Paladin Finance AMA ft. Figue
Primer: How do we even the odds of retail investors against whales? Enter Paladin, a protocol that allows users to deposit, borrow, and manage the voting power inherent in the tokens of the major DeFi protocols. Join Fugu of CRE8R DAO in this AMA with Figue of Paladin as they go through the nitty-gritty of the project.
Their ETHDenver Experience
💡 Fugu met up with the Paladin team at ETHDenver 2022.
Extremely happy to be there
Half of their team is based in Europe while the other half is in the US
They were able to have a bit of team building and to meet business partner during ETHDenver
Will They Be Present At Other Events?
EthCC is the main event that they participate in
They do not want to be in every event
They will be at the Permissionless Conference in Miami in May
What Is Paladin?
A project that's aiming to democratize activism
Today, a lot of activism is led by experts and highly funded teams
If crypto becomes the next financial infrastructure, protocol governance will play a very important role — a lot of decisions are made through governance
For the past year, they have been focusing on vote lending on Aave, Uniswap, Compound, and Idle Finance
A month ago, they released Warden, which is a boost marketplace for Curve
Their tokenomics entails protocol revenue being recycled into more governance opportunities
In their own DAO, they are trying to incentivize people to take over the helm. This prevents people from placing undue importance on the role of the core team to the success of the project
“The goal of Paladin is that we can crystallize the value of influence, and basically become an ally of contributors.”
- Figue
Their Features And Why Is Vote Lending Needed?
There are different vote lending projects on the market
Paladin does things differently. Instead of selling or lending the token as a traditional lending protocol does, what they offer is the selling of the delegation mandate
The token stays in the user’s wallet
Most protocols have roughly 5% of participation and voter turnout. This will become a big problem for regulatory reasons in the near future
These protocols would have to include delegation in order to scale governance
A lot of proposals are having a hard time reaching quorum
“Because if we really want to do decentralized finance, if we don't have people participating and pushing the protocol forward, then it's just not going to work on the long term.”
- Figue
What Are Some Blue Chip DeFi Protocols That Have Delegation Right Now?
Aave, Uniswap, Compound, Index Coop
Most of the big projects have delegation
Curve is an exception
Do They Have Index Coop On Their Platform?
They don’t. The INDEX token is a special token — they are the first one trying meta-governance and they haven’t figured out how to do it efficiently
A few other protocols like Redacted and Olympus are trying out meta-governance
If vote lending is enabled for INDEX today, it would be ripe for abuse as the token price is really low right now to win a vote
If Somebody Wants To Vote On A Proposal, They Can Only Vote With What They Had When The Snapshot Takes Place?
Yes. This is done to minimize governance attacks on the protocols they build on
Their job is to build positive feedback loops on top of these protocols
Hence, it’s only viable if you borrow before the Snapshot is set up
If people are allowed to borrow during the vote, it will end up becoming a contest of who can buy the most votes
Borrowing cost increases exponentially
How Do People Make Sure They Borrow The Voting Power In Time?
People can make an educated guess
Each DAO has a different process for voting. People have to gauge when the vote goes live and borrow before that point
The Process Of Borrowing Governance Power
First, there needs to be some discussion with the community
Next, the individual is going to take out a loan
This is followed by creating a proposal
The individual usually need to have the votes delegated to them for seven days, which is the time period for a typical vote
Another angle is that the individual sees that a vote is coming up, based on the discussions on the forum
Before the vote goes live, they would have to borrow it
Borrowers have to choose what governance token they are going to borrow and how much voting power they want. The UI will inform borrowers how much it will cost
Borrowers do not need to supply any collateral before borrowing. This is because the actual token is not being borrowed
Who Do Borrowers Pay And What Are They Paying In?
Payment is made to depositors
Depositors earn ~80% of fees, with 5% being redistributed to the DAO, and 10-15% is rewarded to people who close their loans
Have “killers” who function like liquidators. They are incentivized to close the loan and re-delegate it back to the owners of the tokens
Borrowers pay in ETH, DAI, or the governance token they are borrowing
What’s The Supply Of Voting Power?
