80% among participants in the program within six months.
• Convene more people and organisations to become ParaSwap delegates to broaden the quality of debate, plurality of voices and offer tokenholders more delegates to delegate their VP according to their vision and expected quality of participation.
• Introduce improvements to the program after six months.

Next steps

To read the section, follow this link: https://gov.paraswap.network/t/pip-58-paraswap-delegate-incentives-program-cycle-1/2048/2#p-5166-next-steps-16

Means

This proposal does not requires to come to life any additional ParaSwap or external product o development

Implementation Overview

We do not foresee any potential negative outcome of the present proposal and it is not expected for the DAO to derive any associated implementation action. The duration of the proposal will be of 6 months since it’s approval.

The DAO is requested that the team currently in charge of Governance Facilitation collaborate with SEEDGov and takes responsibility for tracking the participation metrics of the delegates involved in this program.

Time of Implementation

The maximum total duration of the program is 6 months, and the DAO may cancel it at any time before the expiry of this period.

The reports to be delivered, their content and KPIs have been detailed in the sections ‘Responsibilities & Deliverables’, ‘Final Evaluation’ and ‘KPIs’ above, we therefore remit to them.

Budget

The proposal requires a maximum budget of 180,000 USD in PSP tokens - or in the future new token it may eventually migrate to in accordance with Project Miro - for a 6-month period (up to 2,500 USD per each of the current 9 eligible delegates per month during the first 3 months of the program - up to 67,500 USD - and for the 15 eligible delegates per month during the last 3 months of the program - up to 112,500 USD -), with monthly maximum per delegate of 3,000 USD in Incentives.

*USD costs are fixed, meaning that if the price of PSP increases, the USD costs will remain the same.

The GovCo @paraswap-govco will be responsible for approving and executing the corresponding transfers to each delegate on a monthly basis, according to the monthly report to be published on the forum by the Program Manager.

Risk Assessment

We do not understand that the proposal has cons, and the pros and positive impact on the rest of the community, the ecosystem and the protocol, as indicated, are:

• Encourage active participation in ParaSwap governance and professionalize the role of the involved delegates.
• Seek to strengthen the quality of governance through compensated professional delegates who can dedicate their time to the DAO,
• Seek to increase both the quantity and quality of participation and enhance diversity of voices,
• Allowed token holders who are unable or unwilling to actively participate in governance to delegate their voting power to active delegates aligned with their vision, promoting a more balanced distribution of voting power. In the worst case scenario, if these objectives are not achieved, the DAO will maintain its participation status without significant change. This proposal does not modify any code of the protocol, so no audits are required.