PLP001 - Pegasys Governance Proposal #1
Proposal Title: PSYS Inflation Towards Liquidity Incentives and Single-Sided PSYS Staking Incentives
Proposal Summary: This proposal aims to redirect the yearly 3% additional PSYS tokens (3M PSYS) towards incentivizing single-sided PSYS token staking for Rollux Layer2 and general liquidity for Pegasys on Rollux. By evenly distributing these tokens, half for staking and half for liquidity incentives over several months, we aim to attract more liquidity, stimulate volume, and consequently spur revenue and growth to the Pegasys protocol.
Proposer: Pegasys Core Team
Project Manager: @kek
We’re excited to present our first governance proposal for PegasysDAO, marking an important milestone in our journey as we work towards building and enhancing the Pegasys protocol alongside our vibrant community. Your involvement and contribution are the cornerstones of our ecosystem, and we’re eager to continue our collaborative efforts in shaping the future of decentralized finance.
Our inaugural year has been great thanks to the robust and passionate support of our user base. Our community’s unwavering trust and active engagement have been instrumental in our project’s success thus far.
Despite the growth we experienced, our outward-facing progress was somewhat slowed due to technical limitations on Syscoin Layer 1. These limitations weren’t ideal for optimal adoption or scalability, posing challenges for our growth trajectory. However, our team didn’t allow these hurdles to hinder our commitment to innovation. In fact, we harnessed this as an opportunity to work diligently behind the scenes, delivering a brand new, user-friendly interface from the ground up, developing a new version of the protocol, and preparing to roll out a novel protocol primitive soon.
The launch of Rollux has us poised on the brink of an exciting new era for Pegasys. This new development has leveled up our competitiveness in the DeFi landscape, enhancing our protocol’s scalability and usability. With our adaptability and innovative spirit, we’re eager to seize the opportunities this new phase presents.
We understand that proper incentives are fundamental to the sustainable growth of any protocol. As such, PegasysDAO still boasts a robust treasury and an attractive incentive model, positioning us well for continued growth and stability, in a now post-vesting scenario where we can allocate tokens more effectively and quickly.
This proposal aims to further refine our token management strategy by carefully allocating token inflation. This will be done in a way that values community input and involves ecosystem partners, ensuring our approach is both community-driven and partner-centric. We’re excited to hear your thoughts on this proposal, as we jointly shape the future of PegasysDAO.
In February of this year, we reached a significant milestone - the completion of the one-year period necessary for minting new PSYS tokens. We chose to exercise patience, delaying the creation of this proposal until the launch of Rollux to align our token distribution with the new opportunities this development presents. As a few months have already passed since the commencement of the new PSYS minting, our attention is firmly fixed on the short term.
As of February 2024, we will have a higher level of inflation in the system. This necessitates swift and efficient allocation of the minted tokens at our disposal, to maximize their potential for promoting growth.
This proposal (PGP001) sets forth a plan to use the additional 3% (equivalent to 3 million PSYS tokens) minted annually by the Pegasys protocol as incentives to boost project growth. This will be accomplished by directing these tokens towards single-sided PSYS token staking incentives for Rollux Layer2, as well as general liquidity incentives for Pegasys on Rollux. The idea is to stimulate more liquidity, volume, revenue, and growth to the protocol by splitting these rewards half-half: 1.5M PSYS tokens for single-sided staking, and 1.5M PSYS tokens for liquidity incentives.
For single-sided staking, the 1.5 million tokens will be distributed according to the following schedule: 700,000 PSYS in the first month, 500,000 PSYS in the second month, and 300,000 PSYS in the third month. For liquidity incentives, the other half of the tokens (1.5M PSYS) will be distributed evenly over four months at a rate of 375,000 PSYS per month.
PegasysDAO is also working in collaboration with a yet-to-be-announced key ecosystem partner. This partner’s technology essentially performs on-chain market making for PegasysV3 with a focus on PSYS-delta, ensuring that token reorganizations and liquidity pool (LP) rebalancing always increase the amount of PSYS users hold. This strategy aims to create a superior user experience (UX), generate real capital and volume, and also safeguard users’ investments even in market downturns.
Our intention is to start incentives deployment as soon as possible. However, we’re dependent on external actors to be able to do so.
In a realistic estimate, we’re assuming our partners will be fully up and running on Rollux by July 20th. This gives PegasysDAO enough time for temperature check, discussions, tweaks, and on-chain voting by said date.
The actual incentives kick-off date will be announced on our socials and/or in the Governance Forum.
For staking, we will distribute the 1.5M tokens according to the following schedule:
- First month: 700,000 PSYS
- Second month: 500,000 PSYS
- Third month: 300,000 PSYS
For farms, we’ll distribute the 1.5M equally over four months (375,000 PSYS per month), and these will be added on top of already allocated tokens for liquidity incentives. A full breakdown of our incentive plans, including numbers and dates, will be posted as a separate governance proposal.
We are collaborating with key ecosystem partners to provide unbeatable UX and capital efficiency for single-sided vaults. This partner’s technology carries out on-chain market-making for PegasysV3 with a PSYS-delta focus. This is a more optimal implementation than just distributing PSYS tokens, as it generates real capital and volume, fostering a superior UX. These incentives are necessary as this type of staking carries risks, and there might be days when extra PSYS are required to ensure users are made whole, even in market downturns.
We aim to bring the best UX to Pegasys users and maintain project token allocations healthily. We believe this proposal is a step towards a more sustainable PSYS staking model.
The proposed use of the annually minted PSYS tokens is expected to have several positive impacts on the Pegasys protocol and its ecosystem:
- Growth and Revenue: By directing these tokens as incentives for single-sided staking and liquidity provision, we aim to stimulate more liquidity and trading volume on the protocol. This is expected to boost the protocol’s revenue and growth.
- User Experience: Collaborating with a key ecosystem partner will bring unbeatable user experience and capital efficiency for single-sided vaults. This partner’s technology will enhance the value proposition of staking and LP provision on Pegasys.
- Risk Mitigation: The additional incentives will help offset potential risks associated with single-sided staking and LP provision. This will ensure that users are made whole, even in potential market downturns.
- Sustainable Tokenomics: This proposal aligns with our aim of maintaining healthy token allocations and offers a more sustainable PSYS staking model. It also ensures that we continue to offer the best user experience to the Pegasys community.
This governance proposal will be open for discussion, and we encourage all community members to provide their feedback, ask questions, and voice any concerns. It’s essential for us to make a collective decision that serves the best interest of the Pegasys ecosystem.
Like any initiative, this proposal is not without risks. There is a chance that despite the incentives, the anticipated liquidity may not materialize, or it may be slower than expected. Additionally, the market dynamics of PSYS tokens could change, leading to unanticipated consequences.
We invite the community to provide feedback and thoughts on this proposal. We’re especially interested in hearing from those who plan to participate in the staking and liquidity mining programs. Following a period of open discussion, we will formally vote on this proposal.
This proposal represents an opportunity to bolster the Pegasys protocol’s growth and stability. By incentivizing PSYS staking and liquidity provision, we can create a more robust, resilient, and vibrant ecosystem. We look forward to the community’s input on this proposal, and we are excited about the potential it holds for the future of Pegasys.