Supply comes from people who are lending their voting power
Their largest pool is stkAAVE
The Paladin stkAAVE pool has yield from 2 sources:
Serving as insurance for Aave and being paid for that risk. Paladin auto-compounds the stkAAVE for users
Vote lending fees on Paladin
APY will fall when there’s no votes/loans that are active
Started a liquidity mining campaign 2-3 months ago. Once their token has a price, the APY will be changing by quite a lot
The Paladin team has made their own version of stkAAVE, which is more easily integrated with other projects (e.g. users could put the Paladin version of stkAAVE into APWine to use their derivative products)
Why Are They Called Paladin?
In folklore, paladins are protectors who are on a quest
They want to enable liquid democracy and democratize activism
“So we wanted to have something that represented what we're doing, someone that was here to be the defender of different governance, and someone that was here to uphold the ideals.”
- Figue
How Are They Going To Differentiate Themselves From Other Projects That Are Called Paladin As Well?
The projects who call themselves Paladin are doing things that are very different
One of them is called Paladin DAO, which is an Olympus fork
They are developing their brand to become a very specific product — governing protocols and influence
Hence, they attract a different crowd from the other Paladins
When they started in December 2020, no one was using the PAL ticker on Coingecko. When he last checked it 3-4 weeks ago, there are like 5 projects using the PAL ticker
They will be building their project to last over the long-term
Their Thoughts On The Importance Of Branding
Thinks that branding and communications are very important as they are doing things publicly
It is important to stand out and differentiate themselves from other projects
Paladin was created during a hackathon in January 2021
Their Team
8 of them in their team
They would prefer to grow through the DAO
He is more in charge of the non-technical parts. His co-founder used to be a security engineer and is currently in charge of the smart contracts
Have 2 full-stack devs, 2 frontend developers, 1 product designer, 1 comms person, and 1 governance analysts
Why Is The French DeFi Community So Strong?
💡 Context: The joke about DeFi being the Future of France
Thinks that the meme comes from having a Frenchman in almost all of the large projects
France has some pretty strong mathematics and programming profiles
Might also be crypto values resonating with French people
Could also be a meme as crypto is global
What Is The Warden Product?
It’s their second product
Warden is a marketplace for boosting power on Curve
Warden will be morphing into a full stack lending platform for veCRV
Users will be able to loan out their veCRV on Warden
Users will be able to buy boosts on their boosts marketplace
It’s useful for people who do not want to lock their CRV but want to maximize their CRV yield opportunities by buying boosting power
Today, Warden has 5 million veCRV on the market
V1.1 for Warden will be launching in a month’s time
Curve has 4 different functions:
Admin fees
Governance power
Gauge power
Boosting power
Each of the Curve functions could be a marketplace in its own right
With Warden, users could choose how much boost they are going to lend out and how much they are going to use themselves (e.g. lend out 30%, use remaining 70%)
Do They Have Any More Products In The Pipeline?
They are building in 3 phases:
Phase 1: Paladin and Warden
Phase 2: Focus on governance, clarity and attention
Phase 3: Focusing on minority holder coordination
Their 2 main economic engines will be used to finance everything that they are going to do
The DAO will be slowly taking over these apps and their operations
Doing A Raise From Crypto Native VCs, Including Galaxy Digital
Eventually, protocols have to earn money
There are 2 choices that could be taken:
Conduct an ICO, or
Raising money from private investors
They went with private investors as they offered more value and are simpler to work with
Did the raise last summer
Did not get a chance to speak with Mike Novogratz
They used the funds from the raise to pay the core team
Paying Contributors
Going to start paying contributors in PAL token
Will be setting up working groups from next month onwards
The PAL Token
Their governance token
Ended up with a tiered token:
Normal PAL token with the most liquidity/is tradable
Staked version of their token. Enables holders to participate in governance and to earn a slight inflation bonus
The longer the PAL token is staked, the more boosted voting power you have
They will be launching something called the Chest, which is crystallized influence, in Summer
Will have Holy PAL (aka hPAL) for spectators or large funds who cannot take too much risk
50% of all the protocol fees will be compounded inside the Chest. This is going to be shared with hPAL holders
Did an airdrop to reward early contributors
Allocated 2% of the supply to liquidity mining and DAO contributors
Will be allocating 4% of the supply to the LBP
The token will become transferable after the LBP on 21 March 2022 on Prime Launch
What’s The Goal Of The LBP?
