# PDIP 19 - Changes to the Tokenomics of $PDT
**URL:** https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248
**Category:** ParagonsDAO Improvement Proposal
**Tags:** tokenomics
**Created:** [May 7, 2024, 11:42am UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248 "2024-05-07T11:42:03Z")
**Posts on this page:** 8
**Page:** 1
### Author:  [@DeFi\_Ted](https://discuss.paragonsdao.com/u/DeFi_Ted)
#### Post date: [May 7, 2024, 11:42am UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/1 "2024-05-07T11:42:03Z")
## **PDIP 19 - Changes to the Tokenomics of $PDT**
Authored by DeFi Ted and Milamber.
# **Summary**
This proposal aims to bolster the backing of the $PDT token by resolving community concerns over treasury support of the underlying redeemable value. It outlines a dual approach to ensure $PDT backing, refine the backing valuation calculations, secure ongoing development funding, and revise the distribution of fee shares to stakeholders.
# **Abstract**
$PDT, the governance token of ParagonsDAO, was introduced through a novel NFT Initial Bond Offering. It features a direct claim on the treasury and earnings from bonded NFTs, with 30% of $PRIME obtained through Echelon interactions allocated to $PDT stakers. The token’s value is secured by the treasury it governs.
# **Motivation**
The proposal addresses community concerns transparently and effectively, ensuring no detriment to any party (“no Peter and Paul scenario”). It focuses on creating sustainable, measurable strategies for managing treasury capital and distributing earnings equitably among stakeholders.
# **Specification**
The proposal introduces a clear bifurcation of fee categories for more effective distribution:
_Yield:_ Generated from treasury assets in trading or yield strategies. This includes liquidity positions in PRIME and ETH.
_Rewards:_ Arising from protocol interactions, such as gaming events in Parallel.
**Yield Distribution**
- Reinvested into Strategy: 37.5%
- Buy Back and Burn: 37.5%
- Treasury for Development Funding: 25%
A weekly buyback and burn strategy will provide regular liquidity for the PDT/ETH pair, enhancing market stability.
**Rewards Distribution**
- Staking Pool: 90%
- Treasury Hard Cap: 10%
This proposal excludes redemptions initially, suggesting a 12-month trial of the new tokenomics before considering further changes. The Treasury Council will oversee the adjustment of these percentages through a Treasury PCCP vote.
# **Rationale**
To establish a clear backing value per $PDT, we first identify the circulating supply:
- Total PDT: 162,500,000
- PDT in Treasury: 25,317,737
- Total Circulating: 137,182,263
All vesting tokens in solv.finance vesting have expired and are considered available and on the market, these were vouchers given to founders and early contributors. All remaining PDT yet to be released to the market remain in the Treasury today.
Treasury Totals.
| Current Treasury Liquid Assets | | | |
| --- | --- | --- | --- |
| Name of Token | Token Amount | Price per Token | Total |
| Magpie XYZ (ETH) | 10 | $3,094.40 | $30,944 |
| Renzo (ETH) | 10 | $3,094.40 | $30,944 |
| Eigenlayer (ETH) | 20 | $3,094.40 | $61,888 |
| Etherfi (ETH) | 20 | $3,094.40 | $61,888 |
| KelpDAO (ETH) | 20 | $3,094.40 | $61,888 |
| ETH | 633.573 | $3,094.40 | $1,960,528 |
| PRIME/ETH LP 2 (PRIME) | 0 | $19.26 | $0 |
| PRIME/ETH LP 1 (PRIME) | 72,366.00 | $19.26 | $1,393,769 |
| USDC | 1114000 | $1.00 | $1,114,000 |
| PDT/ETH LP (ETH) | 268 | $3,094.40 | $829,299 |
| PRIME/ETH LP 2 (ETH) | 0 | $3,094.40 | $0 |
| PRIME/ETH LP 1 (ETH) | 275 | $3,094.40 | $850,960 |
| stETH | 1035 | $3,094.40 | $3,202,704 |
| PRIME | 453177 | $19.26 | $8,728,189 |
| Aero LP PRIME | 48,044.00 | $19.26 | $925,327 |
| Aero LP ETH | 296 | $3,094.40 | $915,942 |
| AERO | 24,505.00 | $1.1000 | $26,956 |
| SAFE | 21,484.99 | 1.82 | $39,103 |
| PDT/ETH LP (PDT) | 6933148 | $0.1200 | $831,978 |
| | | | |
| | | | |
| Total Liquid Treasury | | | $20,234,330 |
