Good question.
Majority of protocols are rich in their project tokens but lack base assets, e.g. $ETH, $USDC, etc. which are what protocols mainly look for from LPs, hence having to give away incentives for that.
One major value proposition of PALM is liquidity bootstrapping. A protocol itself can seed the initial liquidity with majority of it being its project token and the rest base asset. PALM will then progressively convert the project token into base asset via LPing on UniV3 by capturing the price bounces of the project token (the acquired based asset will be ejected out of the position for later deployment). You can look at it similarly to DCA, but through LPing. The strategy is market neutral, meaning that it acquires base assets regardless if it’s a bull, bear, or crab market for the token, as long as there is volatility.
The initial liquidity stated in the proposal will come from the existing PAL/agEUR pool that is currently sitting on UniV2 and seeded by Paladin Treasury. Based on the current price of $PAL, the liquidity value is somewhere around $300k with majority of it being $PAL, which is more than enough for PALM to be effective without the need of additional LPs, therefore no incentive needed.
Also as mentioned in the proposal, initially, the strategy will focus on converting $PAL to $agEUR at the local best prices (because the strategy only executes the conversion at $PAL price rallies). Once enough $agEUR has been accumulated, the strategy will then focus on creating deep and sustainable liquidity for $PAL at its current price.