They are selling 2% of the supply/a million pounds
The proceeds from the LBP will be used to finance the DApp
Wants the DAO to own its own liquidity and to LP with it
This would create revenue for the DAO
The LBP is structured as a Dutch auction — starts at a high price and drops until people buy it
Once the token starts trading, it will be available on Curve and Balancer. It will be an ETH-PAL pool on Curve
Do They Have Any Multichain Plans?
This has been requested a lot by the community
However, there is no point in going multichain if there’s no real interest in governance
They are observing projects for traction around governance
Who Are Some Of Their Competitors?
Would not call them competitors as they are not doing the same thing
There are some bribe projects on the market
Does not think that bribing on every protocol will be relevant as most products do not generate enough interest from people
How Do They Plan To Decentralize Over Time?
They try to push the DAO in a way where the community is always the dominant shareholder of the protocol
The team is not able to touch the smart contracts. There is only a pause function in case of a problem
They will slowly hand over operational work and development to the working groups in the DAO
Their circulating supply is low because they want to extend their emissions for as long as possible
“So Paladin and Warden do not need us to function. If I disappear today, the project will keep on running.”
- Figue
Any Integrations They Are Working On?
Currently studying what they could integrate with
Have integrated with stkAAVE and APWine
They have built a Curve pool that allows people to enter and exit Paladin directly with Aave
Have created something called a Garden with Babylon Finance. It is a kind of vault
How Are Decisions On Integrations Made?
Currently, the team is making the decision regarding integrations
Will eventually transition to voting for integrations
Their current strategy is to focus on larger protocols with more demand
Their Roadmap
Their LBP is coming up on 21 March 2022 on Prime Launch
A few days after, transferability of the tokens will be enabled. Users will be able to stake and lock their tokens
In early/mid-April, they will be releasing V1.1 of Warden
They have been re-working on Paladin lending to make it more composable
After that, they will be working on Phase 2 — bringing more clarity and coordination to governance in general
In the long-term, they will be expanding beyond crypto into the traditional finance
“And like in one or two years, we'll be able to use most of the technologies we’ve created in DeFi and just totally obliterate what's happening traditional finance, simply because they're not up to tune. They don't understand and follow the rate of communications that's happening on the internet.”
- Figue
How Do They Ensure That Their Platform Stays Secure?
His Co-Founder is very paranoid about security
Their code has been audited by Pessimistic Audit. They have a bounty on ImmuneFi
Are Their DAO Funds On A Multisig?
Their core team multisig has the DAO funds
They are in the process of migrating the DAO funds to another multisig that’s owned by the community
They have 5 individuals on their multisig:
3 from their team (including the 2 co-founders)
One of their investors
One member from another protocol
Currently, they are on a 3 of 5 multisig. Will be changing it to a 4 of 7 multisig
How Would They Describe Their Community?
Would like to call them the pals, because it’s a funny little name
They have different roles in their Discord server: Squire —> Wanderer —> Warrior
Will be revamping the system to better reward contributors
What Are The Different Ways People Can Earn PAL?
4 ways to earn PAL:
Deposit into Paladin lending. However, liquidity mining rates are going to be reduced
Bounties (e.g. translating articles, making artwork, writing articles, etc.). There will be working groups for business development, marketing, or treasury management
Buying boosts on Warden
Buying the LBP
Do They Have Any Plans To Do Anything With The Knight Of The Week NFTs Or Future NFT Integrations?
💡 Paladin used to hold a Knight of the Week competition where winners earn a Knight of the Week NFT. They have since discontinued the program.
They have a few NFTs:
Paladin OGs who were the first contributors of the DAO
Knight of the Week for people who helped spread the word about Paladin
Valkyrie NFT (30 of them in total)
Working out what can be done with the NFTs
How Could Listeners Get Involved?
Join their Discord and discuss governance with them
Read their articles on Medium
Start contributing in their DAO
Participate in their LBP on 21 March 2022 on Prime Launch
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