Dear community,
Some of you might have noticed we never proceeded with PGP-XX.
Initially Paladin was supposed to refinance its Angle loan with Atlendis. However, the market conditions for lending have radically changed since the FTX debacle.
Atlendis communicated they were no longer ready to support us for the operation a few days before the deadline, which pushed us to ask for a new deadline before the end of the initial loan.
This hard deadline was set on 31/01/23.
Since then, we have spent a considerable amount of time negociating with lenders in order to find another taker for our refinancing.
We pride ourselves in being a healthy DAO, and have offered a 12 month loan at 15% APY, which the DAO could easily pay off considering its revenue (39,000$ / month on average for S2-2022).
The current impermanent loss in the pool is of 292,000 agEUR + 14,000 agEUR of interest, for a grand total of 306,000 agEUR.
Bear in mind that Angle controls 1 000 000 PAL from the LP which they intend to dump if we don’t pay them whole. Additionally, not honoring our debt would create significant backlash on our reputation, and prevent us from doing business with some DAOs in the future.
Here are the solutions I have in mind:
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We are currently in serious talks with Mimo Labs to refinance the loan, but in case the negotiations fail, we have to prepare alterative solutions;
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Liquidate DAO assets to pay off the loan.
We own almost 600,000$ of liquid assets (150 ETH in LP, 135 000 CRV, 1200 auraBAL, 30 000 of Quest fees) and we can sell some of them to honor the debt.
However, this would mean we halve the Curve LP’s size.
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Open a community debt pool at 15% APY over 12 month where we try to refinance ourselves directly with our community;
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Offer a higher borrowing rate (25-30%) and try to see if any lenders will bite.
This is highly risky for multiple reasons:
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30% APY are rates for distressed entities, we are very far from being one, it might send the wrong message to the markets;
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30% APY on 300,000$ is almost 90,000$ of interests, and i believe it to be terms that we should never offer;
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We have a very limited timeframe to pay-back Angle and I am not convinced someone will accept lending us on such short notice;
We can of course mix in various solutions, the goal is simply we mobilize the required funds.