| | | | |
| | | | |
| | | | |
| Current Treasury Illiquid Assets | | | |
| Parallel NFTs | | | $4,028,622 |
| Parallel Masterpieces | | | $1,004,563 |
| Parallel Avatars | | | $312,568 |
| ARBO NFTs | | | $30,000 |
| The Watch NFTs | | | $71,000 |
| Other NFTs | | | $40,000 |
| Total NFTs in Treasury | | | $5,486,753 |
| Total Treasury | | | $25,721,083 |
\*_PDT is not accounted for in totals_
| Backing Totals | |
| --- | --- |
| Total Supply | 162,500,000 |
| Treasury held PDT | 25,317,737 |
| Current Circ Supply | 137,182,263 |
| Total Staking Pool | 94,699,323 |
| Market Cap at current PDT Price of Circ Supply | $16,461,872 |
| Current Price PDT | $0.1200 |
| Hard Cap Treasury | $20,377,393 |
| Hard Cap $PDT | $0.148542 |
| Soft Cap Treasury | $25,864,146 |
| Soft Cap $PDT | $0.18854 |
| Current Discount to Hard Cap | 19.22% |
| Current Discount to Soft Cap | 36.35% |
**Backing Structure**
To ensure confidence in $PDT’s price backing, we assume that the token can be redeemed, recognizing that the redemption value will involve trade-offs due to the illiquidity of certain treasury assets. Under this model, if a holder burns $PDT for their share of the liquid treasury, any NFTs would be discounted or forfeited to other holders.
To clarify valuation moving forward, we introduce two distinct caps:
Hard Cap: Reflects only the liquid treasury assets, setting a per-$PDT value as above.
Soft Cap: Incorporates both liquid and illiquid assets for a per-$PDT value as above.
These caps ensure transparency and provide a framework for accurately understanding $PDT’s backing structure in different scenarios
**Current Yield Strategies**
- Aerodrome PRIME/ETH:
The DAO has strategically collaborated with Aerodrome to establish the first PRIME/WETH liquidity pool. By offering voter incentives, they attract more AERO rewards, which are reinvested into the pool. This enhances liquidity, maintains incentive recoupment, and increases LP share. Initially, PRIME incentives were reduced to minimize dilution, but the DAO intends to raise incentives once PRIME staking for PROMPT is active, maximizing returns through increased liquidity share.
- UniV3 PRIME/ETH:
As a major liquidity provider on Ethereum, the DAO earns daily fees ranging from $3,000 to $10,000 depending on LP size. This fee generation is supplemented by strategic monthly rebalancing of PRIME holdings to maintain a balanced treasury. Although some liquidity has shifted to Aerodrome for improved yield, the remaining $1.6 million in Uniswap still produces significant returns. The range-bound strategy ensures steady revenue, while a buy-sell range protects the treasury by optimizing PRIME trading between $11 and $40, based on current ETH pricing.
\*_The DAO holds the number 3 LP position (702417) relative to all other LPs on Uniswap on Ethereum_
- PDT/ETH:
The DAO maintains virtually all liquidity for PDT, which has traditionally seen low trading volume. With the launch of new Parallel bonds and planned CEX listing, the DAO anticipates increased fee revenue. A future PDT/WETH pool on Base will follow a similar strategy as the PRIME/WETH pool on Aerodrome, utilizing the same AERO reward mechanism to deepen liquidity and draw community participation. Partners are consulted for automated strategies to stabilize trading activity.
- stkETH:
The DAO historically staked ETH conservatively via Lido, achieving a 3% base yield. New diversification into protocols like Eigenlayer, Etherfi, and Swell aims to raise this average to 5-6%, while maintaining risk awareness. Over 600 ETH, unlocked from Uniswap adjustments, will be reinvested strategically. A portion of the 1,000 ETH staked with Lido will also be redeployed for broader diversification and increased returns.
These comprehensive strategies collectively align with the new buyback and burn approach, ensuring consistent yield, liquidity stability, and equitable fee distribution for all stakeholders.
