Paladin (PAL), the DeFi protocol that generates interest on governance tokens

This article is written in partnership with Paladin (learn more)

Paladin, the platform for participating in the development and management of protocols

Among the various cryptocurrencies on the market, some offer voting rights to their holders, allowing them to participate in the development of decentralized finance protocols (DeFi).

These are called governance tokens. We can for example cite the AAVE token of the eponymous protocol. By holding AAVE tokens, Aave users can, if they wish, actively participate in the evolution of the protocol.

However, the majority of these voting rights are not used by their owners, whether for Aave or other DeFi protocols. This is where Paladin comes in, to fill this gap.

The goal of this platform is to democratize the participation of users in the protocols that are important to them.

Owners of governance tokens who do not wish to exercise their voting rights can now offer them to users wishing to participate more actively.

To finance the development of the project, Paladin closed a fundraising round of $ 2.55 million in early October 2021. Paladin has received support from Greenfield One, Galaxy Digital, Semantic Ventures and NFX.

Cocorico, the project was born thanks to a French team. We thus find Romain Figuereo in the management, Valentin Viger in the technological direction and Tom Amiri in the design.

To ensure the decentralization of its governance, the Paladin protocol recently adopted its own token, the PAL. A token intended to unite the Paladin community, the PAL governs the governance of the protocol and allows its holders to vote for certain key decisions. Once the governance structure is in place, more roles will be granted to the PAL token.

Paladin logo

Paladin logo

An active community rewarded

In order to highlight the efforts of users, Paladin uses mechanisms resembling a video game. Thus, users will be able to perform various tasks to obtain ranks:

Squire (squire); Wanderer (vagrant); Warrior; Knight (knight); Paladin.

These different grades allow users to acquire skills and responsibilities within the ecosystem.

A knight of the week is also named according to his contribution, his participation or the help given to other users, and the latter receives a reward. As of this writing, the Knight of the Week received 100 DAI, and the bounties may change in the future.

What are the benefits of Paladin?

First, when the voting right is loaned, the tokens are not returned to the borrower. The aim here is to ensure that the deposited capital is not exposed to counterparty risk.

Thus, only the voting rights are delegated to the borrower. The latter pays fees depending on the duration of the loan and the quantity of tokens borrowed.

In addition, it allows the benefits of holding a governance token to be associated with the benefits of the loan.

Second, borrowers can extend or shorten the term of their loan. As fees may vary depending on demand, the term of the loan may also vary.

Paladin therefore offers the possibility of extending the term of the loan in exchange for a new payment of fees. The shortening allows it to recover the costs advanced by the borrower equivalent to what he has not used.

Diversity and simplicity

Simplicity is Paladin’s best definition. All you have to do is connect a cryptocurrency wallet to it, and you can directly delegate your voting rights. At the time of writing, it is possible to connect 12 different wallets to Paladin, including MetaMask, Ledger, Trezor or even Coinbase Wallet.

We find this diversity in the accepted wallets that we can use in the tokens that we can lend. As of November 2, 2021, 4 tokens are already available on the Paladin protocol:

The UNI of DEX Uniswap; the COMP of the Compound protocol; the AAVE token of the eponymous protocol; and Staked Aave (STKAAVE).

Despite the presence of only 4 tokens, the offer plans to expand, including 2 newcomers who will appear soon:

The IDC of Index Coop; and Idle (IDLE).

Upcoming updates

In addition to adding new tokens, Paladin seeks to develop profitability for users and the variety of choices available to them.

Thus, the protocol wishes to develop a “Pool V2”, to make it possible to generate a profit for lenders, even when the tokens will not be borrowed. To do this, Paladin will inject the non-borrowed tokens into decentralized finance protocols in order to generate an annuity that will be redistributed to the lenders. The advantage is that this will bring stability in the income offered to users, unlike the unique system of rental of decision-making power, which fluctuates according to crucial voting periods.

The addition of a pool creation system will be implemented to allow lenders to pool their voting rights. This will offer the possibility of blocking access to their tokens to certain borrowers. The objective is to allow lenders to grant these tokens to “activists” who could defend their interests.

Tutorial – How to use Paladin?

The first step is common to lenders and borrowers: access the platform and connect a wallet.

To do this, simply go to the Paladin website and click on “Launch App”.

Paladin PAL Home Page

A new page opens on the application. From there, you must then connect a wallet among the 12 offered via the “Connect Wallet” button.

Paladin Tutorial

Once your wallet is connected, you can start using Paladin.

Deposit your tokens on Paladin

To start lending your tokens, all you have to do is go to the “Supply” tab from the application:

Paladin Tutorial

All you have to do is choose the tokens you want to deposit, and feed the pool by clicking on the “Supply” button. Note that this can be done with the token in question, but also in DAI or ETH.

Borrow Voting Power from Paladin

The manipulation to borrow tokens is not more complex. It all starts again from the app dashboard. You must now go to the “Borrow” tab.

Paladin Tutorial

From here you can select a token. When your choice has been made, all you have to do is click on the “Borrow” button of the desired token.

Paladin Tutorial

Once you have chosen the token, you can decide the amount you want to borrow, the end date of the loan, as well as the token with which you want to pay the fees. These are calculated according to the duration of the loan, as well as the “Weekly rate”. The loan can then be extended or shortened via the dashboard, accessible by clicking on the “Dashboard” button.

Have a balance sheet of your borrowings and loans

It is possible to obtain a report of its actions with the dashboard.

Paladin Tutorial

The “Loan Positions” part allows you to see the loans made, with the current status, and gives access to the modification of the duration of the rentals.

As for the “Deposits” part, it allows you to observe the quantity of tokens deposited from the wallet in the protocol and the interest that is generated.

Conclusion

Paladin is a platform that promotes activism in governance tokens, whether by giving access to voting powers to users wishing to participate in the decisions of different protocols, or by allowing owners of these different tokens to generate interests.

Paladin’s goal is to democratize participation in the development of various platforms, providing easy access to users.

The addition of new functionalities risks increasing the appeal of the application in the future, and could make it a must in the world of decentralized finance.

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This is a sponsored and paid article. Cryptoast has made preliminary research on the products or services presented on this page but could not be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service put forward in this article. Investments related to crypto-assets are risky by nature, readers should do their own research before taking any action and invest only within the limits of their financial capacity. This article does not constitute investment advice.

About the Author: Kamil Witoslawski

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As a student of economics, cryptocurrency and blockchain caught my attention a few years ago, and today I am intrigued by their stakes on the economy and society.
All articles by Kamil Witoslawski.

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