Perpetual Protocol Policy Listing

Context

Perpetual Protocol offers Decentralised Margin Trading of Perpetual Contracts over BTC, ETH, LINK, YFI, REN, SNX and many others. Traders can trade with up to 20x leverage long or short with a lower slippage.
Perpetual Protocol would like to protect their users against eventual smart contract hacks, we discussed other policies we could work on but we would like to start with a smart contract coverage as it makes most sense. Perpetual Protocol needs protection over 2.5m$ worth of cover.

The premium price would vary between 2% and 2.5% per year and Perpetual Protocol offers an additional incentive for the Spartan Bucket Capital Miners of 1% of the 2.5m$ over 6 months (approx 2500 PERP).

Proposal
The proposal would be to list Perpetual Protocol’s policy on Unslashed with a premium price of 2%-2.5%, add it to the Spartan Bucket, accept the 1% additional incentive for the Spartan Bucket then do a DAO-to-DAO transaction (similar to the one Unslashed did with Lido) to have the Perp DAO protect its users.

We are putting this proposal to a vote on scattershot, USF holders and Uniswap LPs will be able to vote over it

https://scattershot.page/#/unslashed.eth/proposal/QmW8DEMaQBcqzmZPJqAamESpJdg4teTaosaHzaGWG1ptEP

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How will the 1% be used? From your message, it sounds like it might be distributed to capital suppliers.
I was under the impression that for other policies the tokens of the protocol were distributed to the insurance takers (cover mining).

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The 1% would be for capital suppliers indeed

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Fully support. Thanks for bringing this forward.

I also think it will be great to add additional incentive to capital providers.

I would prefer that the 1% incentive go towards USF holders rather than people in the Spartan bucket. People are going to supply to the Spartan bucket regardless, we should be providing as much value to USF holders as we can (in my opinion)

Also, the 2-2.5% premium, where is that number coming from?

Is it comparative to other platforms being covered? Is it lower because of the size of the policy? Is it higher because of the size of the policy? Just wondering how it was priced.

I would think there ought to be a higher premium charged on bulk insurance buys because it does mean the Unslashed pool is taking on more direct risk

In this case the Spartan Bucket Capital Suppliers are the ones taking the risk, I don’t see the rational behind distributing these to USF holders. I think we should focus on building a product that is coherent, trying to create value or utility for USF at all costs is not a long-term play.

The premium price comes from our risk assessment, we worked on it and the scope of the policy over the last weeks. It is higher because of the risk profile and it is at its current level because of the size and the current composition of the spartan bucket :slight_smile:

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maybe we split it then? 0.5% for USF holders and 0.5% for spartan bucket? (not just this incentive, but any future partnership incentives)

I just think delivering value for USF holders is also important. And they are also the ones voting to make this happen in the first place.

We need a rational behind something like this.
In this case, the objective for Perp is basically to reward the people who are providing the capital to the bucket and taking the risk. Again, trying to create a utility for USF at all costs is not how we build something long term. I will tend to put it on the utility working group for now and have something better structured and backed by a strong and sustainable rational.

a few reasons to share the partnership rewards with USF holders as well as spartan capital suppliers

  1. To generate value for current USF holders
  2. To reward USF holders for bringing additional partnership opportunities TO the spartan bucket (we could hypothetically just as easily vote no on this)
  3. To incentivize spartan suppliers to keep their USF instead of selling it (with the additional rewards)
  4. Because we already aren’t currently using all the available coverage (as far as I can tell). So there’s not a super strong reason to make it even more rewarding for capital suppliers or to try and bring NEW money into the spartan bucket at this point

As a spartan capital holder, I’m expecting a return on my eth in terms of more ETH. We want premiums (or to farm and dump, aka a high APY). So a lot of those people are going top keep dumping the USF they earn unless we incentivize them to keep it

Ok then this goes to the Utility Working Group, the arguments are all going in one single direction.

Regarding the dumping argument, it has already been addressed with the change in the reward structure, more for long term players, less for “short-termists”.
And just to be clear, creating utility doesn’t avoid a dump, if someone wants to dump and they don’t care about the project, you can offer them whatever you want, they will dump and most of the time it is actually automated.

I agree. I think that in terms of optics, it makes a lot more sense to distribute the PERP tokens to the capital suppliers that take on the risk, rather than trying to create value at all cost for USF holders. The most important is to have a maximum of capital suppliers, and then hopefully get enough insurance takers to get as close to 100% capacity as possible. I would much rather see the protocol take a small fee (tbd) from all premiums received which would go to the vault. The DAO can decide on how to best use this revenue.
The challenging aspect in deciding all this is that we don’t really have much visibility of how much is currently generated from the premiums received vs. what is being redistributed to the capital suppliers. It would be really good to see some metrics.

What is the utility working group? Is that just the discussion in discord where we can have more of a debate and then once we get closer to a decision we post in this forum?

it’s basically a group that will be working on the USF utility topic. @EAsports @monstar @Tim_Betting and many others started working on it. I threw the idea of having something a bit more organised with a group of people working together on one topic and being able to reward the contributors.

It’s a big piece and it’s better to go in-depth, which takes a lot of time.

While I agree with the proposal I’m wondering the reason for the 1% PERP reward. Does it work as a form of payment on the premium? As in, without the reward, the premium price would be higher for the policy?

I have no reason to reject an additional incentive (I mean, no one would…) but if it means trading off something else, maybe the vote would be different.

@Marh / @monstar

Summarising the above, the options proposed for distributing the PERP incentives are:
1 - to capital miners
2 - to USF holders
3 - to the working group

From these options, the only ones that make sense to me are 1 and 3.

I think that capital miners are taking the Main risk and are in fact driving the platform, hence deserve it more.

While I also agree that being involved in the working group is important (hence I’ve been contributing), it makes more sense to me if the incentive for the working group is in USF rather than PERP, since we are contributing to improve Unslashed.

In short, I am happy to vote in favour of the original proposal.

@Marh could you please provide more details on the below?

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I think that the PERP reward is separate from any premium calculation. It’s a way to motivate people to provide cover for perpetual, and it’s a gesture of good will. The underwriters take all the risk, so they should get those rewards. The utility and the usage of the USF token is not really fleshed out anyway, if it makes sense at a later point rewards can always be redistributed.

Can’t really form an opinion on the premium because I have no insight in how it’s calculated.

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It works as an additional reward for Capital Suppliers, with another DAOs tokens that can lead them to get interested/participate in that protocol and also a gesture from their side

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honestly I don’t see how the Perp incentives would be distributed to the working group; the utility working group would be focused on USF utility. EDIT didn’t read your full answer, dismiss the previous response

I fully support the PERP reward going to Capital Miners.

With: “1% of the 2.5m$ over 6 months (approx 2500 PERP).” Does this mean the reward will be distributed with PERP?
If this is the case I don’t mind pooling my reward (probably less than 5 PERP) for another purpose benefiting the project.

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I am also interested in how premiums are priced. How is the risk assessed to arrive at an actuarially fare rate?