Proposal: Introducing USDC Polygon Payments

Current situation
As we are now a few months into paying contributors in the DAO and some of the hypotheses have been put to the test in the payment process. We have tried a 50/50 (USDC / ANT) split payments with 60 day rolling average at first. Have moved towards 70/30 split with a 14 day rolling average at the start of Season 1 and due to several implications now moved towards a 90/10 split with a 14 day rolling average (read more here).

Right now we are also in the middle of rolling out DeWork across the guilds / squads. This will lead towards weekly reward payments for contributors, as this will stimulate participation of new joiners.

We already started this conversation back in this proposal

If we are going to pay more often, it will be more and more expensive to pay gas fees via Ethereum mainnet. When we are paying out smaller bounties, this will result in a problem for contributors as gas fees from the mainnet will devour their rewards. Therefore, we strive to give contributors the chance to swap their USDC to their favorite coin, without devouring their reward.

With the payment split being 90/10, we are still aiming that contributors will hold their ANT tokens and start participating in the Aragon ecosystem (with for instance voting). We would also like to give a chance to contributors to swap their 90% earned USDC reward into ANT token (with paying almost zero fees), so that contributors can more or less decide themselves whatever percentage allocation they want. Therefore, an ANT liquidity pool on a L2 is required, but we aim to handle that in a future proposal (later in S1).

To sum up the above problems:

  • Transferring (small) rewards is expensive for contributors
  • Transactions can get stuck for hours or days, if too few gas is being paid
  • Doing payments more frequently is expensive for AN DAO (due to gas fees)

Switching USDC payments towards L2, solves the above mentioned problems. As the Finance squad already gauged switching towards a L2 solution in pre-season via this proposal, we are now aiming to implement it.

What L2 solution to use?
Currently there are multiple L2 solutions to choose, like: Arbitrum, Optimism, Polygon, Zksync, Loopring, etc. Therefore, it is important to provide arguments regarding the new L2 solution choice.

Polygon is right now the most adopted scalable EVM-compatible L2 sidechain that is offering low cost transaction fees. Find here some more information about the chain and its features: Polygon (MATIC) Network Basics | How Polygon Became the Swiss Army Knife of Ethereum | BanklessDAO

As there are also some centralization issues around Polygon, they aim to pursue more decentralization in the future.

The reason why we didn’t go (yet) for alternative L2s, is that we think that these options are more suitable in the future, so we keep monitoring them so we can change (or add new L2s) later on when these are as much adopted and matured as Polygon is right now.

What Polygon Bridge to use?
There are plenty of options in regards to Polygon bridges. However, as we now only use the bridge for USDC, we definitely are fulfilled with the standard Polygon bridge Polygon Web Wallet v2

We would appreciate the AN Tech Sub-DAOs input / confirmation on the L2 choice (Polygon) and bridge (standard Polygon bridge).

Limits & risks
Can be hard for new contributors to understand L2 solutions and how to handle them in their wallet. We will tackle that risk to make a guide for contributors on how to handle their funds on the Polygon chain and how to swap USDC easily towards other crypto. FIND GUIDE HERE

Another limitation is that using another blockchain is requiring a different token to pay the gas fees. In this case it will cost you MATIC to do a transaction (like a swap) on Polygon. However, if you have 1 MATIC ($0,70 at time of writing) you could do 100+ transactions.

Lastly, there is a limitation of fiat off-ramps on Polygon. Every contributor has its own way of off-ramping towards fiat (or just stick with crypto ^^). It depends on your off-ramping method if you have to bridge back your L2 USDC or WETH. If you for instance use Binance, you can send USDC from the Polygon chain into your wallet and from your wallet again back to your usual Ethereum chain off-ramping platform. In that case you are prevented from paying the bridging costs from L2 back to Ethereum L1 (which costs around $20-25 dollars at time of writing).


1 Like

Voting result: Aragon Voice

Thanks @Ricktik6

1 Like