TL DR : Should Paladin DAO distribute 1,000,000 PALs to depositors and borrowers during a 3 month long liquidity mining campaign to become an efficient vote lending protocol ?
and Confirming Core team allocation
Paladin Lending, our first dApp has been live for 2 months. This has allowed us to battle test our architecture with the custody of over 10M$ of governance token under the contract’s care on average.
While we’ve been hard at work on preparing Paladin for new token integrations, we believe it would be interesting to bootstrap our protocol for “large scale” use with the pre-existing pool beforehand. Without organic APY, the Paladin pools are irrelevant and do not present themselves as competitive. The goal of this proposal is to enable a fix to the bleeding TVL and to bootstrap the network effects of the protocol as well as confirm the team allocation.
This looks like a chicken and egg problem : Paladin needs TVL to attract large loans, but only large loans will attract more deposits. Fortunately, we can bootstrap this positive cycle by distributing PAL tokens. A little over 2% of the supply has been airdropped to voters. Which means the protocol is still not decentralized enough, especially as it hasn’t rewarded depositors as much yet.
We propose to distribute 1,000,000 PAL tokens (2% total supply) to depositors and borrowers on Paladin Lending during a 3 month-long liquidity mining campaign.
Paladin becomes valuable when it can offer to borrowers the opportunity to create proposals on the onboarded governance. Hence, we would like to offer yields that will continuously attract more deposits until at least the proposal threshold is reached. All data will be trackable through a custom dashboard available soon, as well as a community enabled Dune page (bounty in progress)
Any proposal brought by the core team and needing financial intervention from the DAO will be accompanied by a set of KPI to measure its success and build from it for the next proposals. We highly advise all future proposers to do the same.
We’ve run some simulations to optimize the distribution between the different pools and have a competitive APY (note that there are almost no 2%+ yield strategies for these governance tokens).
The threshold goals are the following :
- Aave : 80,000 AAVE ($14,56M on 12/04)
- Uniswap : 2,500,000 UNI ($42.5M on 12/04)
- Compound : 100,000 COMP ($22.3M on 12/04)
- Idle : 130,000 IDLE ($353k on 12/04)
Distribution for deposits, with a campaign of 750,000 PALs over 3 months, is planned as follow :
- Uniswap : 3333,33 PAL/day
- Compound : 1333,33 PAL/day
- Aave : 833,33 PAL/day
- StkAAve : 2500 PAL/day
- Idle : 333,33 PAL/day
As there is no market price for PAL tokens, we can only display the token per day distributed, but for reference, our Seed Round was done at 0.6$/PAL. This would value Paladin under 1,000,000$ at current distributed supply.
It would also be possible for the DAO to vote on a token market value to display a market APY (should be presented as another proposal).
The goal of Paladin is to offer useful loans during Governance Votes. With that idea, the reward system for the Borrow side is designed in the following way:
Each pool will have a ratio decided (govToken:PAL ratio), and all the Borrows will receive a reward in PAL based on the amount of fees used by the Loan and the decided ratio.
Ratios are planned as follow :
- Uniswap : 1 UNI : 0.75 PAL
- Compound : 1 COMP : 10 PAL
- Aave : 1 AAVE : 10 PAL
- StkAAve : 1 stkAAVE : 10 PAL
- Idle : 1 IDLE : 0.125 PAL
A 1st amount of 250k $PAL will be set for the Borrow Rewards. Depending on the success of this campaign, a new decision will be made to either keep distributing rewards for Borrows, or the campaign will be stopped.
By distributing more tokens via liquidity mining we also enable more users to enter the DAO and reward in a more significant fashion those who have been long term depositors.
High yields will also act as a large-scale marketing campaign to give more visibility to Paladin.
As some of you might have noticed on chain, the team currently has no allocation unlocked, or even vested. We proposed a 15% supply cap in the TGE blog post and would like to submit it to be allocated to the team and future team members with a 3 year linear vesting to align us with the protocol and contract the core team to build the Paladin product suite until November 2024.
Let us know what you think and how this proposal can be upgraded.