**Staker Earnings**
Stakers will continue earning $PRIME and other tokens through airdrops, claims, and player rake returns. Additionally, they will receive future fees generated by ParagonsDAO’s products. Currently, stakers are subsidized by 30% of $PRIME from caching events according to existing tokenomics.
Recently, the Treasury Council temporarily increased this subsidy to cover the last two months. The proposed charts align with anticipated player returns in the staking pool, factoring in reduced reliance on the subsidized $PRIME supply.
New tokenomics if accepted via vote can be implemented immediately, we have currently explored options with [Aera.Finance](https://www.aera.finance/) which is a product built by Gauntlet to better manage our Uni V3 positions. The Treasury will explore further automations of the strategies and disbursements.
# Copyright Waiver
Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).
[Link here to google docs and accurate table data.](https://docs.google.com/document/d/13L13j9Nun-AaWy1l68FfZyc8PfXYGibfKkmJZWXeOQg/edit?userstoinvite=flapjackson@paragonsdao.com&sharingaction=manageaccess&role=writer)
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### Author:  [@tricky](https://discuss.paragonsdao.com/u/tricky)
#### Post date: [May 7, 2024, 2:27pm UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/2 "2024-05-07T14:27:41Z")
This PDIP good PDIP. Send it
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### Author:  [@Jcrew](https://discuss.paragonsdao.com/u/Jcrew)
#### Post date: [May 7, 2024, 2:45pm UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/3 "2024-05-07T14:45:13Z")
Great proposal. Codename: Valhalla?
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### Author:  [@Rhagga](https://discuss.paragonsdao.com/u/Rhagga)
#### Post date: [May 7, 2024, 2:48pm UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/4 "2024-05-07T14:48:15Z")
“The proposal addresses community concerns transparently and effectively, ensuring no detriment to any party (“no Peter and Paul scenario”). It focuses on creating sustainable, measurable strategies for managing treasury capital and distributing earnings equitably among stakeholders.”
Ship it!
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### Author:  [@alewt](https://discuss.paragonsdao.com/u/alewt)
#### Post date: [May 7, 2024, 10:22pm UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/5 "2024-05-07T22:22:22Z")
where does this leave the possibility of farming $PROMPT with the treasury $PRIME?
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### Author:  [@DeFi\_Ted](https://discuss.paragonsdao.com/u/DeFi_Ted)
#### Post date: [May 7, 2024, 11:42pm UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/6 "2024-05-07T23:42:03Z")
PROMPT farming is still YTD given we have very little to go off on forecasting.
PRIME in the Treasury has been ring fenced for this purpose and the Treasury Council will develop that strategy and announce for public review once more information is available.
You can consider that any other tokens to be allocated such as PROMPT and other gaming ecos we have exposure to are not captured here as well and open for speculation.
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### Author:  [@flapjackson1](https://discuss.paragonsdao.com/u/flapjackson1)
#### Post date: [May 10, 2024, 7:41pm UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/7 "2024-05-10T19:41:22Z")
I love the concepts.
Also shared in previous discussions on this, but sharing here for transparency - my only hesitance (for stage 2, in about 12 months if all a success) is that implementing redemptions on a multi-chain, active treasury seems like a monumental task if we choose to do it. But perhaps there are ways to simplify (e.g. you can redeem the ETH value of your share, on 1 chain, redemptions limited to x amount per week, processed on 1 week delay etc etc)
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### Author:  [@DeFi\_Ted](https://discuss.paragonsdao.com/u/DeFi_Ted)
#### Post date: [May 11, 2024, 12:22am UTC](https://discuss.paragonsdao.com/t/pdip-19-changes-to-the-tokenomics-of-pdt/248/8 "2024-05-11T00:22:10Z")
I answered this question also in the discord and sharing here cause I think it goes a long way to how redemptions can work in the future.
> The reasoning behind this is to allow data to present itself that becomes useful as well, we have a lot of unknowns right now if this is implemented.
> Redemptions are important imo however how they happen can differ, I expect that we will be able to have redemptions setup as a queue with a pool of funds being generated from the buyback scheme allocated to redeems.
> There is an expectation that fees from liquidity provisions can support redemptions and buybacks in time.