[PGP001] PSYS Inflation Towards Liquidity Incentives and Single-Sided PSYS Staking Incentives

Proposals
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General Project Information

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

Team:

Introduction

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.

Description

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.

Implementation

Timeline

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.

Staking Incentives

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

Liquidity Incentives

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.

Rationale

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.

Projected Impact

The proposed use of the annually minted PSYS tokens is expected to have several positive impacts on the Pegasys protocol and its ecosystem:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Risks

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.

Feedback and Approval Process

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.

Conclusion

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.

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I support & appreciate this proposal! Happy to see Rollux being put on the top of the priority list - we’re definitely aligned on that.

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I think this is a good way to use the additional 3M PSYS. Now that Pegasys started on Rollux it is a good time to promote the new Pegasys version.

The to be announced partner sounds intereting. Looking forward to more information once they can be shared.

As we are talking about fund usage there is also still the 1M PSYS open originally planned for Syscoin community and early NEVM user airdrop. NEVM is now the old Pegasys world. Maybe it makes sense to use the 1M for early Rollux users.
What do you think is it good to add them to the 3M now or better wait for a more bullish market to promote then?

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It sounds perfect for me. Rewards seem fair for LP and staking. I will be staking my PSYS as soon as it’s an option. Cannot wait.

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hey Lorgar, yeah, that’s the idea: using the 1M allocated for SYS community directly on Rolllux, helping incentivize the migration process and volume brought over. We’ll go more into detail regarding full token breakdown for incentives and airdrop in another post

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Even though I am strongly against token inflation, but since Pegasys is moving to Rollux L2 I believe they need all that is needed to give the users a good and attractive “User Experience.” However the 3M tokens to be mint will be unfair to be distributed equally between Liquidity Providers that carries more risk and a one sided stakers that carries little or no risk whatsoever. Therefore, I will suggest that Liquidity Providers should be allocated 2M tokens Whilst Stakers have 1M tokens. Thanks and I wish Pegasys good luck in their new phase.

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Curious why you are proposing to use a fully year of inflation (3M PSYS) for staking and liquidity incentives over 4 and 3 months, respectively. Are you assuming that the remaining 8 and 9 months will need no incentives? It seems like a very short time for trading fees to increase to a level that would encourage people keeping staking and providing liquidity on their own without incentives. Can you provide more details on this rationale?

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I don’t think a promise was made; however, I believe it was implied that the 1M PSYS would be in future airdrop to L1 LP providers, L1 traders, etc. and a snap shot taken at some point in the future… Also, if all of the incentives are provided on L2 then why wouldn’t all of the LP and trades go to L2? It has been stated that liquidity is needed on both L1 and L2. L1 will not be used as much but it is still needed. Will L1 be updated to a V3 DEX too? Concentrated liquidity might also help on L1.

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The yet to be announced partnership is interesting. I’m looking forward to hearing more information. However, it is difficult to understand the impact of this proposal without also understanding the extent to which the partner will interact with Pegasys and how. There is less than a month before the 20th, how much are we gaining by keeping this partner under wraps and thus voting prior to the 20th?

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Gran idea y gran equipo, SYS y PSYS hold!

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Great Pegasys and Rollux L2

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Thanks for the feedback degen, I think you bring up a very valid point.

The team and I will try to post the full PSYS incentives breakdown here in the forums today.

There, you’ll see that LPs have more than 9M tokens allocated towards incentives, while our tokenomics has already run out of staking incentives, that’s why we’re directing inflation equally, and experimenting. with more real-yield-based single-sided staking models.

Once the post is up, I’ll ping you here so you can check it out. Curious to hear what you think after looking at the whole picture.

Have a great week mate, cheers.

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Good question, ellipsoid. The inflation timelock was actually reached back in February, giving us about 6 months of “backtracking” to make up for the L2 delayed release.

As I told degenpro, we’ll post the full token incentives breakdown plan today, and there you’ll see that incentives will go further time-wise.

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Liquidity and trading on L1 are intended to be aimed towards Foundation/protocols doing very specific things, and other edge cases. The average user is incentivized to migrate completely to L2.

If there’s enough demand, we’ll deploy V3 on Layer 1 as well.

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We’ll announce them this week, the earliest we can. They would just rather announce after deployment/integration is done, so we’ll respect that.

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Lol, I don’t know who will want to go and perform swap on L1, the experience on L1 is not encouraging, so forget the idea of deploying V3 on L1. Thanks

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Sounds good the proposal. I would like also to become more details about the current token circulation, the future unlocks and emissions.

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Update: We received a new deadline for our partners system’s to be up on Rollux: August 30th. Make sure to tune in on our socials and in the Forum for more updates.

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30th August has come and gone, are we not supposed to be given an update if there is still another extension of time for partner(s) to complete their integration(s).

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Hey @degenpro, sorry for the lack of communication.

One of our partners ended up not delivering what we agreed on and Pegasys’ team is now working to finish what’s necessary for Farms to be up soon.

In the meanwhile we have another partner working on Staking and that should be up in the next 2 weeks.

I’ll add another update here by the end of next week, once we get a new update from both partners.