TL-DR: This is part 1 of the DAO restructuring - setting up the parameters of the token migration
Context:
PAL has been the governance token of Paladin for the past 3 years. As the project refocuses on its most profitable protocol (Rings), we believe that having one unified value accretive asset would streamline value in a significant way.
We believe a migration is a better option than creating a fully new token since the same development team is behind the project. We’re also using Paladin technology at the core of the protocol (Quest) and have leveraged Paladin funds to build the project out. Protocol Owned Liquidity has always been a focus, and migrating to a new token would mean we can keep the same high quality liquidity at no additional costs. Furthermore, doing right by the current stakeholders seems simply a better alternative than maximising short term value from a new token. We want the project to succeed because it’s good, not because it’s the new FoMo.
Our suggestion is to deploy on Sonic since this is where we are seeing the brunt of the economic activity of the protocol. Additionally FeeM will provide additional DAO revenue simply by the fact the token is Sonic native. The low fee environment will also help us make relatively complex tokenomics use-able for retail users.
Technical implementation:
The migration will last two years exactly. After this period, all unclaimed NEWTOKENs will go to the DAO Treasury. All hPAL lockers will be mass unlocked once the migration process begins and PoL has been migrated. Currently locked users will have to lock for at least a year and will receive veNEWTOKEN During this period, users will be able to deposit their PAL into a contract and receive the NEWTOKEN.
Additional considerations
Total supply
PAL is currently distributed in the following fashion:
- 42.32% Paladin Community Stakeholders
- 43.35% DAO treasury
- 11.5% Mithras Labs Contributors
- 2.83% PoL
Supply numbers are a psychological tool, while the current numbers are acceptable we recommend moving to a total supply of 20,000,000 NEW TOKENS. Meaning that each stakeholder would receive 4 NEWTOKENS for each 10 PAL migrated.
Inflation:
While we’re comfortable with executing on the short term with the available tokens, we do not want this to hinder us in the future. The goal of the coming proposals will be to allocate most of the supply (around 85%) to specific systems making emissions much more predictive. As such we will bring a future proposal up separately on the matter in order to avoid over-cluttering this proposal.
Migration safeguards:
A big issue with migrations is arbitrage between the new token who has the most liquidity (all PoL will be migrated to NEWTOKEN pools) and the old token. A way to limit this is to vest / lock migrated users. This is especially important here as we will mass unlock all hPAL users and 53% of the supply will be entirely liquid with only 3% of it in guaranteed liquidity. We believe forcing a lock isn’t for everyone and as such, users will have 2 options:
- Lock for a year and earn 4 veNEWTOKENs per 10 PAL as well as upcoming revenue sharing in NEWTOKEN;
- Migrate 10 PAL for 3 liquid NEWTOKENs;
Means:
- Cancel VoteFlywheel emissions immediately;
- Build a migration tool/UI;
- Cover development costs (40,000 EUR)
- Deploy NEWTOKEN
Voting options:
- Do a token migration to NEWTOKEN and deploy it on Sonic;
- Do a token migration to NEWTOKEN and deploy it on Ethereum;
- Keep PAL
- Rework the proposal
- Migrate on Sonic
- Migrate on Ethereum
- Maintain PAL
- Rework