PGM-66 : Grant Tholgar team for Rings development

[0xmemorygrinder]

Context:
The Tholgar team has been contributing to the Paladin ecosystem for almost two years as of now. During this time, the team developed first a warlord autocompounder, and more recently have been contributing technically with Mithras Labs to the development and success of Rings Protocol.

The Tholgar team developed/contributed to the technical aspect of the following products/components :

• The core rings contracts (voting escrow and voter), which have a TVL of $7.52M of scUSD and $2.77M of scETH
• The staking wrappers contracts (wstkscUSD and wstkscETH) with a respective TVL of $36.51M and $29.45M
• The auto-voter, which attracts users to lock by providing the best voting APR available. It currently has $3.47M of TVL
• An advanced points system with custom integrations for top tier protocols, and a generic interface for others to plug themselves, attracting users to deposit in Rings to farm the airdrop
• The first front-end of the app, which allows all users to deposit, stake, lock and vote

Two of these products are able to generate revenue, which will be transferred to the DAO once this proposal is approved and applied :

• The staking wrappers, currently taking no fees, but can be activated if the DAO think it is a correct option to generate revenue
• The auto-voter, currently generating $~1100 per week, approximately $57k per year by taking fees on the harvested and compounded voting incentives

Rationale:

To continue further the collaboration with Paladin under the upcoming rebrand, we are asking for a grant equivalent to 1,000,00 PAL in NEWTOKEN. We ask for 10% liquid at migration and have the rest linearly vested over the next two years.

This amount encompasses multiple aspects.

The main one is the intellectual property of the technological stack, which will become the DAO’s property. The second point of consideration is the forfeited revenue the auto-voter brings to Tholgar team, and the potential revenue of the wrappers contracts.

Finally, we intend to be aligned with the long-term success of the project, by continuing to build the future vertical of products the project will provide to the users.

Means:

• equivalent of 1,000,000 PAL in NEWTOKEN; 10% unlocked at TGE, rest linearly vested on two years

Voting Options:

Yes / No / Abstain

[Figue]

Very happy to see this proposal go live.
We’ve been collaborating with the Tholgar team for two years, and their contribution has been crucial to the success of Rings.
This is an important vote, on three different aspects:

1. It lessens the DAO dependance on Mithras Labs (my dev company), and increases protocol decentralisation, as Tholgar has the requited skillset to maintain the protocol if needed.
2. It brings in additional products (Rings auto-voter, the upcoming liquid locker…) into the DAO instead of outside, pushing PAL as one token to rule them all mode.
3. It broadens the DAO’s development firepower and enables us to maintain and develop more than what we could previously.

As such, I will be voting in favour of this great. Having additional smart contributors around the table is an excellent move, especially in such crucial times.

[frieez_e]

I agree that Tholgar has been a reliable partner of the DAO for a couple of years now, and I fully agree that they should be rewarded for their work.

However this proposal is at the very least delusional, and at most insulting coming from a team that claims to be aligned with Paladin.

Considering Tholgar accrued around $120k in rewards from rings from it’s gauge alone, and is most likely financed by the Rings gauge which totaled ~$174k in rewards, it’s hard to see the current proposal as anything else than Tholgar trying to get rid of the less profitable products while keeping the real yield generated by Rings.

If Tholgar wishes to become a Service Provider of the Paladin DAO, I fully support the initiative but it should comes with the proper terms like forfeiting their Rings rewards to the DAO, …

In the meantime, Tholgar and Mithras Labs should provide a detailed view of Rings protocol, so the DAO can understand which component of Rings is controlled/maintained by who.

Also the 10% of liquid tokens at the migrations seems very unfair compared to every other PAL holder that needs to accept a 25% slash.

tldr. This proposal is a big NO for me, and should be reworked

[0xmemorygrinder]

Hello, thank you for your answer.

A lot of information were given in your comment @frieez_e but a lot of them are incomplete.
Let me address them one by one.

First, this is true that the Tholgar team benefited from the rings gauges, but the amounts mentioned are a lot higher that what we actually received.

The Rings gauge has accumulated a large sum of rewards, but the main purpose of this gauge was to fund the necessary expenses for the project’s well being. For example, the gauge rewards paid the designer and the rebrand expenses, on top of some other deals that will be disclosed soon.
From the amount you mention ($174k), the Tholgar team received only $~10k, which is far less than what you imply.

