PIP-55 Reward Mechanism Automation, WakeUp Labs Update Thread

Governance Proposals Approved Proposals
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TL;DR:

WakeUp Labs is collaborating with ParaSwap to automate its Reward Mechanism. This initiative is designed to streamline ParaSwap’s incentive programs, reducing manual work, minimizing the potential for human error, and enhancing the overall user experience by automating the distribution processes for both the Reward Program and the Gas Refund Program, focusing on the Ethereum Mainnet transactions.

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Incentive programs are critical to fostering engagement in any DeFi ecosystem. However, managing these processes manually, in a DAO, introduces operational complexity and increases the risk of human error.

Our collaboration began with key insights of ParaSwap’s Gas Refund Program:

  • 95% of refunded gas fees were tied to Ethereum Mainnet transactions, despite these representing only 22% of valid operations.
  • Transactions on other networks, such as Polygon and Optimism, accounted for 78% of the volume but yielded minimal refunds, averaging $0.06 per address.

These findings led to a decision: streamline gas refund calculations to focus exclusively on Ethereum Mainnet activity, where they generate the most impact, while maintaining the ability for users to claim refunds on the network where they stake their PSP.

What Does Automation Involve?

At WakeUp Labs, we are delivering a fully automated reward mechanism with several features. Scripts will automate data handling by gathering transaction data, calculating rewards, and allocating tokens based on ParaSwap’s incentive structures, such as those outlined in PIP-53. Reward allocations will be proposed automatically on Snapshot, enabling DAO members to approve or reject them through governance. Seamless execution will be achieved through third-party protocols like UMA and oSnap, which will handle on-chain execution without requiring manual signatures. The Gas Refund Program will continue to reward users, but calculations will now prioritize Ethereum Mainnet, where the majority of impactful transactions occur. Additionally, the entire development will be open-source, with comprehensive documentation available on GitHub to ensure transparency and foster trust within the community.

Phased Implementation

The rollout will follow four key milestones:

  1. Architecture Definition, and Technical Specifications
  2. Build Scripts to Gather Data and run them
  3. Configure Snapshot, submit proposals, and set up everything to avoid manual signatures
  4. Documentation, testing, deployment to production, and release

What This Means for the ParaSwap Community

This collaboration brings tangible benefits to ParaSwap and its community:

  • Efficiency: Automation eliminates manual overhead, allowing the team to focus on strategic priorities.
  • Decentralization: Tools like UMA and oSnap reinforce ParaSwap’s governance model.
  • Transparency: Open-source code and regular updates foster trust and community engagement.

Next Steps

This is just the beginning. As we move through the implementation phases, we will share updates and invite feedback from the ParaSwap community. Together, we aim to set a new standard for efficiency and decentralization in DeFi.

Stay tuned for updates on our X (Twitter) and LinkedIn!

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Milestone 1: Technical Research Completed

Key Highlights

This milestone involved defining the internal architecture for the solution, validating system flows with the Laita Labs and WakeUp Labs technical teams, and developing a Proof of Concept (PoC) tested with third-party protocols like UMA and oSnap. The process also included designing a database and establishing technical integration details for smart contracts, as necessary.

For more details, refer to the PIP-55 Research document: PIP-55 Research.

Next Steps

Upcoming milestones include:

  1. Automating Reward Computations: Finalizing scripts and APIs for seamless data handling.
  2. Snapshot Proposal Integration: Implementing governance automation.
  3. Deployment and Testing: Ensuring a smooth transition through rigorous QA.

Together with ParaSwap, we are redefining DeFi.

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Update, Current Status & Next Steps

Hello everyone,

As the current epoch finishes next Monday (the 17th), we’d like to provide an update on the project’s status, the progress made so far, and the next steps.

Milestone #2: Gather Data & Perform Calculations

Stake Reward Calculations

  • We have preliminary calculations for Epoch 26. Around 80% of these calculations are accurate (≤ 0.2% difference).
    • Most discrepancies are due to a known bug from our side.
  • Some differences are also related to decimal precision adjustments that still need to be implemented.

