Founding Knight
We deployed Paladin Lending on the 29th of September 2021, reaching an 8 figure TVL in 24 hours. After that, not much happened for quite some time. While the idea of democratizing activism was, and remains, a beautiful ideology, it became apparent pretty quickly that there was neither demand nor a business model that could sustain the development of such system. 3 years later the original protocol remains permissionless and open source, but we will progressively sunset our front end for this legacy app.
For a lot of projects from this bull-market generation, a failure on its initial vision would have simply killed its future prospects. That is not our style. Interestingly enough, we discovered an adjacent use-case for vote lending: controlling incentives for AMMs. In Curve’s case, you could buy votes controlling emissions, which lead to attracting liquidity to your pool. We built Quest from this assumption, and released it in 2022, to fill the demand we were seeing. Since then, we have successfully pivoted into a marketplace for liquidity, which was crystallized by the release of v2 a year ago.
Fast forward 30 months, Quest has distributed over 10M$ of rewards from close to all the large DeFi projects, and we have particularly grown in 2024, going from 5% market share to 20% market share of the vote incentive industry on Ethereum.
Far from a successful pivot, we see the current situation as the bare minimum that was needed to ensure Paladin’s survival. The current protocol revenue enables us to be sufficiently profitable to cover development & maintenance costs but not much more, which could have limited growth prospects if we hadn’t reacted accordingly. The PAL token expected to regain momentum, especially with the recent rework sparking renewed interest. While we’re still awaiting a major trend reversal as the full stack integration progresses, the upcoming revenue share proposal in the forums could be a game changer, potentially accelerating the token’s growth and appeal.
This post will be the first of multiple, setting new standards of communications with our community. Our roadmap is clear and it is time to share more of what is in the store for Paladin.
As mentioned above, we are now fully focused on onchain liquidity management. Quest is our flagship product and we are expanding on its success through several directions. Quest v2 already broke grounds by offering advanced customization for liquidity incentives. We intend to do so again as we entirely redefine the user experience for onchain liquidity management
This however, doesn’t necessarily mean doubling down on vote incentives. They will remain an important aspect of Paladin, but take a back-seat while we steer the UX more towards liquidity management. Vote incentives have increasingly often exceeded the market capacity, leading to net losses on incentive campaigns, which is why they cannot be the sole source of liquidity for projects anymore, especially when the peg is their core value proposal. The bribe to liquidity mining feature was our first foray into alternatives, as the balance between incentives and the underlying emissions became insufficient (this has happened multiple times on multiple AMMs over the past 18 months). This should not affect the needs of liquidity of Paladin users. As such we will be expanding the Paladin toolset with a liquidity mining solution available at launch on Uniswap v4: Valkyrie. As all of our other products developed for Paladin it is an onchain app enabling the creation of complex reward strategies on the new AMM. We hope to use this experiment as the launchpad of the most advanced liquidity management tool for DAOs.
In 2023, Quest development has been oriented toward L2 integration, with Xchain Quest now enabling us to deploy and set up voting incentives on any EVM L2 in record time as well as sealing partnerships to embed it as a core piece of infrastructure on new and upcoming protocols. We have also experimented with franchising Quest, with the first spinout live: Transmission, a marketplace enabling the purchase of cheaper rates on Gearbox protocol.
All of this will provide marginal improvements on the current situation Paladin is, but is unlikely to help us grow up to another order of magnitude without waiting for the projects we built on to themselves grow as such. Meanwhile we’ve figured the current business happening in Paladin could be optimized for 10x more revenue, opening even more growth opportunities. This is why we have been researching a new independant primitive synergistic with Quest. Stay put for more information.
Needless to say, we are extremely excited by the future of Paladin, and liquidity management as a whole.
See you soon,
Figue and the Mithras Labs team