We benefited fully from the Tholgar gauge, but again, the real amount of profit accumulated to this day is ~56k, which is less than the half of your referred amount. This is because you did not compute the bribes that were deposited to receive such funds.
The Tholgar gauge has been created to reward Tholgar as a protocol, since it created and operated the staking wrappers contracts (~66M of TVL), which are responsible for the majority of the integrations with other protocols.
Other protocols also have their own gauges without contributing on the technical components of rings, so this point should not enter in consideration during the review of this proposal. If we want to review the current framework, let’s open a proposal on the topic.

These gauge revenues were the only compensation we had for a lot of product development/maintenance we made.

Regarding the accusation stating that we wish to get rid of under performing products, this is absolutely false. The efficiency of the rings gauges has drastically decreased, being right now around 1.1. The rewards for the gauges are thus far less than what they used to be. Furthermore, the Mithras team approached us in order to acquire the product and not the other way around.

The grant encompasses the forfeit of the fees all our products make/could make and the intellectual property of the technological stack. This alone represents 60k$ a year and does not encompass the current growth of the product.

As mentioned in the original post, the Tholgar team has created the whole rings technical stack, excepted quest which is a Paladin product. The goal of this proposal is to transfer all the rights and revenue to the DAO to have everything into a single entity.
Feel free to ask any questions.

[2beornot2be]

Hello, if I well understand, it means Tholgar asks 400 000 NEW TOKENS.
Which will be 2% of the total supply?
If this is considered as a precedent, next contributors could ask the same amount.
Can we have updated tokenomics to see the post-migration distribution?

[Figue]

Yes, this represents 2% of the supply for:

• Acquiring the Tholgar IP and products and implementing them in the UI;
• Aligning the Tholgar dev team over the next 2 years to keep developing their products and increase the dev capacity of the DAO;

If other contributors built a product generating close to 6 figures or more, have been key architects in building a product with 9 figures of TVL for the DAO, then they are more than welcome to show themselves. I’m sure Paladin will strongly benefit from aligning them.

Here is a recap of what the distribution would look like:

[Beguin1]

gm, supporting the proposal here for the various reasons highlighted by Figue above, just giving my 2cts; the 10% liquid unlock at migration when every other holders will be forced in staking or slashed is a threat to the token price action at launch of NEWTOKEN. I propose changing this point only to force staking or slashing options for the unlocked tokens.

I’d also prefer you pay yourselves on fees for a little more while you are staked, than give you liquid NEWTOKEN to dump at launch.

[frieez_e]

Thank you, @0xmemorygrinder , for the clarifications. The data I have all comes from @Beguin1’ Dune queries for Paladin and Rings, as I understand that those are the “official” sources.

Based on those, it appears that the distributed rewards from rings are slowly decreasing over time.

source

source

Quest incentives are also slowly decaying week after week.

source

Additionally, Sonic’s (and by extension Rings’) TVLs are inflated in anticipation of Sonic’s Season 1 airdrop, which should be happening next month.
There’s absolutely no guarantee that Rings will be spared by the post-airdrop withdrawals in the coming weeks, and thus no guarantee that the current ~$57k per week of revenue will not drop significantly.

As I mentioned earlier, having 10% of NEWTOKEN immediately after the migration is unfair to every other $PAL holder, and as @Beguin1 said, it can be a threat to the NEWTOKEN price action.

Also, if we were to proceed with the proposed vesting, Tholgar would have the possibility to dump nearly 1% of the NEWTOKEN supply before long-term aligned holders could redeem a single token from the migration lock).

I also believe that 2% of the total supply is way too much for a product we have no way to predict the evolution.

That’s why I propose the grant amount to be adjusted to a maximum of 500k $PAL (1% of total supply) linearly vested over 2 years.
Tholgar will then be free to migrate those to NEWTOKEN through the regular framework.

[0xmemorygrinder]

Thank you for your thoughts @Beguin1 and @frieez_e

Regarding the 10% liquid at TGE, your concerns are totally valid and while we do not intend to dump it, we are totally fine to lock it. With this, we will be like every other holders migrating.

For the foreseeable future, nobody can predict what will happen next and currently Paladin is tied to the success of Rings so if the product works, an upside for PAL will happen, but the reverse is still possible. Moreover, an action plan has been initiated to keep the TVL at least as steady as possible
The grant value will also change according to the success of Trevee, so this metric seems to be a weak criteria in the proposal evaluation.
As the main technical development team, Tholgar will be the most aligned with the project future, and will be incentivized to extend the reach of Trevee

[Starny]

Thank you for submitting this proposal and for all the work done so far.

I want to apologize in advance if my comments might strain any relationships, but I feel it is important to express my honest opinion. Unfortunately, when you join a team, it can be difficult to speak up or disagree, but I know I am not alone in these thoughts, so I feel compelled to share them.

