We’re proposing a 3 tiered PAL structure built around Holy PAL (hPAL) that will enable long term incentive alignment between Paladin stakeholders, protocol growth, PAL utility and wider ecosystem impact in governance.
- Align different stakeholders to Paladin ;
- Create a financial engine for governance ;
- Enable positive feedback loops between speculation and protocol usage
- Have a system flexible enough to adapt to the next stealth projects
Paladin has been live for five months and has pushed the bounds on what’s possible without any token incentives or mercenary capital. Governance has now decided to enable transferability, but releasing a token for the sake of having a priced asset is meaningless in the long run. The core team has designed a tokenomics architecture that will incentivize holders to align with the protocol.
Paladin’s mission is to democratize activism. To do so, the protocol needs to become a bridge from the speculative economy to the participatory economy. The following tokenomics are a draft in that direction.
PAL will be available under 3 tiers granting different levels of rewards depending on the degree of alignment.
Tier 1 - PAL (Speculative layer)
This is the token as is and it will have no voting rights or privileges, it will be used to provide liquidity.
Tier 2 - hPAL (Contributor layer)
This is a staked token confering 1:1 voting power.
Token Holders are free to unstake at any time, however there will be a 10 day cooldown period.
Initially a small inflation of 2.5% will be dedicated to hPALs
Tier 3 - locked hPAL (Aligned Contributor Layer)
Locking hPAL (6 months to 2 years) will give access to extended voting power (up to 1.5x), The Chest (if lock is over a year), a higher inflation bonus (up to 15% when locked 2 years) and the fee switch.
What is The Chest ?
Governance is a resource intensive activity that takes energy, time and money. Paladin products simplify the time and energy it takes to take meaningful action. The Chest captures this philosophy to its purest form. It was designed as the ultimate weapon for protocol politicians.
We see the Chest having two effects : the first is creating more opportunities for governance users by lowering barriers to Paladin tools. Holders of hPAL will be to redirect their share of the Chest to governance loans on Paladin, boost purchases on Warden, [CENSORED] and [CENSORED]. As long as you intend to keep participating in governance, locking PAL to have a controlling stake in the Chest will enable you to access more influence in DeFi. This way we hope that Paladin will solidify and offer a new kind of resource for governance: influence.
All of this leads to the second possibility, the Chest and Paladin toolsuite becoming a baseplate for future governance integrations and developments.
While we want to see many tokenholders be active in the governance game we recognize the reality that many holders just want exposure to a growing ecosystem. With this in mind we want to enable a market for chest rights that’ll give holders the opportunity to generate revenue. This would also include revenue potential from PAL vote lending.
Protocol fees will initially be accumulated to the treasury to optimize revenue and then be split evenly with the Chest once its live. Afterwards, the distribution of protocol fees will be controlled by hPAL lockers (Chest / Treasury / Lockers).
- At launch (just after the LBP), PAL will have both staking and locking live, as well the inflation incentives and the boosted voting power.
- Incentives are currently estimated to last 2 years with a 300,000 PAL budget.
- In a few months (pending audits) The Chest will be activated and activists will be able to contend for the accumulated protocol fees.
- LM will be automated and a boost system controlled by hPAL users will be introduced by Q4 2022.
Next Steps :
- Community feedback on Research Post
- Technical implementation of Staking + Locking mechanism
- Vote on implementation of Paladin Tokenomics
- Activation of the Chest (Q2/Q3-2022)
Please give your input as this implementation is going to be one of the most impactful on the future of the project. After feedback this research post will be adapted into a Protocol Upgrade Request (PURe).