Use the rest to grow PoL to a target of 20% of circ.;
Context:
As we roll out Rings and focus back on Paladin v3, we are seeing growing interest back on $PAL (with an average of 50,000$ of daily trading volume since Rings’ launch).
This creates significant volatility on the token which leads me to believe that we should progressively reinforce our PoL.
Rationale:
This is not just for the sake of traders, but because maintaining a healthy liquidity can be a significant revenue driver. At 1% fee, 50,000$ of volume results in 182,500$ of fees.
For this reason I think we should sell some assets (our AURA), and add it to liquidity on Sonic.
Currently we have liquidity on 3 chains:
Ethereum (Curve): 622,000$
Base (Aerodrome): 88,000$
Sonic (in process of being deployed on Shadow): 40,000$
We should move back our PoL from Convex to Curve as CVX emissions have died down and double down on Sonic PoL as Rings is become a large project on the chain and we stand to do a lot of volume there.
Therefore, we’d like to redirect the half of the current monthly excess revenue to growing its liquidity to at least 100,000$ (or for the average trade to be executed at less than 1% slippage). This would replace the additional budget used in the Vote Flywheel as we’ve seen no noteworthy change in Quest use since its addition.
Means:
Sell 40,000 AURA;
Use proceeds for additional PoL;
Voting Options:
For / Against / Abstain / Rework proposal
I agree on high-level that simplifying current treasury should be done, but I don’t agree on few of the specifics.
I’m most against that we should grow liquidity/POL at these levels. If the DAO believes, that Pal is undervalued currently, increasing liquidity (through POL) means that Paladin is selling Pal at undervalued prices to new holders. With multiple positive tailwinds in the horizon, I think there’s general consensus that Pal trading at ~$3m marketcap, is not close to the fair value.
And while ultimately market always sets the fair value, by adding POL we are directly taking a directional bet on the fair value of Pal is overvalued as we are adding more liquidity at current price.
Ultimately any feelings of Pal having constrained liquidity levels stem from the fact that Pal is trading at very low price/mcap/fdv. This directly translates to higher price-impace unless we arbitrarily decide that POL needs to support liquidity at very low prices.
Traders interest should not be be given any weight. Generating fees does benefit DAO more as
POL generates more revenue
Other entities are incentivised to LP as well
keeps the option open of bribing higher on Aerodrome if it’s deemed benificial
I believe that all of these benefits most by focusing on Paladins’s core-businesses which long-term drive improve fundamentals, generates attention and increases valuation.
Overall, perceived liquidity will improve as marketcap increases.
Other miscellaneous points is that
I agree with selling Aura. While Aura has decided to conduct buybacks to support the token price, the fundamental issues of long-term dilution (afaik) is still present.
I’m in favor of redeeming WAR into CVX, and selling that into USDC or other-blue chips (BTC,ETH)
Growing Sonic Pol seems reasonable
Lack of depth in liquidity also comes that we currently have liquidity in three chains causing friction. While for any sophisticated trader, this is not a large issue, it would probably be beneficial to keep majority liquidity in max two chains.
What’s the goal of redeeming CVX, is it selling it ?
Not sure about selling Aura this low, especially if they voted buybacks as said @Aavikkosoturi, in the meantime it can generate extra revenues with bribes if locked
On the POL topic, it’s true that adding more liquidity as these price is basically selling low but low liquidity and high slippage also often refrain from buying, and for PAL there is slippage even for small amounts.
As the interest is growing on Sonic, makes sense to grow liquidity there but why not just rebalance existing for now ? For exemple 550k mainnet, 100k base, 100k sonic instead of current split (These amounts probably changed by now but you get the idea)
For PAL valuation being too low to add more, why not use part of the revenues after SP costs & savings to buy back PAL ? I believe this was already mentioned in the past by @Figue
This will also help grow liquidity without selling more cheap PAL
On a side note, how is PAL briding managed from/to Sonic ?
The fact that PAL on Base uses the official bridge is not ideal, might be worth asking everyone to bridge back on mainnet & redeploy using LayerZero (& same for Sonic if not the case)
Voting rework on the forum as seems there seems might be a bit early to vote on it, but the option isn’t available on the snapshot vote
Hi, feedback was taken and proposal pushed to a vote
Lock into vlCVX
To my knowledge buybacks have already happened and there is no new catalyst that could revert the current trend. We’ve held these assets for over 2 years, they are currently yielding 1800$ per month. I think providing liquidity with this on Sonic could be much more useful for Paladin.
Because if we remove any from Base or Mainnet right now they would significantly lose in efficiency. Yes there is slippage, but that’s because Paladin is at 2.1M$ market cap.
Revenue is still way too low to enshrine this, but I agree it should be our North Star.
Sonic PAL was deployed via LayerZero; it should be available on Stargate by tomorrow. As for Base, it would be hard to migrate independently, let’s put it off until PAL v2.