Mission: DeFi EP 48 - Paladin is solving the DAO governance problem & providing powerful incentives to make it work
Primer: How do we solve governance apathy? Join Figue and Alejandro from Paladin as they share how their project enables governance token holders to unlock the value of their tokens by lending their voting power to borrowers who need it.
Background
Figue
One of the Co-Founders of Paladin
Before crypto, he used to be a banking lawyer
A few years ago, he heard about DeFi and it made a lot of sense to him
Tried a few ideas during hackathons. Ended up building around vote lending and democratizing activism
Alejandro
Head of communications at Paladin
Before crypto, he was from politics
“When I saw Decentralized Governance, I'm like, oh, this is really interesting, because I wasn’t thinking of the utility of crypto besides speculation.”
- Alejandro
How Did They Come Up With Their Idea?
It was a process
Governance is very important as token holders are empowered much more than stockholders
Instead of having an annual shareholder meeting, anyone can put up a vote any time
“So it's pretty crazy. It's corporate governance, but on steroids.”
- Figue
95% of people don’t turn up to vote
On the other hand, there’s a small number of people who want to push ahead, contribute, and make things work
A large number of proposals don’t even reach quorum, which is a big problem
Vote lending was started as a solution to this problem
What Is Vote Lending?
Holders of governance token can deposit them into Paladin
When someone wants to buy a vote, Paladin sells them the delegation mandate
The protocol only sells the right to vote. The borrower does not actually hold the token
There’s no liquidation and counterparty risk
Duration For Buying Votes
Vote buying is for a period of time
Did not want vote buying to be paid on a per vote basis as this could introduce governance attacks
Vote buying by duration entails that people have to be responsible about how much time is needed for a vote
The interest rates are dynamic, depending on the utilization of the pool. This pushes out bad actors as it becomes exponentially more expensive to do a governance attack
What Do Users Gain By Delegating Their Votes To Paladin?
Users earn yield for selling the vote that they are not using
Voting power has to be borrowed before the vote is put on-chain on Snapshot
Integrating Other Protocols With Paladin
Protocols need to add a module that enables delegation on Snapshot
Currently integrated with Compound, Aave, and Uniswap
Do They See This As Something That Protocols Will Use In Order To Achieve Quorum?
DAOs and protocols are their client base
When Did They Start The Project?
Dec 20/Jan 21 — that was when they started with the hackathon
Worked on building the full version of the product and a testnet until Summer 2021
The Mainnet was launched on October 2021
1.5 month ago, they released their 2nd DApp (Warden product)
Did They Have To Shift Gears During Development?
Curve Wars were a more recent phenomenon
Crypto is larger today than in the past
Adoption Of Their Products
In September 2021, their Discord and Twitter followers were under 400
Implementing bi-weekly contributor calls to engage with contributors
People have been participating in their Discourse forums and Snapshot votes
What’s Their Next Developmental Phase?
Have created a full stack vote lending platform for Curve called Warden
Want to finish perfecting the platform
After that, they want to focus on giving a better experience to contributors and delegates in the ecosystem
Do They Have Plans To Move To Other Chains?
Have been studying it but have not set on anything yet
Chest
Will be introducing something called the Chest
Protocol revenue will be redistributed to the users to be reused in all of their DApps
hPAL, their locked governance token, could be thought of as holding access to influence
Warden
A marketplace for people to create, buy and sell their boost for CRV
They have quite an amount of CRV locked with them
Tokenomics
Have PAL and hPAL tokens
Did not want people to use the token for speculation
Holders can stake their PAL token for hPAL for additional benefits that come with it
Will be releasing a tokenomics article soon
The aim is to incentivize active governors and differentiate between PAL and hPAL
Holders can lock their PAL tokens for hPAL for between 6 months to 2 years
Launch Of PAL Token
PAL will be launched through a LBP on 21st March on Prime Launch
It will be structured as a dutch auction
After that, the token will be transferable and open on the market
The LBP is done to raise funds to help them bootstrap the DAO and create a sustainable revenue model
Response From Other Protocols
When they started out, a lot of people did not get what they were doing and thought that they were pushing for governance attacks
As more people participate in governance, they realized that it does not work and they need solutions
After people realized that Paladin is not used for governance attacks, they gained more credibility
How Many People Are On Their Team?
Have a team of 9
6 devs
3 non-technical people
Anything Else That The Team Wants To Share?
People find politics and sports very interesting because of the narratives around it
Want to build narratives around corporate governance to make it fun
“And we're going to create what is called the governance game. And that's something we're really interested in slowly building out. Because we think there's a huge incentive in making all of these decision-making process fun and interesting.”
- Figue
What Project Or Person Do You Think Is Absolutely Critical To The DeFi Ecosystem?
Figue
Julian Koh from Ribbon Finance. Have done very well in the face of crisis
Liquidity Wizard from Tokemak. Extremely impressed by their product and the ability to generate hype around their community
Alejandro
Gabriel Haines. His memes and videos are entertaining and gets the word out about crypto
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