TL;DR : Allocate 390,000 PAL to a Hats Finance contest in order to have additional pair of eyes on the codebase of the Vote Flywheel
Context & Rationale:
Paladin is set to introduce a new tokenomics model where both PAL emissions and later on revenue, will be shared with stakeholders enabling the marketplace with their votes.
As of PIP-16, it was enacted that Paladin would commit 2.6M PAL per year for a theoretical duration of 3 years at least, for a grand total of 7.8M PAL. This is a large amount of tokens (~15% of the supply) at current prices this represents 1,200,000$, not counting the additional revenue that will be shared and the eventual more permanent system that will be in place.
We have done several peer-reviews but feel it would be much safer and encouraging for future lockers (human and code-based) to know that a thorough security-check was done on the product. As such we would like to request financing to afford a contest on Hats Finance of 390,000 PAL (5% of the tokenomics system).
We recommend Hats for the following reasons:
Contests attract a broader diversity of security researchers, which means more pair of eyes on the codebase;
We can pay in PAL instead of USDC or ETH;
It works on a pay per found system where if a low number of issues are found we will not pay the whole 390,000 PAL.
Creating new power users;
Risks:
Lack of security researchers looking at the codebase because of the bounty denominations in PAL;
Creation of 390,000 PAL of sell pressure;
Means :
390,000 $PAL as well as an election thread once approved.
Just to make sure I understood properly, the 390K PAL that would be used would come from the 7,8M PAL allocated, not in addition to it right ?
Interesting, do we have more infos on this ? Is there a minimum that has to be paid & stages or are they calculating this internally ?
This feels a bit contradictory, did they communicated some interest to stake/lock/LP some PAL or did they mention the need to sell what they will receive ?
Overall I support this proposal as Hats Finance has a good track record, but would appreciate if @Fav_Truffe or anyone from Hats can jump in to share more infos on the above topics.
It’s additional, why would we take away from the system’s emission?
No it depends on the mark up for Critical, High, Medium and Low payouts. Given the absolute obliviousness of most people on security, I would recommend to let the technical team budget this out with the total budget.
No, it is an assumption that security engineers are looking to get their gains in stablecoin in the end. This was a generality mentionned by Hats doing the onboarding.
Hey @Dydymoon! Thanks a lot for the reflection on the proposal.
As can be seen in the table below, Hats has been extremely instrumental in catching/unearthing vulnerabilities before launch and we are outstanding among others with our 100% payment by results mechanism.
The formulation was unclear with a % of the total allocated for tokenomics, thanks for clarifying. That’s another big spending for the tokenomics topic.
This definitely helps having a better idea of potential vs max spending indeed thanks !
Was also wondering if Hats would conserve part or all of the PAL to participate in the tokenomcis flywheel but seems Figue answered it would most likely be sold for stablecoins. In this case, can you consider splitting the swaps to reduce the price impact ?
I am totally in favor of this proposal as hats seems like a good platform for contests and it is a no brainer on my side with a decent amount of PAL allocated towards
