ATTENTION: Proposal to Unlock 27.6m Perp Tokens to Sunset V1 users (repost)

There has not been a meaningful conclusion to the sunset of V1 users and this proposal, in particular, has not gained the attention it deserves which is why I am reposting it.

I hope that together, as a community, we strive closer to what’s fair for everyone - for early users, current V2 users and the team.

Summary

We ask for the community to allocate 27.6m PERP to be used to fully compensate all users who lost funds in Perp V1.

Proposal

In light of sunsetting Perp V1, the team has brought up five options for the community to choose from:

  • Proposal 1: Distribute remaining funds proportionally according to users’ remaining margin and unrealised PnL at the time of V1 being paused
  • Proposal 2: Distribute remaining funds and first cover 99% of our users starting from lowest margin and PnL up (this covers most retail users; excludes negative PnL). The remaining users then receive pro rata according to their margin and unrealised PnL.
  • Proposal 3: Distribute remaining funds to small position holders first ($100,000 unrealised PnL and margin or less; excludes negative PnL), and any remainder to larger position holders, proportionally according to users’ remaining margin and unrealised PnL.
  • Proposal 4: We will sort wallets from small to large according to the position size and then close positions sequentially by 1%. Once the largest account has had its 1% closed then we still start again at the bottom of the list. This simulates actual AMM function in a scenario where all traders gradually reduce their positions.
  • Community proposals : Fully evaluate and vote on community proposals in a separate vote, in favor of the four options presented by the team (above).

Each option distributes the funds asymmetrically. One option would give more to smaller margin accounts, the other to larger traders and some a combination of both. Naturally, this has brought a lot of questions around fairness and even disharmony within the community.

A user commented in the Community Forum that ‘The Perp V1 litepaper clearly states: “Should the Insurance Fund be depleted, the Insurance Fund will trigger the Perpetual Protocol smart contract to mint new PERP and subsequently sell them at market to ensure the system’s solvency.”’ where a Perp team member responded with “This minting mechanism was abandoned in favor of using Perpetual DAO funds instead. Any mint would be subject to a vote. We can add this option to the vote if there is support for it.”

Hence, we are calling for the community to mint 27.6m PERP to refund all of the remaining margin and unrealised PNL of each V1 trader. We propose for the PERP to start vesting linearly over 12 months after a 4 month lockup.

At the current time of writing, PERP is trading at $1.41 so 27.6m PERP is worth roughly $38.9m, which is the total value of remaining margin and unrealised PNL that is enough to compensate and make each user whole. (The value of all user obligations is $44.6m, and the current proposals offer $5.7m in compensation, so $38.9m is the remaining outstanding obligation.)

Benefits

  • Perp V1 is the first iteration of Perpetual Protocol. Users of V1 are early supporters which reveals that there is long term alignment in the growth of the platform which is why it is crucial to come up with a solution to this shortfall that benefits loyal users. This proposal paves a clear path for that.
  • Protecting the safety of user funds should take priority over anything else. Failure to do so reduces the trust and predictability in the Perp team. The team writes ‘no funds in Perp V2 are presently at risk,’ but this current situation is a reflection on how the team would react in similar situations in the future.

Risks & Mitations

An understandable concern to this proposal would be that offering out PERP tokens as a form of compensation can be a disservice to current PERP holders as tokens distributed may be instantly sold off once received.

This is why we propose a long vesting schedule that is designed to minimize selling impact and optimize for positive behavior that is inline with the community.

2.3m tokens will be released into circulation each month which is only 3.3% of the circulating supply. A previous proposal published by a PERP team member called for the community to mint 13m PERP to be used for strategic partnerships (titled “Unlocking perp Tokens for Growth”). A 4m USDC weekly cap was set on the mint to ensure limited selling pressure. With our current model, less than 4m USDC is released into circulation monthly.

Conclusion

All in all, the safety of users’ funds is at the forefront of this proposal. In order to maintain goodwill of both the platform’s early users, current supporters and the team, we will ensure to work closely with the relevant Perp core members in setting up smart contracts for the token vesting and maintaining transparency by announcing any developments on key platforms (i.e. Twitter, Discord, etc).

Relevant Link

  1. Snapshot

[NOTE: This is not an original post. This is a repost for a previous proposal. Link to that is here: Proposal: Unlocking Perp Tokens to Sunset V1 users]

9 Likes

i agree … why do people only care about small traders? like bruh big traders support the protocol too

they were probably paying bigger fees when perp was still float …

2 Likes

Yeah I am in favour of this.

A proposal posted by Long-run-view was also something I was in favour of however nothing was done about it: Use PERP to provide max(op2, op4) to Perp v1 users

Let’s do something please.

