PGM-43 Treasury Management #10

Paladin Governance Management (PGM) PGM - Approved
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Summary: Optimize PoL and vote incentives for liquidity efficiency

Context:
As per Treasury Management proposal #7, Paladin has been harnessing PoL farming for the past eighteen months, while it has been a successful way to pass the bear market and prove our product market fit, the use of the farmed assets needs to evolve with the DAO needs.

The still ongoing declassification of CRV as a strategic asset has allowed to deepen on-chain liquidity for PAL token pairs, bootstrap Warlord TVL which is currently experiencing a major growth phase, and contribute to reducing debt to go forward as a self-sufficient protocol.

The current priority should be to enable as efficient as possible liquidity while farming assets to bolster revenue and accelerate loan repayment.

Actions:

  • Migrate the 10,000 USDC and PAL equivalent destined to the Balancer PAL-OHM pool to the PAL-FRAX on Liquis;

  • Starting from this proposal, sell all CRV rewards into 50% USDC and 50% CVX;

  • Deposit all CVX into Warlord;

  • Progressively migrate back all funds on the veToken MS back to the main MS for accounting clarity;

  • Extend incentive budget until january 2024 (135,000 additional PAL needed);

Rationale:
Recent vote incentives efficiency on captured emissions show ratios of 1.4x for Balancer/Aura ecosystem vs 1.8x for Bunni/Liquis; considering the respective POL shares on both PAL-OHM and PAL-FRAX pools as well as their current liquidity depth, it seem accurate to rebalance the TVLs. This also contributes to a better routing of PAL swaps for stablecoins on aggregators.

The update of Warlord weights as per PIP-18 enabled to strengthen staked $WAR APR due to the strong dominance of $Aura token in the vault, however the need for CVX inflows remains important to activate the full flywheel with other protocols of Paladin ecosystem such as Quest through the delegation auto-voter, as well as rebalancing progressively the index and fetching the best CVX yield available (~40% APR).

Regarding PAL emissions, since Paladin is reshaping its tokenomics & several proposals were already published with the objective to attract more lockers & enable them to redirect extra emissions to whitelisted Quests :

PIP-14: Tokenomics 2.0: Approved the global design idea

PIP-16: Emission Budget: Approved a max spending (15,6% of PAL supply) over 3y

PIP-17: Boosting System: Approved x5 initial boost for hPAL lockers on LOOT yield

The current emission schedule will be renewed with the ongoing budget as per PGM-12-3 for what should be the last period, with the following parameters:

  • 55,000 PAL per round (110,000 monthly) - down from ~ 100,000 PAL per round.

Split between 3 gauges and ecosystems:

  • PAL - ETH on Curve
  • PAL - OHM on Balancer (Arbitrum)
  • PAL - FRAX on Liquis

There should be 4 to 5 rounds left before the rollout of tokenomics and we have 93,000 PAL left from the previous budget. So we are requesting an additional 135,000 PAL budget.

Voting options:
For / Against / Abstain

  • For
  • Against
  • Abstain
0 voters
1 Like
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Gm, thanks for this proposal !

This one actually includes many different topics so will address them separately :

Agree, it makes sense to increase the mainnet liquidity in anticipation of the new tokenomics to reduce slippage of interest buyers.

I disagree here. Considering the current ETH liability of the DAO from Mithras Loan (& Mimo loan) the priority is to accumulate these two assets, especially ETH to neutralize the loan volatility risks.

The last split voted was 40% USDC, 40% ETH/LST, 20% Strategic Assets if needed

Until now we mostly did 50/50 USDC/ETH as we’re already accumulating strategic assets with farming. However, since we had to sell most of our CVX to repay part of the ETH, it can make sense to start accumulating some again, in which case we could do the voted 40/40/20 split with 20% in CVX (but not even sure it’s the best solution since we don’t use the voting power)

Agree that if CVX deposits on Warlord are attractive again, adding the remaining ones is probably the best move to increase ETH holdings with stkWAR yield.

Not convinced by this. The issue is that the wrong address was shared to the Liquis team for the vesting, so this will lead to having to vote on both multisig whether we remove one MS or not. (Also shared some thoughts in the committee channel about it as this is blocking the transactions which reduce our emission power temporarlily)

I personally like the current setup as it allows to not have all the treasury at the same place, and imo over time the locked msig should be used to manage strategies, while the other could focus on operational txs and mostly holding PAL/ETH/Stables (as you initially suggested)

However, if we’re considering removing one MS, we could consider to fork the StrategicAssetManager contract on Aave to keep that separation while reducing the responsibility on the main MS by reducing the amount of funds managed.

I’m not against renewing the budget for some time until tokenomics are ready, but why is the beginning of the proposal saying 300k PAL needed, while the end says 135K PAL needed ?

Not sure to follow the math here if you can elaborate pls ?

1 Like
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It was a typo

Fair point

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If no other comments arise, we will push to vote tomorrow

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https://signal.paladin.vote/#/proposal/0x9f77c3d3e7b369532f0d55977d9d051f9d9c5e7a3c57506042f842c2267dfb50

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Quorum PGM-43: 718 927 votes

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1 Like
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gm ! Thanks for the proposal, late comment on my side… Things are making sense to me, I like the split between two msig that allows more flexibility. I will fully support this proposal with the Option 2 which makes more sense and put us on the safe side (40% USDC / 40% ETH / 20 % strategic assets )

1 Like
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Hello, late comment for me too…
The proposal makes sense to me but I agree with Dydymoon for the loan repayment. I will thus vote Option 2.