Summary: Allocate up to 250,000 hPAL to a Gauge vote allocators partnership over a maximum duration of 3 months
Context:
Paladin has historically built its vote markets on Curve, but with growing competition with better insider connections in the Curve ecosystem, we are currently lacking a large enough voter pool to sustainably fill up large incentive campaigns. With Quest v2 and range bound campaigns, this could potentially be more dangerous as incentives will become partially dilutive and need to be “arbitraged”.
Votium has 18M vlCVX under management of their auto-voter, with close to 10m vlCVX that are extremely sticky because of the Union pounder. Votemarket benefits from the close to 60M veCRV in their liquid locker.
This proposal aims to level the playing field by creating grounds for deeper partnerships with both Yearn’s yCRV and other projects like Aladdin’s clevCVX.
Rationale:
The only reasonable way to incentivize large voters in participating more actively in Quest is to redistribute part of our revenue. Considering the state of the treasury and upcoming tokenomics, it makes sense to instead offer additional PAL rewards to these voters. Here is an overview of how much fees Paladin can make by managing such additional volume:
By offering an additional 1% in PAL on top of the arbitraged volume, we create a system that rewards these large voters for arbitraging our Quests and onboarding them at the same time on our tokenomics so they become more reliant on incentives on our platform.
Of course, this system will be irrelevant when the Vote Flywheel is live, as everyone will benefit from additional emissions. For this reason, we are recommending to de-activate this program once tokenomics are live.
Simply put, it is “cheaper” for us to do a rebate in hPAL than in other tokens.
It would be ill-advised to dilute the current protocol as we need it to close down the loan and eventually pay for DAO development. Furthermore, in the wake of our new tokenomics it makes sense to want to align larger stakeholders.
Are you sure about the max revenue of 7,700$ per week? I have tried to recreate the calculations based on my understanding, and in my view, the max revenue would only be the 3,852$ that you listed as the minimum.
My breakdown is available here: Paladin kickback budget - Google Sheets. I’d be happy for someone to point out any error I made. It seems that the 7,705$ would be in case of max volume (192,608$ with no rate discount: 4% = 7,705$). But that would not happen, would it?
Other than that, I think the idea to incentivise with hPal for the next 3 month to attract large voters is a good idea.
Yeah this was used thinking everyone would pay 4%, you are right in saying it could be as low as 2%. Important to take into account current average fee is 3.8%
I’m curious about this as well. I’ve already started asking questions on the french channel on Discord, but I don’t want to duplicate the topic, so I’ll continue here. Will there be a special deal for these hPALs with the whitelisted protocols, or will they be free to do as they wish with them? Have they expressed any specific interest in these tokens?
I don’t think we can impose conditions on distribution outside of sending hPAL, anything else is either pure fantasy or requires full trust in the counterparty, which we shouldn’t give to anyone in this current market. The only solution would be a legal contract, but Paladin as a DAO doesn’t have a legal structure adapted to do so yet.
As I understand it, this proposal aims to kinda start what’s coming with the tokenomics before it’s ready, by potentially incentivizing whales/project controlling a lot of votes with PAL rewards on top of existing bribes, hoping that they potentally don’t sell it ? Pls correct me if my interpretation is wrong here.
Tbh its unclear who needs that much voting power, but I understand the rationale behind trying to attract more important voters which I guess might be for OTC deals.
0,5% of the supply is an important spending but as it’s “up to 250k” it can also be less.
How much do you expect this program to spend in the first month (likely November) ? Isn’t it better to try with a lower amount & reevaluate after one month for example ?
This is not for OTC deals but public Quests, which are currently not filling despite being at market price. Having partners on this is a necessary step to scale our offering in the Curve ecosystem.
Considering Yearn has confirmed their interest in the partnership but Aladdin hasn’t we could reduce the max budget to 165k PAL instead.
At most the program would cost 55,000 PAL (unlikely to be filled) over one month.
Literally the same argument for vote incentives, delegate incentives, signer incentives, etc… At some point we have to make choices, and Revenue Growth vs Price Action should be a no brainer. (reminder that this budget is only used if we make money)
Got it thanks for the clarification. Great to know one of the big voters confirmed some interest !
Yes but as the majority of the treasury is in PAL, the price also highly impacts the growth, the treasury strategies etc so it’s hard to find the right balance.
However yes indeed these are only spent if the revenues are increased so I’ll support trying this strategy