Gas Refund Calculations

  • We have preliminary calculations for Epoch 26.
    • These calculations are based on inputs from Paraswap’s databases, combined with data from our scripts.
    • 82% of the calculated refunds differ by less than $0.23 (approximately ≤ 1 $PSP).
  • We will do an additional iteration to fine-tune these differences and improve accuracy.

We will continue working to achieve 100% accuracy in both sets of calculations to replicate Epoch 26 as soon as possible.

Once that is complete, we will replicate the calculations for Epoch 27 and then run the full data gathering process on the WakeUp Labs side.

At that stage, we will also generate the corresponding Merkle Tree so each user can claim the tokens they are entitled to—A task we didn’t account in the original scope.

This will allow us to close out Milestone #2.

Milestone #3: Snapshot + oSnap Plugin

  • It won’t be feasible to make the oSnap plugin work as required by Epoch 27.
  • Completing this milestone will require an additional round of work to generate the necessary transactions (including Merkle tree updates), followed by multiple QA rounds.

Note: We discovered some limitations with the oSnap plugin that prevent certain steps from being fully automated. We’ll share more details soon, but we still believe it adds significant value overall.

Milestone #4

We have been documenting everything continuously, but we will finalize all documentation once Milestones #2 and #3 are complete.

Next Steps

  • Epoch 27:

    We expect to perform accurate calculations using the same database inputs that @Laita Labs shared with us for Epoch 26.

  • Subsequent Epochs:

    Our focus will shift to generating Merkle proof files, and integrating the oSnap plugin.

    We will only proceed with implementing the oSnap plugin in our production environment once all involved parties are fully confident in the results.

    After all this is done and delivered, we will proceed, Epoch by Epoch, on gathering the complete data without relying on Laita Labs’ databases.

We regret not meeting the deadlines and milestones previously defined, but this decision ensures a final delivery that meets the project’s importance and requirements.

Our commitment remains absolute, and we will allocate the necessary resources to successfully fulfill the tasks previously agreed upon with the DAO.

If new extraordinary issues arise that compromise deadlines, we will notify the DAO and Laita Labs as soon as possible so we can reach a mutually agreed-upon decision.

If you have any questions or need further information, please don’t hesitate to reach out.

Special thanks to the Laita Labs team for their continued assistance in this project, which has turned out to be more complex than initially anticipated, and to the DAO—we appreciate your understanding.

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Milestone 2: Data Collection & Execution Automation Completed

Key Highlights

We’ve successfully completed Milestone 2 of the ParaSwap Reward Mechanism Automation. We built and executed scripts to gather crucial on-chain data, aligning reward calculations with PIP-53 and ParaSwap’s API results. These scripts determined ParaBoost Scores per address by Epoch and ensured accurate reward allocations across Escrows, as well as the proper construction of their Merkle trees, allowing users to claim their assets. This marks another step toward full automation, increasing efficiency and transparency within ParaSwap’s incentive framework.

Although we could have shared our results with the community and conducted the voting process manually via Snapshot in the last Epoch (Epoch 28), the ongoing PIP-59 proposal and the uncertainty surrounding this distribution—along with the time required to complete a Snapshot vote (at least five days)— was blocking us and led us to prioritize refining and finalizing the distribution 100% automated directly for the next cycle.

Next Steps

We will finish the Snapshot Proposal Integration, automating governance to streamline reward allocations for community approval. Alongside this, Deployment and Testing will ensure a smooth transition with rigorous QA, guaranteeing the reliability and efficiency of the automated reward mechanism.

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Dear forum,

We’re pleased to announce that over the past few weeks, we have been working on the final details for PIP-55.

As you may know, yesterday marked the closure of EPOCH 29.
The distribution of rewards and the Gas Refund Program usually takes place a week later.

We aim to be the ones executing the next distribution, which will be in less than a week.
Of course, we are working with the oversight, support, and validation from the @Laita Labs team.

That’s why we’ve been testing the functionalities of the implemented service both on testnet:

And on OP Mainnet:

Those were TEST transactions — don’t be alarmed.

