OP grant application - Reducing gas costs on Arbitrum and Optimism

(Authored originally by @Chab on the forums , posted on his behalf as per request)

Abstract Optimistic rollups are gaining tractions and trading volumes. Despite being way cheaper (~10x) than Ethereum to execute trades with Paraswap on it, they are still dependent on gas conditions on Ethereum, so the gas price can increase a lot in case of high gas fees on Ethereum. This proposal aims to develop a callData compression algorithm that would help reduce the gas cost by ~50% for the trades made on Arbitrum and Optimism in order to create another competitive advantage for Paraswap against other aggregators. This reduction would directly contribute to make Paraswap more interesting than its concurrent for small trades and could lead more traders to switch on Paraswap to save important fees over time. This increase in volume will generate sustainable additional revenue to the DAO as these chains are very important chains in the EVM ecosystem. The feasibility of this proposal has been agreed by the core team across several meetings with for example Mwamedacen and 0xYtocyn.

Goals & review Optimistic rollup transaction price depends a lot on the size of the callData sent with the transaction. This proposal aims to develop a fast polyvalent off-chain compressing algorithm for callData, a decompressing smart contract and integrate them into Paraswap current architecture with the coordination of the team. It is expected to be delivered and deployed before 2024. I’m convinced that this development would benefit Paraswap DAO and users by reducing gas costs for any trade, increasing the volume and the revenue on those chains, and contribute to make Paraswap more competitive. The main goal of this proposal is to allocate 25k $OP tokens from the OP grant reserves of Paraswap DAO, in order to fund the different steps of development related to this optimisation and research. The validity of the implementation will be checked by the core team at each stage, as well as a member of the DAO.

Means

• Initial 2k $OP on validation of the grant.
• research & POC: 5k $OP
• evaluations and optimisations: 7k $OP + 3k $OP bonus (if average saving > 45%)
• adaptations of code base and deployment: 8k $OP Total: 22k $OP + 3k $OP performance bonus (around $30k at current $1.4 valuation).

Of these, 500 $OP would be sent to @Xut (who agreed the role) at the end of the two first steps in order to certify the figures have been reached. So 1k $OP is included to bring more confidence to the DAO members that all goals were achieved.

A fee of 5k $OP would be applied to my rewards if the development isn’t live in the end of February 2024, in order to prove my dedication to achieve this proposal fast, except if the team attests it comes from a difference of prioritisation within their inner resources.

In case the bonus condition or other steps wouldn’t be achieved, the amount for each conditions would be sent back to the DAO OP grant resources.

Implementation Overview

Research & POC:

• Document gathering ideas for optimising callData size on optimism (could stay confidential if necessary to keep competitive advantage)
• Implementation of a smart-contract allowing for callData decompression
• Implementation of a script in JavaScript for compressing callData, to give as a input to the decompression method of the smart contract
• Compression average rate of at least 25% at this stage required Considering the time that took the discussions and to be sure this proposed proposal will be possible I have quite progressed on that part; and it is possible to deliver this phase in early october.

Evaluations and optimisations

• Create a framework for evaluating the performance and exactitude of the compressing algorithms regarding a variety of inputs, and the related gas costs
• Optimise the contract to reduce the callData even more
• Optimisations on the compressing algorithms
• Compression average rate of at least 35% is expected at this stage and the algorithm should be efficient (running in few ms)
• If compression average rate is at least 45%, 5k $OP should be unlocked This phase is estimated to be reached in the mid of November.

Adaptations of code base and deployment

• Testing in real conditions and final adaptations to the contract for production condition
• Help and guidance around the necessary modifications in the API and blockchain
• Internal documentation and flows for the compression well designed and proved
• Implementation of the compressing algorithm for the Paraswap API specific language
• Support and slight optimisations post-production if possible
• Gathering data and analytics around the savings
• Documentation and redaction of communications of the advantages and savings made through this optimisation This phase is estimated to be released in production before the end of 2023.

All the materials of my research would be the property of the team and given entirely at each end of stage at least, in order for the team to continue my work if something really bad happened. This way the DAO could find another person to continue the development or the team could decide to improve it and integrate it later on. The code source could become open source with a DAO vote but regarding the competitiveness between aggregators, this work will first be maintained private between the core team, Xut and me.

A word As a member of the DAO for 2 years now, and a Paratrooper for 4 epochs, I would like to contribute more to the thrive and sustainability of this great project, and I’m convinced that it can be a great example for people to research and propose optimisations to the DAO.

Best, Chab