TL;DR: Considering the actual distribution of hPAL votes, as well as the very limited risk proportions of increasing hPAL gauges weights cap, we suggest two alternative models, one allowing Quest creators to request through governance proposal the increase of their gauge cap weight, based on quests share of the total volume, the other simply increasing all caps from 10% to 20%.
Context:
Since the release of hPAL tokenomics, various loot gauges have consistently attracted more than the 10% vote cap. Notably, these gauges often correspond to historic and loyal Paladin Quest creators. This alignment suggests that the current hPAL tokenomics effectively supports long-term contributors to the Paladin ecosystem. The persistent demand for these gauges indicates a need to reassess the cap limits to better reflect the actual usage patterns and to ensure that the system continues to incentivize valuable contributions.
Introducing a dynamic weight cap model would imply frequently passing admin txs to update caps, which is not efficient and might become very costly. Instead the best solution seem to allow quest creators to ask for an increase of a specific gauge cap if it is justified by the volume & fees generated by the said quest.
Rationale:
The value of emissions compared to the hPAL Total Value Locked (TVL) shows significant dilution, which results in a more organic distribution of voting power. This natural redistribution supports the case for increasing the cap, as it allows for a broader and more equitable allocation of votes across different gauges. By raising the cap, the system can better reflect the diverse interests of the hPAL holders.
Moreover, the fee generation model of Quest fundamentally differs from that of a DEX, which justify a different cap system should be employed.
DEX governance voters receive PAL emissions not underlying DEX pools LPs, hence an attacker should simultaneously hold exotic gov token such as veCRV, bribe the majority of hPALs voters with an high enough efficiency to compound their rewards and loop the strategy over multiple rounds, which is neither economically nor time efficient.
Voting Options:
- Apply a linear tranches system based on volume metrics to cap loot gauges weights (On demand from the quest creators), this applies in a DEX ecosystem agnostic fashion, meaning that there is no specific allocation of the PAL emissions per underlying governance market.
Formula : max(0.1 ; Quest_Value / Total_Volume_Round)
This will reduce the risk of an isolated attack over the distribution of PAL emissions, however as Quest user base scales the gauge cap per individual Quest will effectively reduce.
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Increase the current 10% cap weight to 20%, matching the observed current desired distribution of votes. This will improve the efficiency of the vote flywheel in its current state but might need to be revised later.
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Rework
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Abstain
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Against
- Option 1
- Option 2
- Rework
- Abstain
- Against
