As the DeFi space continues to mature, yield farming remains a popular activity for investors seeking high returns. Curve and Balancer are two of the most competitive yield farming ecosystems, with numerous flywheels contributing to the support of their native tokens. Today we’re excited to release a new flywheel that links these ecosystems together, allowing investors to get exposure to both Aura and Convex ecosystems. This new product is called Warlord, and it aims to simplify access to systems to the profits of governance wars.
Paladin's expertise in coordinating participants in vote markets has revealed that the dynamics of these markets can be volatile due to various factors such as price fluctuations, lock rates, and inflation rates. As a solution, we created a yield-bearing index (YBI) that combines the equity portion of a governance portfolio with the income portion to provide greater growth potential with reduced risk and volatility.
The Warlord index simplifies investment by using a single token called WAR that combines the passive yields of CVX and AURA governance markets. By minting and staking WAR, users can earn revenue from protocol rewards and vote incentives. Any AURA or CVX earned is auto-compounded into more WAR. Warlord also avoids the complications of liquidity and impermanent loss since WAR tokens can always be redeemed for their underlying assets. Additionally, Warlord can be adapted to other vlTokens to potentially increase the value of WAR. The addition of new assets will be managed by Paladin voters.
Only CVX or AURA can be used to mint WAR, ensuring that every WAR token is backed by a basket of these assets. This allows for easy redemption of WAR for the underlying assets. The current fixed ratio for minting WAR is 1:1 with CVX and 1:2 with AURA.
We'll focus on the AURA strategies for simplicity. These strategies are similar to the CVX strategy, with one exception: vlCVX earns cvxFXS and FXS, which is also distributed to WAR stakers.
When a new WAR token is minted, the corresponding amount of AURA or CVX is immediately vote-locked into their respective protocol. To earn from all of the Warlord strategies, users must stake their WAR tokens. Vote-locked AURA generates auraBAL, which is then staked to earn BAL, AURA, and bb-a-USD. The BAL tokens are cycled into more auraBAL and the AURA tokens are locked into Warlord for more WAR. The bb-a-USD is exchanged for WETH. Additionally, the gauge power of vlAURA is delegated to Paladin’s delegation service, which optimizes vote incentive yield across all vote markets and platforms in each voting round. Our delegation address has consistently outperformed the market. All vote incentives, except PAL, are converted to WETH and distributed to WAR stakers. By staking with the help of Warlord, users can capture all of this yield.
To leave the Warlord system, a user must unstake their WAR and follow a two-step process for redemption. WAR can always be exchanged for its underlying assets. The redemption weight is determined by the current ratio of locked assets within the system. Firstly, users must submit their WAR into the redemption queue and wait for the tokens to unlock from their respective protocols. Once the tokens become available, the user can complete the unlock and claim their tokens. A 2% fee will be charged by Warlord for joining the queue. Also while in the queue, WAR remains unstaked, resulting in no yield earned.
When you access the app, you'll be able to view the overall dashboard for the Warlord system. Right below that, you'll come across the WAR card, which enables you to Mint, Stake, and Unstake. For enhanced user convenience, it is possible to mint WAR and simultaneously stake it in stkWAR in a single transaction. By doing so, newly minted WAR tokens will automatically begin earning yield.
The Paladin DAO originally sought to automate the management of its own holdings of CVX and AURA. But it soon became clear that opening such a system could become a flywheel for Convex and Aura holders, less DeFi-native users, and the rest of the Paladin ecosystem.
Get started with WAR minting today and enjoy the easiest exposure to Convex and Aura.
And if you have any questions, don't hesitate to reach out to the Paladin team in Discord – our knights pledge their aid.