TLDR: Paladin, the governance token lending protocol, is voting to improve its current governance framework to further align the system with the current needs of the DAO. Custom governance frameworks provide DAOs such as Paladin with a flexible and adaptable way to govern their operations and make decisions, allowing them to respond quickly to changing circumstances and better serve the needs of their users.

Paladin Lending was launched on Ethereum Mainnet in September of 2021 with the stated goal of reducing governance friction and enabling more speculators to join in governance through the borrowing and lending of governance tokens. In the world of token-based voting, Paladin stands out as an interesting DeFi mechanism that enables the accumulation of governance power and influence. Over the last year, the protocol has slowly grown its dAPP offering and nurtured its DAO community.

As with other DeFi protocols, a mature governance system is required to better enable the various decisions that need to be made within the community. At the start of 2022, Paladin passed a proposal to implement a v1 governance framework. This framework gave the young protocol a clear process for how to enact change. In this v1, several proposal types were introduced that segmented the various changes possible into different buckets.

Paladin’s governance frameworks were influenced early on by some of the more mature protocols such as Aave. DeFi protocols frequently implement proposal frameworks to encompass the changes that occur often within the DAO. Paladin nods to the dozens of protocols that came before and overlays this framework practice to suit the needs of the protocol. Proposal frameworks are powerful because they provide DeFi protocols with an agreed-upon and hopefully a straightforward path to implement change.

Now, Paladin is voting to update these same frameworks in order to adapt its governance process to the evolving needs of the protocol. Governance is important to Paladin and it’s no surprise that their own process is continuously improved.

The Proposal: Governance Framework Update

On November 28th, a proposal was brought forward to the Paladin forums with the aim of improving the governance frameworks of the protocol. The proposal suggests replacing the current four proposal frameworks with four new categories that are more suited to the current needs, development, and direction of the protocol. At Paladin, the current frameworks are Paladin Governance Proposal (PGP), Paladin Constitution Modification (PCM), Paladin Upgrade Request (PURe), and Paladin Partner Program (PPP). The proposal would replace all of these with the following new categories: Paladin Integration Requests, Paladin Governance Management, Paladin Improvement Protocol, and Paladin Emergency Protocol.

Paladin Integration Requests (PIR) are proposals for integrations, partnerships, and new token support. Paladin Governance Management (PGM) is a framework that encompasses all proposals related to the DAO treasury and its related activities. Paladin Improvement Protocol (PIP) is a proposal framework that includes the most important and high-impact changes to the protocol, the DAO, the constitution, or the governance framework itself. Paladin Emergency Protocol (PEP) is the last proposal framework that aims to prepare the DAO for any emergency situations.

Each of these new proposed categories includes a voting duration, quorum, and admin for facilitating the vote that is unique to the proposal type.

This meta-governance proposal builds on top of an already developed governance process within Paladin. Token-based voting is used by the protocol to make decisions on things such as protocol parameters, allocation of treasury funds, and partnerships. To enact these decisions the protocol uses proposals. A proposal begins as a forum post where it must remain for a minimum of 48 hours to receive community feedback and gather sentiment. After this, any persons with over 5% of the circulating PAL supply can post the proposal on Snapshot to begin voting. Paladin primarily uses off-chain Snapshot voting to ratify its decision-making. The governance token for Paladin is the hPAL token, which is a token awarded to stakers of the PAL token. To pass, a proposal must receive support from at least 15% of the circulating token supply (PAL). This quorum requirement varies depending on the proposal type.

At the time of publication, the proposal is available for voting and has received a 100% "Yes" vote. Voting ends on December 31st, 2022.

Big Picture

In the grand scheme of things, DAOs are still in a very early stage of development — especially when it comes to sorting out governance systems that are both effective and value-aligned. It is not uncommon to see even the most mature DAO-like communities adapt their governance systems to accommodate new circumstances, find better alignment, or make them more efficient and effective. In recent months, for example, we have seen both Compound and Aave make significant changes to their governance processes. It is typically a sign of good community health when a protocol’s governance adapts through existing community-sanctioned mechanisms. This is after all one of the several advantages that DAOs have over most traditional organizations: the ability to adapt quickly and with transparency. With this proposal, Paladin is putting such principles into practice.

We’ll be tracking this proposal activity closely at Boardroom. Follow our newsletter to stay up to date. If you’re a voter in a protocol, make sure to check out Boardroom Portal.

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