Despite the bear market conditions, Paladin has been asserting itself as a strong player within the Curve Wars enabling protocols to align voters with projects. Their recently launched product, Quest, has seen some good early traction as well as received positive feedback and attracted interest from different protocols.
Currently, there are three active Quests and more are to be launched in the future to benefit both the next Quest creators and veCRV holders!
Weβd covered Paladin a couple times before and have always been interested in learning more since the team keeps releasing new products to address the most emerging needs within the space. After being quite impressed with their recent Twitter space discussions, such as AMA with Threshold Network and AMA with StakeDAO, we were lucky enough to find some time to chat with Paladin Team.
As usual, the interview is paywalled until Monday.
CMC
Paladin Team -- tell us as much as you care to reveal whoever we're speaking with behind the handle here!
PAL
We'll be answering jointly with Alejandro, Head of Comms and Romain, Co-Founder.
CMC
LOL, it's an ambush!
Take us back to the beginning... how did Paladin first come up with the idea?
PAL
We actually tested the idea of vote lending back in a hackathon back in January 2021 (EthGlobal).
And the rest is history.
CMC
Back then I believe the focus was on stkAave. What did you learn in this early release, and how has it shaped your growth?
PAL
It was for Uni, Aave and Compound. We have re-focused on StkAave and veCRV since then. But our initial release showed that governance interest, not even usage, was still super early.
CMC
Are we still early, or is the market starting to catch up?
PAL
I think it's both the fact that we're early (only 5% of tokens are used in governance, and by 1% of the addresses) and that governance has never been sexy. Voter apathy is real and most people do not care.
Curve and its gauge weight stand out as an exception.
By separating those who just want to trade and those who want to participate and have to lock, they effectively classify holders.
Furthermore by introducing a purely economic governance, and controlling emissions (gauge weight votes) they created a game where various stakeholders are financially incentivised to participate
CMC
During your recent AMA with StakeDAO you spent a lot of time breaking down the tokenomics of CRV (ie speculation/governance/liquidity premiums). In your experience building Paladin, do you think that there's a particular formula or weighting of such features protocol designers should keep in mind to help promote governance success?
PAL
If we had to learn from vetokenomics, I'd say locking is extremely elegant as is separates speculators from governors and forces alignment while preventing the "bank-run mindset".
The magic formula framework is really dangerous because each project has their own culture, mechanics and stakeholders. context matters and what works for Curve probably won't work for most other tokens.
CMC
Is tying economic value to governance the most successful method you've seen for making governance "sexy" or are there other formulas you're watching
PAL
I'd say it's more about separating political governance (parameters change) and economic governance (emissions).
But we're far from making it successful, Curve is the biggest one by far and barely has 2,000 recurring voters a week.
I haven't seen a formula working as well, but if I had to guess, i would say indirect governance (not by a governance token but by deposits for example) could be interesting to explore. Either way, Paladin will adapt to what works and is the most sustainable for DAOs.
CMC
Moving to Paladin more specifically⦠in the aforementioned Twitter space StakeDAO described it as the best product available on market. Could you review their case in some detail for people who are unfamiliar with the mechanics?
PAL
Quest is our take on Curve gauge acquisition, commonly known as "bribing." Instead of having a winner takes most system where projects throw as much as possible on a weekly basis, we wanted to create a dapp that enabled projects to plan their Curve strategies on a longer timeframe. Quest is meant to be a tool for sustainable gauge access for DAOs.
By reversing the logic from a budget being split into all voters to a cap of votes being rewarded on a $/veCRV basis, we enable projects to create a floor gauge weight. This is especially interesting for projects looking to maintain a peg, and the ones who have problem with voters dumping the rewards, since our system incentivizes people to stay in the Quests.
CMC
You'd mentioned on your AMA that this was seeing some robust growth of Quest. I noted you architected this in such a way as to be friendly for protocols to try it out, such as being friendly when Quests fall short of objectives. Can you comment on any such design choices you made, as well as talk about where you expect future growth may come from?
PAL
We build Quest to make Curve Wars sustainable. Projects are spending hundreds of millions right now to get access to the gauge, but it's not worth it for most because they don't reach their milestones.
By creating pro-rata vote vaults and offering fixed yield to your oldest voters, we're providing infrastructure that incentivizes less people to dump and more projects to experiment.
And by experiment I don't just mean trying the solution out. I mean testing new prices, ceilings, or more complex strategies around gauge acquisition.
Essentially, bribing has been around for nine months with next to no additional features. Now the design space is wide open.
CMC
The biggest holder of veCRV is of course Convex -- how do you see them fitting into the new incentives landscape?
PAL
We build for compatibility. While Warden and Quests were conceived to re-empower veCRV holders, our goal is to make Quest interoperable with all of the Curve ecosystem wrappers eventually.
CMC
You have a fantastic understanding of the broader DeFi and web3 space -- what are some of the emerging trends you are most excited about?
PAL
We're laser-focused on governance in DeFi, so we're probably missing a ton of action, but Liquidity Wars, Zk wallets and under-collateralized lending are fascinating to see grow.
I'd add that L2 adoption is going to dramatically increase our design space as builders. Fun times ahead
CMC
Excellent! Anything we should have asked that we missed? Any final thoughts you want to add?
PAL
Try out Quest guys, it's fresh new and lucrative experience for veCRV voters! Outside of this, thank you for the lovely chat.
Paladin has a great, very active community - anyone is welcome to join it on Discord.
We also invite you to keep an eye on Paladin Teamβs Twitter for more updates!