PIP-125: Signaling Vote to Set Paloma PUSD Redemption to USDT to a $500,000 Minimum

Governance
1

Proposal: PIP-125: Signaling Vote to Set Paloma PUSD Redemption to USDT to a $500,000 Minimum

Status: Proposed

Author(s): BoweryKing

Type: PalomaUSD Redemption Proposal

Discussions-to: Governance - Paloma

Created: 02/14/2025

Simple Summary

This is a signaling vote to the Paloma Foundation to implement a redemption minimum for PalomaUSD to its backed-asset Tether’s USDT. The Paloma Foundation asks the Paloma Community to vote to approve to set the redemption rate of PUSD to its backing token, USDT at $500,000 minimum. This vote will set the minimum needed to redeem PUSD to the underlying and backed asset, USDT.

Abstract

The Paloma protocol has launched a native stablecoin, PalomaUSD, that is backed by Tether USDT deployed on the supported Paloma target chains. Anyone can mint PUSD by connecting to Paloma’s PUSD manager and locking USDT on any Paloma supported target chain. PalomaUSD exists both on Paloma and can be bridged to any supported target chain via Paloma’s Skyway bridge.

When users wish to exit PalomaUSD, they will need to redeem (burn) their PUSD on a Paloma supported EVM chain for USDT. Given that Paloma cannot force or restrict users to redeem their PUSD for USDT on any particular chain, it is possible that PUSD redemptions to USDT can exhaust locked USDT balances on a particular chain. To manage redemptions, the Paloma Foundation proposes setting an initial minimal redemption requirement for PUSD to USDT. Any PUSD holder who wishes to redeem their PUSD for USDT on an EVM target chain, must redeem at minimum the redemption minimum. Users who do not wish to redeem the minimum amount may swap PUSD on any DEX that has PUSD pools.

This is a signaling vote to the Paloma Foundation to implement a redemption minimum for PalomaUSD (PUSD) to its backed-asset Tether’s USDT. The Paloma Foundation asks the Paloma Community to vote to approve to setting the redemption rate of PUSD to its backing token, USDT at $500,000 minimum. This vote will direct the Paloma Foundation set the minimum needed to redeem PUSD to the underlying and backed asset, USDT. This signaling vote will not affect the ability for users to swap PUSD for any other stable, including USDT.

Motivation

Launching PalomaUSD on Paloma requires that PUSD to USDT redemptions be orderly and managed as Paloma’s developers continue to improve the native, protocol-based stablecoin. An initial launch redemption limit will help support PUSD and allow Paloma to grow the stablecoin ecosystem. In the future, the community can submit another vote to upgrade the PUSD to USDT redemption rate to allow for a lower minimum for redemptions. Currently redemption requirements are set by many stablecoins. Tehter requires KYC / AML and a minimum of $100,00 to redeem USDT for fiat dollars into a bank account.

The Paloma Foundation also desires to encourage stablecoin trading between PUSD and other established stables. Maintaining the high redemption rate will allow users and arbitragers to establish trading pools with PUSD and other stables. The confidence of PUSD will be reflected in its maintained dollar peg in stable pools launched with PUSD. It will be the Paloma Foundation’s motivation to communicate the backing reserves of PUSD publicly.

Technical Specification

The PUSD Manager contract is a Cosmwasm and Vyper contract that manages the minting and redemption between PUSD and USDT.

