TL;DR: This post sets the stage for upcoming proposals that will fundamentally reshape the DAO’s positioning.
In December, we (Mithras Labs) launched Rings Protocol, a meta-stablecoin on the Sonic ecosystem. The results have exceeded expectations:
$100M+ TVL in under 50 days
$7M+ in annualized fees
While Quest remains a key revenue driver for Paladin, its contribution is now overshadowed by the earnings from gauge participation and the potential revenue from strategically placed service fees. Given this, we see two possible paths forward:
- Consolidating all value into a single brand and token
- Spinning out a new token dedicated to Rings
We strongly believe the first option is far more value-accretive. However, if the community sees a better path, now is the time to discuss before we formalize our approach. Our goal is to leverage four years of learnings to build a best-in-class decentralized protocol with revenue sharing and market-leading savings yields within the next 12 months.
Key Decisions for the DAO
To achieve this, the DAO will need to decide on several foundational changes:
1. Approval of a New Umbrella Brand
We have hired a designer and are working on a full branding proposal that we plan to present in the coming months. Our goal is to create a unified identity that resonates with both Quest and Rings users—establishing a scalable, decentralized financial ecosystem akin to a decentralized bank.
2. Migration of the Token to Sonic
Migrating an Ethereum-native protocol is a bold move, but the numbers speak for themselves:
- 35% of PAL holders are now on Sonic
- PAL transactions on Sonic have nearly matched Ethereum’s 3-year total within just 5 weeks
The traction is undeniable—our product and community belong on Sonic. While this transition introduces security and execution risks, we will implement necessary safeguards to prevent exploits and ensure a smooth migration.
3. Aligning Rings Stakeholders
The DAO treasury currently holds ~50% of the token supply. Given that all existing stakeholders have completed vesting over a year ago, and with some having moved on while new contributors step up, we propose:
• A structured grant framework for contributors to align incentives for long-term protocol success.
• A key grant to Veda, which has built and continues to maintain the core vault technology and will play a crucial role in decentralization.
4. New Tokenomics
Once the above items are finalized, we will introduce a revamped tokenomics model that integrates:
Revenue sharing;
Reservoir design for emissions;
New governance delegation model for risk management;
The DAO’s large token ownership is a strength, but uncontrolled emissions could introduce governance risks. To enhance investor confidence, most supply will be allocated to predefined use cases, gated by governance safeguards, and not subject to short-term governance uncertainty.
5. Treasury Sale
Executing this ambitious roadmap will require higher-than-normal service fees, but additional funding can accelerate progress. We propose a treasury sale to strategic investors to:
- Fund marketing & adoption;
- Build a safety buffer for scUSD to increase user trust;
We strongly recommend allowing us (Mithras Labs) to manage the fundraise privately, ensuring we secure the best investors and terms. OTC sales at current token prices are unlikely to be favorable, so this approach will maximize long-term value.
6. Optional Annual Inflation (3%)
The industry is often too fixated on Bitcoin’s scarcity model, preventing projects from leveraging more flexible financial strategies.
We propose a 3% annual inflation mechanism, which the DAO can approve or reject each year—providing a controlled margin for long-term operational flexibility without unnecessary dilution.
Next Steps
We plan to publish and vote on these proposals throughout Q2. Let’s get to governing!