Tokenomics 2.0: The vote flywheel

TL-DR: Explore a budget, parameters and a setup to bootstrap a flywheel around Paladin Quest and other upcoming projects.

Quest has successfully found PMF, averaging over 200,000$ of weekly volume, with a v2 is set to become the absolute best solution technically speaking. We believe intertwining Quest with tokenomics will enable us to become a market leader on voting incentives while driving significant interest in the PAL token.

At this point, we have finalized a design as a core team and wanted to bring it forth to the community for additional ideation, and to confirm this was the right path to pursue.

I/ Proposed architecture summary:

The Vote Flywheel (VF) aims to solve three problems:

  • Create buy pressure for PAL;
  • Incentivize hPAL locking;
  • Prevent PAL emissions from being dumped;

This is achieved by enabling hPAL holders (locked PAL) to control the allocation of PAL emissions to different modules, namely “VF”, which will enhance the APR available for Quest voters without increasing the costs for Quest creators.

VF is built on top of a gauge that allocates the emissions in various sub-systems. The Emission Allocator is where the DAO will deposit the program’s budget. Stakeholders will be able to choose in which sub-systems they want to allocate budget. Initially, we will only have two sub-systems, the PoL Quests and the Vote Flywheel. No additional sub-systems are planned for the short future, but any community member can come and offer a new opportunity. It can be summarized as followed:

Note: You can only participate in a sub-system pro-rata of the votes you allocated to it. Ie: if you didn’t allocate anything to Quest PoL, you have no voting power for that sub-system.

II/ Sub-systems

A/ Quest PoL

Since the release of Quest V1 (May 2022), Paladin has been manually creating Quests to drive emissions at a discount to its pools and farm them. This is a profitable operation that we intend to keep running at least for the time being. By creating a dedicating sub-system, we will effectively decentralize and automate its management.

B/ Vote Flywheel

The Vote Flywheel is the main part of the tokenomics, and the sub-system is likely to drive more and more emissions as new stakeholders join us.

Stakeholders participating in this sub-system will benefit from Faith, usable in two instances:

  • At the Quest creation level, you will benefit from an LOOT bonus on top of your rewards, pro-rata of your Faith Share. It will be possible to delegate/sell your Faith to other creators;
  • At the Quest voting level, your Faith will maximize the rewards you can earn (base + a modular amount of LOOT).

LOOT is a PAL derivative we added into the system for two reasons:

  • We believe this flywheel only works if we inject real-yield into it, and give it an unlimited growth potential;
  • We are exploring a vesting type system where you have to wait a few weeks to get the whole amount of rewards, but can instantly redeem and keep part of the already released PAL & real yield;

For the complex system thinkooors, here’s a thorough explanation of the total system

Subsequent questions and next steps:

  • In order to avoid crowding this proposal and losing focus, we would like this post to be dedicated to comments on the actual system (Emission Allocator, Sub-Systems, Vote Flywheel and LOOT);
  • In a subsequent proposal we will focus on the total budget of the program, which is likely to be the largest DAO spending ever;
  • There will be a dedicated proposal for LOOT to decide where the real-yield will come from (Warlord fees to begin with, most likely) as well as the parameters of Faith (our custom boost system);
  • Finally, we will need a proposal to WL all PoL Quests, as well as the introduction of a Quest whitelisting framework.

I’m a hpal locked user but not well informed of the latest development. Take my comment as a community user of your service with basics knowledge.

It’s a good step forward for $PAL tokenomics.

The proposition should probably be written down in a explicit way : “boosting APR quests with $hpal”


  • is $loot another token? And if you have more info somewhere, I’d be interested to see the reasoning behin
  • Faith is the amount of $hpal (that takes already into account time lock & pal amount), right?

I know you’re relentless shippers. I love it. I love as well how iterative you handle every development. However a general remark is to avoid too much naming. If we have already words for it, it’s more user friendly to use it.

There is more value IMO to let people figure out the mechanics & the logic behind your development than the definitions behind your naming.

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Thank you for the feedback!
We can’t really communicate extensively on something that is yet to be decided, so we haven’t really focused on simplifying the message yet.

  • LOOT is not as much a new token as a wrapper of PAL mixed with some protocol revenue.
  • Faith Boost calculations remain to be determined, but it would likely be your total amount of hPAL, yes.

What do you think we could remove / simplify?

Over the past two weeks we’ve given a lot of thought of different thoughts to the potential system and have to the conclusion that also entirely managing PoL incentives would be too much for the time being. Here are the following changes we’re supporting:

  • We would like the tokenomics to solely focus on the Vote Flywheel, with a separate PoL farming budget allocated;
  • FAITH will be removed from the design, and simply referred to hPAL boost;

If no further comment arise, we will rewrite this as a PIP to formalize its development.