PSP staking system is switching to PSP 2.0, which introduces two staking pools: Basic Pool (sePSP1, 100% PSP) and Boosted Pool (sePSP2, 80% PSP + 20% ETH).
Stakers of the old system (ParaSwap Pools & Safety Module) should migrate to one of the two pools (sePSP1 or sePSP2) to continue earning incentives (in ETH rather than PSP) and participating in the Gas Refund Program (up to 95%).
Your staking incentives and gas refund level depends on your ParaBoost, which represents the incentive boost you receive on your stake from performing value-adding actions for the Protocol, such as trading, order-making, pooling, and referring.
PSP 2.0 is the result of months of community engagement and deliberation and resulted in the major update ever to PSP tokenomics. The full details of PSP 2.0 can be found in the PSP 2.0 forum proposal.
In summary, PSP 2.0 introduces the following improvements for PSP stakers:
Decreased PSP emissions reducing PSP token inflation
Distribution of 80% of the protocol fees to stakers and 20% to the DAO treasury in native gas chain tokens (ETH, Matic, AVAX, etc.)
New Social Escrow staking system and ParaBoost: incentivizing stakers who provide value or services to the ParaSwap protocol
What's different from the previous staking version?
Staking Mechanisms
Moving away from the previous staking method where users staked on ParaSwapPools or Safety Module, PSP 2.0 introduces sePSP1 and sePSP2: two ways of staking PSP that seek to maximize the utility of the PSP provided while offering a streamlined staking experience.
For more details about the differences between sePSP1 and sePSP2, click here.
For more details about how to stake PSP, click here.
Protocol fee incentives
As opposed to the previous staking model, where rewards for stakers were distributed in PSP, PSP 2.0 distributes protocol fees in native gas chain tokens (ETH, Matic, AVAX, etc.): 80% of the protocol fees to stakers and 20% to the DAO treasury.
Previously, PSP rewards were auto-compounded on ParaSwapPools or needed to be claimed by Safety Module stakers. With PSP 2.0, incentives become claimable by users at the end of each epoch after the grace period of one week.
After becoming available, incentives will have to be claimed within the following six epochs; otherwise, unclaimed incentives will go back to the DAO treasury.
Epoch length
The epoch length changed from two to four weeks to help users accomplish the numbers set out by the ParaBoost easier.
Gas Refund Program
The Gas Refund Program was aligned with PSP 2.0 by introducing the following changes:
Consider ParaBoost score for Gas Refund instead of staked PSP amount.
Double the per-epoch limit from $1.25k USD to $2.5k USD to account for the lengthened epochs.
Make the gas refund levels continuous rather than discrete
Limit the refund to 95% instead of 100% to avoid system gaming.
Full details of the Gas Refund Program can be found here.
Governance Committee (GovCo)
PSP 2.0 introduces a Governance committee that governs the PSP 2.0 reward system and ensures it is fair and unbiased.
If you would like more details on GovCo's initial members and responsibilities, please visit the following proposal.