Optimizing DAOs: The ParaSwap DAO Buyback Approach

Balmy
3 min readApr 3, 2024

In the fast-paced world of DeFi, optimizing operations and maximizing efficiency are a must-have for any protocol that aims to be successful. Yet, for DAOs, executing daily buybacks of project tokens can be a cumbersome process full of challenges. This is where Mean Finance comes in with an innovative smart contract solution designed to streamline the ParaSwap DAO buyback process and facilitate its operations.

What is the $PSP Buyback and how does the DAO benefit?

ParaSwap DAO earns $BAL (native token of Balancer protocol) and $OP (native token for Optimism blockchain) tokens through liquidity farming from an Aura pool, intending to use these tokens for purchasing $PSP (in this link you can find the proposal the DAO approved). However, executing these buybacks presents significant operational overhead for the DAO.

For instance, let’s consider a scenario where ParaSwap DAO decides to initiate only one trade for their buyback. The process involves several steps, including: withdrawing $BAL and $OP tokens from liquidity positions, proposing a trade to buy $PSP, obtaining multiple signatures from DAO members, and finally executing the trade which in turn can revert from slippage settings due to the amount of time it has taken since the process started. Not only does this process consume valuable time, but it also incurs unnecessary transaction costs and introduces speculation risks.

Our smart contract addresses these pain points by automating the entire process in a single transaction, thereby streamlining buyback operations and freeing DAO’s time to focus on their project mission.

By leveraging our smart contract solution, ParaSwap DAO removes manual intervention and speculation from the equation and experiences a dramatic reduction in all costs associated with daily buybacks. This approach allows the DAO to focus on its core objectives without worrying about market fluctuations, ensuring swift and efficient execution of buyback transactions.

How does our Smart Contract work?

As mentioned before, our smart contract simplifies the ParaSwap DAO buyback process by consolidating multiple steps into a single transaction. Here is how it works:

  • Claims $OP and $BAL tokens from this Aura pool
  • Increases the DAO’s DCA $OP => $PSP position
  • Increases the DAO’s DCA $BAL => $PSP position
  • Withdraws the $PSP tokens and stakes them as $sePSP1
  • Sends the $sePSP1 tokens to ParaSwap’s DAO multi-sig for redistribution to stakers (done by the DAO in the future)

This efficient workflow not only saves time in one operation but also enhances DAO governance and transparency.

All this process is enabled by DIA Oracles: Our protocol uses the $PSP/$USD DIA Data Oracle feed to ensure accurate and reliable pricing data for the correct execution of the DCA orders.

This integration not only improves the security and integrity of the process but also guarantees fair pricing for every swap. In the event of any liquidity issues, the swaps would not be executed providing an additional layer of security for all stakeholders involved.

Final thoughts

By returning value to its stakeholders, ParaSwap DAO encourages long-term engagement and participation within the ecosystem, fostering a community-driven approach to governance and development.

In essence, the ParaSwap DAO buyback seeks to unlock new opportunities for greater innovation and impact in the DeFi space. Our goal is to enable ParaSwap DAO to focus on its mission while removing manual operational work and saving costs and time.

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