However, I am currently against the proposal in its current form, and I believe the requested amount should be reconsidered for the following reasons:

• Nature of the Work: I am not a developer, so please correct me if I’m mistaken, but from my understanding, both Rings and the auto-voter are essentially forks with minor modifications. While I understand that even forks can require effort, my impression is that such work is generally less demanding than building something from scratch. Therefore, I question whether the requested compensation accurately reflects the actual workload.
• Attribution of TVL Success: While Rings has achieved over $100M in TVL, I don’t believe this is solely due to the technical implementation. The relentless business development efforts from Figue, the support from Sonic, and partnerships with Veda have played a major role. I don’t think the TVL milestone should be used as a direct argument for this grant, nor can it be attributed exclusively to Tholgar’s code (no offense intended—just my perspective). Figue’s work, for example, was instrumental and did not require an additional 2% supply allocation.
• Technical Issues and User Experience: As a Community/Communication Manager, I have received numerous bug reports from users since launch and even recently. Issues like wallets displaying exorbitant gas fees on MetaMask, or persistent “ledger to update” errors (which do not appear on other Sonic apps), have negatively impacted user experience. From my discussions, it seems some issues could be resolved by updating the wallet toolkit, which raises concerns about ongoing maintenance and responsiveness.
• Team Commitment and Priorities: I’ve heard that some team members have recently taken on new full-time jobs. How many hours per week can you realistically dedicate to Rings over the next two years? What priority will this project have? Since the new employment, I’ve noticed a decrease in development pace, which is understandable but problematic for Rings and its users.
• Integration and Communication: The process of integrating points has been slow and is still not complete (though I understand this is not always Tholgar’s fault, as other projects need to provide data). However, even after follow-ups on Telegram and the Google Sheet I prepared to track progress, updates and communication were lacking. This made my community/communication role more difficult.

Given these points, I believe the grant amount should be reduced to better reflect the actual work, impact, and ongoing commitment. I would be more supportive of a revised proposal that takes these concerns into account, both in terms of requested compensation and clear commitments regarding future development and maintenance.

That being said, I respect the work you have done. I recognize that you had to work under significant time pressure at the beginning, and I agree that we always need more hands and greater decentralization, especially with teams external to Mithras and the core contributors.

[0xmemorygrinder]

Thank you for your answer. We will try to break it down point by point as you did but keep in mind that for confidentiality, we cannot provide as much details as we’d like.

• Nature of the work : We agree that a large proportion of contracts are forks of existing protocols. However, there is a misunderstanding of what a fork represents in the case of rings. In fact, we had to make adaptations to the voting escrow/voter and auto-voter to make them work with the rest of the contracts. The adaptation work in itself represents a workload. What represents an even greater workload is the testing phase of these contracts. You have to write far more tests than lines of code in the contract to ensure that all cases are tested. These tests could not be retrieved from the source because they had not been published. We therefore had to write them by hand. Now, it should be noted that contracts and the frontend are only the user-facing parts. To keep Rings running stably and with as little manual intervention as possible, we had to create a collection of keepers and APIs from scratch. We keep a close eye on all these APIs to spot potential problems early on, and that takes time too.

• Attribution of TVL success: We aren’t attributing the success of Rings, we agree that it is a complex combination between multiple actors. Your work or Figue’s one have been crucial. We are only attributing the credit to the technical aspect of Rings.

• Technical issue: There have been a few bugs inside the rings interface and we always resolved them promptly. Regarding the wallet problem on the app, we have tried a few months back to upgrade the wallet toolkit package but without success. Since your answer, we updated the packages again, we hope it will fix the issue

• Team commitment: Since the inception of the rings project, we have put into the same hours as of now and it won’t change in the future as we are committed to the success of the rings project.

• Integration and communication: We’re well aware that the points system has lacked communication, and we’re very sorry about that. We really did our best to have a better system and better communication over the last few months, which have been intense on the points side. Currently, the points system has over 12,000 lines of code with more than 10 custom integrations. This represents a more complex system than what blockchain foundations like sonic are doing.
  What we want to show here is that we know we could have done better with more time and resources, but we still managed to produce a working system that was not at all originally planned in the project.

To conclude, we joined rings at its inception, taking a risk since the amount of the grant would not have covered development costs by a long shot. Nevertheless, we have continued to work on the project, doing more than what was initially planned, because we believe in the project and want to see it succeed. We understand the sense of injustice that might occur regarding the allocation, however, we took a risk that relied entirely on the potential success of rings, by creating the entire technical stack.

Our allocation request was not left to chance and was first negotiated internally with the core team. It is based on the value we bring to the project (skills, but above all a technical infrastructure and revenues for DAO).

Let us know if you have any further questions