Having said that, once the OP Mainnet tests are concluded and the calculations are done for the recently finished epoch, we invite you to review the snapshot proposal, validate the data, and vote in favour if you’re satisfied. Once the vote passes, the transactions will be automatically executed.

We also find it important to clarify the step-by-step process:

  1. We’ll do the calculations and validate them with the Laita Labs team.
  2. We’ll upload these data to Snapshot for automatic processing and proposal creation.
  3. The WakeUp team will share these links with the community, explaining the distribution in more detail.
  4. A vote will be held on Snapshot.
  5. If the vote passes, the rewards distribution will be executed automatically, and individuals will be able to claim their funds as usual.

This concludes the automation and distribution process, giving the decision-making power to the DAO while providing more transparency than before.

Please note that since this is the first time we’re handling the distribution ourselves — while also configuring the automated process — and given the ongoing tests, the 5-day voting period, and the challenge window for oSnap validators after the vote passes, there may be a slight delay in the distribution of Gas Refunds and Rewards.

Best regards,
The WakeUp Labs team

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Update on PIP-55: First On-Chain Gas Refund Distribution Live!

As mentioned in our previous post, the first stage of the PIP-55 implementation is underway.

Thanks to the collaboration between @Laita Labs, UMA, and WakeUp Labs, we’ve successfully proposed the first automated, trustless distribution for the Gas Refund Program:

  1. The distribution amounts were independently calculated by both Laita and WakeUp Labs — and matched.

  2. WakeUp Labs pushed this data to Snapshot via a custom script. With UMA’s support, the proposal now triggers an on-chain transaction to automatically execute the distribution.

  3. Laita and GovCo no longer need to manually sign or transfer funds — it’s fully automated.

:backhand_index_pointing_right: Snapshot + oSnap Proposal (Epoch 29):

https://vote.velora.xyz/#/proposal/0xde5026a02a18a6aa7018c6b1c15884270c77dd86eafe43428f085b1371365f32

This marks the first time the DAO, not individuals, validates and approves a Gas Refund distribution.

What about the Rewards Distribution?

The Rewards proposal will go live on Monday as the UMA team was fixing a minor UI issue between Snapshot and oSnap found during the creation of the Rewards proposal.

Thanks for your support and patience! :folded_hands:

If you have any questions, feel free to reach out!

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Congratulations to the @WakeUpLabs team on this great milestone for the DAO!

One question. We saw in the snapshot proposal that you provided a link to an IPFS Folder containing various files. Do we have to make any checks to make sure the transfers are correct before we vote? If so, can you tell us what procedure we should follow and what we should verify? Thanks.

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Hello @Seedgov,

Great question! That IPFS folder mirrors the structure @Laita Labs has always used, but with updated data and the correct epoch number.

It includes the raw data and the exact transactions to be executed on-chain once the Snapshot vote passes.

A quick check is to match those transactions with the ones that will be executed on-chain.
Deeper verification, like manual calculation or recreating the Merkle trees, is possible but complex. We’ve already done that work to ensure the results match Laita’s for Epoch 29.

If needed, we’re happy to make this process easier to audit in future epochs.

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Thanks @WakeUpLabs for putting this proposal together. We are generally supportive of continuing gas refunds for active stakers, and we appreciate that the Merkle roots and distribution files have been shared via IPFS. That said, we noticed the IPFS link and Merkle root hashes weren’t posted in the forum thread itself. Adding them there would improve transparency and help keep everything in one place for easier reference. If possible, sharing a quick screenshot or summary showing that the numbers match the data would also be helpful. It would make the vote clearer and easier to follow for everyone in the DAO.

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Thank you @WakeUpLabs for the work in automating the gas refund process. I do believe this is an important step for Velora DAO to be able to directly perform some operations in a trustless and decentralized way after a Snapshot vote.

I understand the technical implementation details may already be validated. However, I still want to mention that at Kleros we have a competing tool similar to oSnap, Kleros SafeSnap, that can do the same work but with Kleros as the final dispute resolution protocol. Another big difference is its flexibility as it can allow Velora DAO to enforce any set of rules like a Constitutional check.

