๐Ÿ›ก
Fees Usage: Safety Module
ParaSwap collects fees through its operations. Along with other sources, they are used to fund an insurance module for ParaSwap, and all of its users.
There are currently two main types of revenues for ParaSwap:
  1. 1.
    50% of the positive slippage on transactions executed through the service (on ParaSwap's website)
  2. 2.
    ParaSwap is also integrated by many third-party services, adding (or not) fees - part of which is shared with ParaSwap along with the Positive Slippage.
For more information on they are implemented, please refer to the fee structure page:

Current Fees & Collection

So far, the fees have been collected by the team and used exclusively to fund the development of the protocol. Starting from Monday, Nov 22 at 12pm UTC, all newly generated fees will be redirected to a TimeLock Contract, so that further collected fees can be handled with an improved process.
Once the new contract is live it will secure the fees collected by ParaSwap, used to fund a Safety Module:

ParaSwap Dual Layer Coverage

Several layers of insurance have been initially deployed by the team to protect ParaSwap's to insure the protocol and its users against smart contract risks. Governance can further expand or adjust coverage needs, using a PSP budget if needed.

๐Ÿ›ก Prepaid Unslashed Insurance

ParaSwap purchased a $30M coverage from Unslashed Finance covering the aggregator and staking smart contract without any action needed from our users.
The policy provides compensation in case of smart contract failure, both for the ParaSwap aggregator and PSP staking contracts for one year. Governance will manage the renewal of the policy.
Unslashed's coverage is effective, yet not exhaustive. It protects against smart contract-related risks. The second layer of insurance is implemented to further protect ParaSwap's users:

๐Ÿ›ก๐Ÿ›ก ParaSwap's Safety Module

Any system failure or loss resulting from mispricings on ParaSwap, were they to occur, could be appropriately compensated for from the Safety Module. In the meantime, the assets gathered in this pool will be used across DeFi to produce yields and further grow the available balance protecting ParaSwap.
The Safety Module can be further expanded by governance decision to create additional layers providing further protection and can support any assets or model, including LP tokens staking.

โ€‹

Last modified 12d ago