We’re excited to introduce ourselves to the Index Community and open a dialogue before opening an Index voting market. At its heart the Paladin protocol aims to enhance governance interactions with voting markets, coordination mechanisms and more. We have been live since 30/09/2021 at app.paladin.vote and audited by Pessimistic.
While the topic of vote lending and liquid influence is controversial, we believe that built correctly and in tandem with the community, the right guardrails can be defined to ensure healthier governance. We’d like to use this post to elaborate on why we took the approach we did, how it can help persistent shortcomings in governance and how you can contribute to it all.
Paladin Lending aims to fill the gap by providing a dedicated lending protocol to manage influence in governance. We want to create a win-win solution between investors and activists for more effective coordination : creating utility for passive non-voters and granting new tools for activists.
DAOs are rooted in a vision of openness and low barriers so all kinds of individuals can work together in full transparency. Index has thousands of different token holders yet when you look at the voting record it’s heavily skewed toward a few participants with participation averaging around 15% lately.
This is for a lot of reasons: protocols are still distributing ownership, high gas fees, information overload, passive investors, etc. A class of delegates is emerging but it’s still questionable how effective this will be, especially when we see that contributors are minority holders in the DAO. Overall, the result is a lot of idle governance power (80%+) and centralization risk.
Today, this means that if someone buys OTC 10% of the circulating supply for 5M$, they will get a proposing stake in most of the biggest protocols of DeFi.
Our goal is that voting markets can make this influence liquid and separate passive investors from players who are really interested in participating, giving more leeway to contributors and forcing the discussion of low turnout and openings to attack vectors.
Feedback is a crucial part of our process and we’ll continue to work closely with communities integrated into Paladin. That way lending markets can better reflect each culture. Each onboarded asset was presented before-hand on the community forums and we were invited to speak on Community Calls to answer with full transparency. In the long term our goal is to help create better incentivisation models for core contributors and push for minority holder coordination, but it all starts with vote lending.
In its current design, staking pools can be customized in terms of access (whitelisting delegates, need for minimum “skin in the game”…) or through its interest model.NB : the current pricing models are a bonding curve with Utilization Rate of the pool and Quorum / Proposal threshold as parameters. This way, the loan cost discourages huge borrows for long periods and reduces potential GEV on large loans.
Paladin went live at the end of September and we wanted to use this post as a greeting and an invitation to collaborate. By creating a community designed pool, the Index community can enable liquid governance on its terms.
There will be an upcoming community call on the 9th of November at 18:00 CET in our discord, to clarify everything that needs more explanation. If you can join us we’d love to hear from you. If not, feel free to share your thoughts in this discussion and we’ll answer any questions.
NB : If you’re interested in learning more about the Paladin vision and architecture check out our articles: Manifesto for a new wave of corporate activism, Paladin, the governance lending platform, Voting Markets: Why now.