PIP-XX: Utilizing Aura Finance to bootstrap PSP liquidity on Optimism

[stikers]

Can you please modify the Proposal with the new informations ? Thanks to this, you could launch the vote tomorrow

[Lup]

Gm everyone!

The proposal looks great, and I’m happy to see so much excitement!

We’ve been preparing a new proposal to use the DAO treasury exclusively on R&D, which includes ARB, OP… We think this market timing is the best opportunity to bet on product excellence and spend most of our energy to make ParaSwap more efficient & truly decentralized. I think it’s better to find another solution that does not use the liquid DAO treasury, which includes ARB.

We’ll follow up with a proposal in the next 2 days.

UPDATE: we’ll need another 1 - 3 days

[Paradigme]

So between today and Saturday that’s it? @Lup

[json]

Given Lup’s desire to utilize ARB and OP treasury funds for R&D, I propose we push the proposal as is without the addition of OP and ARB. Does anyone object to this?

I want to avoid having this proposal be contingent on an otherwise unrelated topic/area of focus.

[stikers]

It makes no sense to me to create such selling pressure on the PSP.
The use of our OP and Arb grants lends itself well to this proposal. Without these assets, it becomes less obvious.

[json]

The purpose of the proposal is to have Paraswap acquire AURA as a strategic asset to utilize for liquidity indefinitely and for Paraswap to grow liquidity in a cost effective manner all the while providing an enticing, third party liquidity opportunity for its community.

The PSP is only going to be used at the beginning to create emissions for the gauge and the amount proposed was meant to be minimal. Moreover, the adjusted proposal, per community’s discussion, still uses PSP in conjunction with OP and ARB.

With current efficiency, Paraswap would technically be utilizing the PSP to acquire the above-mentioned strategic asset at an efficiency of at least 1.7, meaning for every $100 Paraswap would receive >$170 in value. The amount of PSP provided should be reduced and eventually eliminated since Paraswap will own enough AURA to help maintain liquidity on multiple chains.

Making multiple proposals contingent on each other will hamper the process flow and comes with an opportunity cost. However, if the community wants to better understand how the OP and ARB is utilized then we can wait. I just want to make sure that we’ve covered all the bases and that everyone is aligned before moving forward.

[enerow]

Discussions are still on going on that proposal and didn’t pass yet, so let’s focus on this one.
I think we can still do both (R&D + AURA) so I propose :

• Allocate $5K in $PSP + $5K $ARB weekly for 10 weeks.
• Swap BAL + OP rewards to $PSP, and distribute it to Stakers in sePSP1 at the end of each epoch.
• GovCo will handle preparing payload and providing program analysis to ensure sustainability and profitability (@Figue)

The allocation will run approximately until the 2nd week of jan 2024, so at the end of dec 2023 we will have to prepare a new proposal and vote to extend/update/stop this allocation. We could then if agreed by the DAO use $ETH as a substitute of $ARB.

This will still leave the fondation with 200K $ARB for R&D in addition with the $OP.

[Paradigme]

Ok. Sounds good

[stikers]

Nice, let’s go ! It’s the best way

[0xYtocin]

While I agree it would be better to use multiple token types to fund the Aura proposal, I am still not sold on the idea of using $ARB to fund development on the Optimism ecosystem. While it’s true that unlike the $OP grant the $ARB did not have any specific conditions, future delegates might not like seeing that we used the governance token of one rollup to incentivise activity in the other. I’ve already seen some delegates rating some STIP proposal authors based on their ARB allocation, and if I saw something similar happening in another protocol and an Arbitrum delegate I would not take it positively.

Personally, it would be much better to focus those tokens on things that impact the Arbitrum ecosystem positively (like R&D and integrations on the arbitrum ecosystem), and instead use the leftover OP that was allocated for liquidity for this (Approximately 45k OP). Future Aura could be supported by applying for an Optimism grant specifically for growth and incentives, which would remove this strange mismatch betweeen incentives and ecosystem incentivised

[enerow]

@0xYtocin

Personally, it would be much better to focus those tokens on things that impact the Arbitrum ecosystem positively (like R&D and integrations on the arbitrum ecosystem), and instead use the leftover OP that was allocated for liquidity for this (Approximately 45k OP). Future Aura could be supported by applying for an Optimism grant specifically for growth and incentives, which would remove this strange mismatch betweeen incentives and ecosystem incentivised

I proposed $ARB tokens because I knew that it was airdropped tokens with no specific conditions on how to use them. But yes it makes even more sense to use $OP instead, if selling them to buy AURA is allowed.

[0xYtocin]

In the end it’s up for the DAO to decide, but using the leftover from liquidity + the integration deployment grant to encourage the integration with PSP should fall under the grant category

[json]

It may be important to note that Balancer did get approved for an Arbitrum grant. If governance approves for a similar program for Arbitrum as it might on Optimism then Paraswap could take advantage of that market efficiency as well.

Are we agreed then to use $OP? Adjusted the bullets below.

• Allocate $5K in $PSP + $5K $OP weekly for 10 weeks.
• Swap BAL + OP rewards to $PSP, and distribute it to Stakers in sePSP1 at the end of each epoch.
• GovCo will handle preparing payload and providing program analysis to ensure sustainability and profitability (@Figue)

[Figue]

Proposal is now live: Snapshot

[agrosso]

Hi all, it’s great to see this proposal moved to snapshot.

@Figue I’d like to highlight the previous discussions about PSP buyback with sePSP1 distribution vs wETH distribution, as we agreed to go for the latter, and this is not reflected in the actual vote.

As the vote is already published, I think we should clarify it here before the snapshot vote ends.

@agrosso

Distributing an additional sePSP1 to all stakers would mean developing a new distribution process, as the current ones are for wETH distribution (rewards) and sePSP1 only for gas refund participants.
This might take time, and I think we should consider the dev resources needed to do it vs the amount that will end up being distributed (reminder: Aura will have OP incentives for a limited time).

From an operations perspective, resource and time wisely, I think it would be better to include the earned OP and BAL into the epoch rewards flow, having Mimic convert them to wETH and distribute to stakers as the rest of the protocol fees

@enerow

What’s a shame is that the PSP buyback, lock and distribute in sePSP1 idea was intended to mitigate the $10K PSP initial sell. But you make a point here, thank you.

@stikers

The important thing is to launch this proposal quickly to take advantage of the incentives.

So if you think it will be quicker to distribute wETH then…
Let’s get started.

@Albist

Buyback would have been better but if not possible, let’s go for WETH.

Also agree to follow the OP incentives for the doubling down strategy using ARB treasury.

@Paradigme

Thanks @agrosso

Go for ETH then

[enerow]

I had a talk with @Lup and it looks like it’s not that hard to implement. I conscientiously went back with sePSP1 instead of wETH. Buyback is important to compensate the initial sell.

[Figue]

Agreed on the buybacks. I will also provide the GovCo payloads to easily set up the incentives, should reduce necessary time in the process by a fair amount

[Paradigme]

Thanks for your message. Buyback was the best solution if its implementation was feasible.

It seems it is, so go for buyback!

[Lup]

Not hard but we need to find a good third party. I think the specs should be:
1- MEV / Arb resistance toolings
2- Randomize swaps timings to avoid arbs
3- insure best execution to avoid too much price impact that can lead to easy Arbs

We can explore if Mimic can do it or maybe Gelato or Biconomy

[stikers]

Hello, any updates?

Thanks in advance
Stik