This tool has been used by 1inch DAO since 2022 and was also chosen in ShutterDAO. Would love to give more information and discuss this in more details with you !

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We agree with what @Curia mentioned. We believe that if, for the next epoch, @WakeUpLabs could include a short guide, summary, or some screenshots to help the community better understand the numbers and calculations, it would be a great contribution. The more people double-checking, the better for everyone.

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Hey @0xAlex! Thanks for letting us know! It’d be great to chat more and explore potential synergies.

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@Curia @SEEDGov,

Apologies for not including the information directly in the forum earlier—since it’s our first time posting, we simply overlooked it.

To clarify, since the gas refund is paid in sePSP1, just like in the Snapshot Website, here are the details:

Total Refunds for Distribution: 93,350.115741246219975568 sePSP1

ETH Mainnet
• Total: 63,250.4188904132165876 sePSP1
• Merkle root: 0xc315c13d730779ad1b4e2ed5f2a89da814344b7e71c29b05fe78dcdce81142a6

OP Mainnet
• Total: 30,099.696850833003387968 sePSP1
• Merkle root: 0x5bb8b91c69b4ffd9cfcdf9de2f814bff58e652ceafcaafab67e3f8f6bb23e2d8

:file_folder: Distribution Files

  • IPFS Folder for Epoch 29 Gas Refund Distribution
    Note: The Gas Refund Epoch is numbered 59 due to legacy distributions prior to PSP 2.0.

If you open the IPFS folder and view the following files:

You’ll see that, in the first few lines, the values match those presented in the proposals:

Screenshot
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Similarly, you can compare the proposed transactions for Snapshot with the following files:

Screenshot
Screenshot1920×1117 152 KB

(The parameters are different because it’s not a ‘raw’ transaction, but that can be easily verified).

This isn’t enough to validate how the data ended up there, but it is at least enough to confirm that what is going to be executed matches what we shared.

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Hey everyone,

The rewards distribution proposal is now live! You can vote on Snapshot so the rewards can be distributed to stakers: Proposal Link

To validate the transactions, here’s the IPFS file: IPFS File

You can easily verify that the transactions to be executed—once the Snapshot proposal is approved—match the .json files included in the IPFS link.

Please note that we decided to shorten the voting period to 3 days (instead of the usual duration) to let people receive the funds sooner, as this should have been executed earlier.

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Quick update,

The Gas Refund proposal has been approved — thanks for voting! If there are no challenges on UMA within 24h, the transactions will execute automatically. UMA is informed and everything is proceeding as expected.

Here the links:

The same process will follow once the Rewards proposal is approved.

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Thank you for the updated!

We’ve reviewed the details and, while we haven’t gone through every element in depth, everything appears consistent and aligns with the distribution structure that was previously communicated.

We’ll be supporting this proposal.

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Gas refund transactions have been executed following the 24-hour challenge period of UMA. The users who were set to receive funds can now claim them!

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We vote for this proposal as we did not find any issue after our review.
We also empathize with the decision to shorten the voting period to 3 days in order to accelerate payouts and deeply appreciate that intent.

However, maintaining a predictable governance routine is crucial to balance participant effort and operational stability. We therefore recommend keeping the standard 5-day voting period, or even in the future, establishing a fixed weekly schedule for Snapshot proposals to ensure both prompt distributions and sustainable governance participation.

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The Snapshot voting period for the Rewards Distribution Proposal has ended and it was approved!

Here are the two UMA links:
:link: Link 1
:link: Link 2

Everything is progressing as expected! Tomorrow, once the UMA oracle approves it, we’ll notify you when the distribution has been automatically executed.

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Yes, you’re absolutely right—this first distribution was all about getting things done. But for the next one, we’ll place a strong focus on refining processes, standardizing each party’s tasks, and ensuring proper communication in case of any adjustments.

Thanks for the feedback—it’s something we’ll definitely keep in mind for the next distribution.

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