PSP-IPΔ22: PSP 2.0

Summary

What is PSP 2.0?

In summary, PSP 2.0 is a complete overhaul of PSP tokenomics. This proposal radically reduces token emissions and rewards users with protocol fees. The most significant change in this proposal is the introduction of Social Escrow PSP (sePSP), a novel model in DeFi that rewards users who perform actions beneficial for the protocol and DAO growth.

Why are we introducing it?

The main purpose of the PSP token is to scale and govern the ParaSwap protocol. After one year of observation and community feedback, we believe the current system could be improved by addressing its limitations: staking efficiency, liquidity, and sustainable native token emissions.

What are we proposing?

To achieve these changes, PSP 2.0 proposes the following main ideas: Overhaul the PSP Staking system Introduce the Social Escrow and reward boosting system (ParaBoost) to reward users with protocol fees instead of PSP Implement a pilot period in which a Governance Committee will monitor the new system. Propose the creation of vested PSP (vPSP), a one-year linearly locked version of sePSP to be used in future distribution events.

Table of Contents

Full details of the proposal can be found in our forum post

Staking Mechanisms

• sePSP1 - PSP Staking
• sePSP2 - Liquidity Pool Staking
• Introducing the Migration from sPSP/stkPSP

Fee Redistribution and Epoch Alterations

ParaBoost and Social Escrow

• Trading
• Making
• Token List and Wash Trading Prevention
• Pooling
• ParAccount
• PSP Balance Booster
• Referrals
• Computing

Emission Strategies

• Vested sePSP
• Gas Refund Adjustments

Accountability Measures

• Governance Committee (GovCo)
• PSP 2.0 Pilot
• Proposal Procedure Revisions
• PSP Participation and Quorum

Migration - PSP 1 Emissions Smoothing

Effective Proposal Changes

Effective Proposal Changes

Actions effective immediately after the vote passes:

• sPSP Emissions Smoothing for Migration: All emissions for PMMs will be stopped. Meanwhile, a maximum of 1.5M PSP/month will be distributed among each sPSP relative to the number of stakers in each pool.
• Renewal of the Gas Refund Program
• Introduction of Expedite Proposals

Actions effective after 2.0 launch:

• Implementation of migration module
• Epoch length alteration: Extension from 2 weeks to 1 month per individual epoch.
• sPSP/Safety Module reward cut: The old emissions will be discontinued once the new system goes live
• sPSP deposits pause: Once the new system is out, no more sPSP depositing will be allowed.
• Enabling protocol fees reallocation for both previously accrued fees and future ones
• Voting protocol alternation: Switching from the current tokens to sePSP and sePSP2 as the only voting tokens. sePSP will receive 1 voting power per PSP staked, while sePSP2 will receive the aforementioned 2.5x boost to voting power for the PSP staked in it.
• sPSP/stkPSP cooldown modifications: The withdrawal times for both systems are to be altered for the transition to 0 for migration purposes.
• Gas refund adjustments: Altering the Gas Refund levels to make them compatible with the new ParaBoost system —--

For a full explanation of each of the sections of the vote, please visit the forum post