2 Likes

PERP is no longer trading at $1.4 so i think the number of PERP minted should dynamically change per the PERP price right?

1 Like

hmm what about a mix of this proposal and the buy back proposal

2 Likes

I believe the option C of the buyback proposal would be an intermediary solution. Under option C of the buyback proposal, the “smaller” accounts (<$5M) will get back their money much sooner due to the distribution method. The PERP holders will actually be benefiting a lot more under Option C as well because such a large amount ($34M) are flowing in to pump the PERP price.

1 Like

ok but how do we get this to snapshot

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I think since there’s enough in PERP V2’s Insurance Fund to keep V2 users afloat, this seems like to be the only best way forward to keep early users happy. Similar to how Drift handled the damages of their V1, they fully recompensated users. It is only right for PERP to do the same thing.

Hopefully early Perp Protocol users are faithful to the growth of the ecosystem and won’t easily short the coin right once it vests

1 Like

In theory it can go to snapshot after 7 days of discussion on this forum, which has already passed. However I don’t see how this is significantly different from a vote that already happened: Snapshot

In the previous vote, a lower amount was requested, but 90% of holders voted against it.

If @carview1987 requests to create a vote, we can vote, but I don’t see what this proposal has that will make it more attractive than the vote I linked to above.

1 Like

I’d love to post this for Snapshot and try out the chances. I think it’s only right to do so.

How and who do I send my 0x web3 address to?

But if it makes it easier. Here is my address: 0x4F868CA9Ea87bd2EFE85CaDAF39f2537A902Ccea

Just taking a read and it’s very hard to understand what the options to this are. Is the proposal basically a binary outcome with Yes/No where 27.6m PERP is distributed?

Currently speaking to the team in setting up Snapshot for this. For colour, the options will be:

  1. Mint PERP and fully compensate everyone equally (A cap of 3% PERP tokens will be released each month)
  2. Support minting PERP tokens but not this proposal
  3. Against minting PERP tokens

*the price of PERP will be a 7-day TWAP of the last week of every month and will be used to calculate the amount of PERP that should be minted to make all of V1 users whole

@carview1987 sorry it’s taken us a while to properly address your proposal. As we discussed, the team is concerned that there are not enough details in the proposal to ensure proper implementation. I recommend clarifying a few things so we can proceed with the vote. I would also recommend updating the original post as many voters may not read all the comments before voting.

  • List of beneficiaries of this proposal
  • What amount (either in USD or PERP) each beneficiary is to receive, possibly including how your statement “users who lost funds” is defined (ie. what measure and standard was used to determine that funds were lost).
  • How the total proposed amount of PERP will be distributed to beneficiaries if the amount they are to receive is in USD (ie. if beneficiaries are to receive $38.9m but 27.6m PERP is proposed, how any shortfall will be handled)
  • Whether this proposal is an unlock/allocation from Perpetual DAO funds, or a mint of new tokens. I recommend updating so the title and various paragraphs match.
  • Whether the outcome of the vote to distribute v1 funds (Snapshot) will be considered by this proposal, or beneficiaries are to receive PERP from this proposal in addition to funds already distributed.
2 Likes

Not sure why but I am unable to edit the main post so I am clarifying here:

  • List of beneficiaries of this proposal
    I asked the Perp Team whether they are able to send the official data of each V1 users’ remaining margin and unrealised PnL at the time of V1 being paused something like 20 days ago however till now they have not sent over the data even after agreeing to do so.

This data use to be public information (i.e. queryable through their API) until the Perp Team took it down.

  • What amount (either in USD or PERP) each beneficiary is to receive, possibly including how your statement “users who lost funds” is defined (ie. what measure and standard was used to determine that funds were lost).
    The total amount each user will receive will be: (total margin and PnL at the time V1 closed of the user’s account) - (funds received from the v1 fund distribution per Snapshot))

[Funds received from funds paid out in Sunsetting Perp V1] - [Remaining margin and unrealised PnL at the time of V1 being paused]

  • How the total proposed amount of PERP will be distributed to beneficiaries if the amount they are to receive is in USD (ie. if beneficiaries are to receive $38.9m but 27.6m PERP is proposed, how any shortfall will be handled)
    To be clear, each user will receive PERP that is equivalent to the USD value of their remaining margin and unrealised PnL that was not compensated from the Sunsetting Perp V1 fund handout.

  • Whether this proposal is an unlock/allocation from Perpetual DAO funds, or a mint of new tokens. I recommend updating so the title and various paragraphs match.
    Mint new tokens.

  • Whether the outcome of the vote to distribute v1 funds (Snapshot ) will be considered by this proposal, or beneficiaries are to receive PERP from this proposal in addition to funds already distributed.
    Users will receive PERP that takes into account the funds are distributed.