PGM-4 : Allocate PAL rewards for palStkAave on APWine (Formerly PGP-4)

Paladin Governance Management (PGM) PGM - Approved
1

Summary:
The goal of this proposal is to allocate PAL rewards for palStkAave pools on Apwine according to the PGP2.

Context & Reasoning:
One month ago, one of the Paladin assets(palStkAave) was integrated to the winelisting and on the liquidity mining program on APWine to receive APW rewards.

APWine is a yield tokenizing protocol with allows to sell some yield in advance, and works with two mechanism :

  • PT (Principal token): Represent the deposit on a 90 days period
  • FYT (Future yield token) : Represent the yield after 90 days period

Each asset voted on a winelisting gets two pools: PT/Underlying (palStkAave toknized/StkAave) and PT/FYT (palStkAave tokenized/ yield tokenized) in our case.

The palStkAave auto compounds the yield of the safety module (~6% APR in Aave), but also earns additional PAL rewards when staked on the reward contract, which are not taken into account when palStkAave is deposited into APWine.

Rationale:
To continue bootstraping the palStkAave TVL, and to compensate with the issue described above, I propose to allocate 20k $PAL / month, split on both palStkAave pools on Apwine over the next two months.

The rewards can be allocated as follow:

  • PT/Underlying pool : 3500 $PAL/week
  • PT/FYT pool : 1500 $PAL/week

Means:
20K $PAL/month over the next two months : 40K $PAL

(100% of the additional PAL external rewards budget, 0.116% of the total treasury)

Sustainability:
I suggested a two months program to finish the first period on APWine, then we can submit a new proposal to renew, adjust, raise, or stop this program before the next period.

Voting options:

  • Yes
  • No
  • Abstain
Should we publish the PGP 4 on snapshot ?
  • Yes, I support this proposal
  • No, rework proposal
  • Abstain

0 voters

4 Likes
2

Hi Dydymoon, thanks for this proposal !
I think we should share at least an equal amount between the 2 pools as PT/FYT needs a good liquidity too to be efficient. We already see most of people sell their FYT to provide only the PT/underlying pool (wich is less risky), my concern here with this rewards’ allocation is that it should accentuate this and make the FYT/PT market even more inefficient.
I understand from Paladin side it’s not really a concern but from Apwine side it is and I think it’s worth to help them too with this proposal :slight_smile:
(I vote for rework this part)

3 Likes
3

I second your point. Even though I am not 100% familiar with APWine’s mechanisms it sounds reasonable to evenly split the pools to:

-As you said, to make it efficient
-Added benefit of extending a 90 day period to 180.

I am also in favor of a rework.

1 Like
4

@Dydymoon thanks for bringing this idea forward.

In addition to a range of strong, qualified investors, APWine is an innovative product that is yet to garner its deserving attention.

There is a mutual benefit of these two budding protocols, APWine and Paladin, partnering together.

We will be voting YES for this proposal if it goes up for Snapshot voting.

3 Likes
5

Seems a tad expensive to do this amount of LM rewards for only stkAave, I’m a cautious yes.

2 Likes
6

@Slash @AlejandroPaladin @fig Thanks for your feedback !

I picked this allocation according to the current liquidity on APWine (3x more liquidity on PT/Underlying than PT/FYT: 288K$ VS 81K$)

PALs will not change the APR anyway since it has no price yet, but if we do some calculation at 2$/PAL as an example, we should have APR around:

  • PT/Underlying: ((3500x52x2)/288000)*100= 126% in PAL only
  • PT/FYT: ((1500x52x2)/81000)*100= 195% in PAL only
    (with the current distribution proposed and liquidity)

If the difference is too small between both APR, we can consider to allocate 3K/week on PT/Underlying and 2k/week on PT/FYT. With a PAL price at 2$ and the current liquidity, the APR would be around:

  • PT/Underlying: ((3000x52x2)/288000)*100= 108% in PAL only
  • PT/FYT: ((2000x52x2)/81000)*100= 256% in PAL only

And to have more data, with an equal split and a 2$ PAL price, we should have:

  • PT/Underlying: ((2500x52x2)/288000)*100= 90% in PAL only
  • PT/FYT: ((2500x52x2)/81000)*100= 320% in PAL only

I think 3K/2K might be a better distribution, but let me know your thoughts on this

1 Like
7

Hey guys, I like this logic of following the APWine distribution logic. Would love to see a core APW member pop in and confirm this decision !

This is actual utility for palStkAave, by incentivizing the bahviour we’re creating a win-win-win situation (Paladin, users & APWine) for a penta-yield situation.
Also please note that APWine currently manages ~10% of the palStkAAve.

Creating utility for our token will be a huge deciding factor in maintaining the great growth the pool has been seeing as we will very soon no longer have the monopoly over stkAave utility (good ideas tend to get copied).

2 Likes
8

Thanks for your calculations, still think we should go for a 50/50 alloc tho as it would incentivize people to providing the less liquid pair ; because a huge PT/underlying liq is not needed if the related FYT/PT is skiny