  • Cosmwasm PalomaUSD Manager: The CW PUSD Manager CosmWasm smart contract provides functionalities to manage PUSD tokens, including minting, burning, and transferring tokens. It is built using the CosmWasm framework. Features include:
    • Register Chain Register chain settings in hash map with chain_id as key
    • Mint Pusd Mint PUSD denom when user deposits USDT on EVM
    • Withdraw Put PUSD and send release USDT message on EVM chain
    • ReWithdraw Resend withdraw message in case the previous message failed
    • BurnPusd Burn PUSD denom when the release USDT message succeed
    • CancelWithdraw Cancel withdraw PUSD in case the previous message failed
    • UpdateConfig Update configs including retry_delay and owner
    • SetPaloma Set paloma address on EVM Vyper contract
    • UpdateCompass Update compass address on EVM Vyper contract
    • UpdateRefundWallet Update refund wallet address on EVM Vyper contract
    • Contract Deployed at: Address paloma19nr...c3xy Details - Paloma (GRAIN) Blockchain Explorer
  • Vyper PalomaUSD Manager: The pUSD Manager Vyper is a smart contract system implemented in Vyper for managing pUSD, a stablecoin in the VolumeFi ecosystem. This contract facilitates the minting, burning, and overall management of pUSD tokens, ensuring stability and security within the decentralized finance (DeFi) space. It is built for the EVM using Vyperlang.

The Signaling Vote Proposal: Pip-125.json

{
    "title": "PIP-125: Paloma Foundation to to set the redemption rate of PUSD to its backing token, USDT at $500,000 minimum",
    "summary": "This is a signaling vote to the Paloma Foundation to implement a redemption minimum for PalomaUSD to its backed-asset Tether’s USDT",
    "type": "Text",
    "deposit": "10000000ugrain",
    "metadata": "ipfs://QmY5NCJh1pccZubuwz5yf23nenerBo8HouABPabZorSqm3"
}

The Signaling Vote Metadata: Pip-125_metadata.json

{
    "title": "PIP-125: Signaling Vote to Set Paloma PUSD Redemption to USDT to a $500,000 Minimum",
    "authors": [
     "BoweryKing"
    ],
    "summary": "This is a signaling vote to the Paloma Foundation to launch the Paloma GRAIN token on the Ethereum Blockchain as a Uniswap v2 or Raydium Memecoin with 1,288,000,000Billion Grains from the Paloma Foundation Eco system Funds. We also signal the Paloma Foundation to launch the Uniswap v2 (WETH/GRAIN) pool or a Solana Raydium (SOL/GRAIN) pool as a memecoin with at least 10ETH or 150 SOL of liquidity and deploy the pool with a price per token proposed 0.000000020186335403 ETH and an initial pool launch Market CAP of 130 ETH or 1,877 SOL
",
    "proposal_forum_url": "https://forum.palomachain.com/c/governance/6",
    "vote_option_context": "Vote YES to support the vote to signal the redemption minimum of PUSD to USDT as $500,000"
}

The Signaling Vote CLI Command

palomad tx gov submit proposal
–gas auto
–node=https://rpc-1.paloma.nodes.guru/
–chain-id tumbler
–from
-y

How to Vote on Proposals 182

**Paloma Client:**
palomad tx gov vote 182 yes \
--chain-id tumbler \
--from <Your Paloma Address> \
--node <Your node> \
-y

**Paloma LightNode Users of V2 Only:**
1. Windows
docker run --rm --pull=always -ti -v $env:USERPROFILE\paloma-lightnode\.paloma:/root/.paloma palomachain/lightnode-client:v2 vote-proposal 182 yes

1. Mac, Linux & VPS
sh $HOME/Downloads/setup.sh vote-proposal 181 yes

Rationals

The Paloma Foundation desires to encourage stablecoin trading between PUSD and other established stables on Paloma’s Got Talent AI token launcher. PUSD is a new stablecoin. Maintaining a high redemption rate, at launch, will allow users and arbitragers to establish trading pools with PUSD and other stables. The confidence of PUSD will be reflected in its maintained dollar peg in stable pools launched with PUSD. It will be the Paloma Foundation’s motivation to communicate the backing reserves of PUSD publicly.

Paloma wants to be the fastest relay chain in the world with the most decentralized network of validators that can attest to any transaction with the fastest possible execution. Paloma aims to make it easy for developers to control smart contracts on any Solana, Ethereum L1, L2, and L3 chain.

To learn more about Paloma, please visit https://palomachain.com

To follow the project on Github, please star the project GitHub - palomachain/paloma: The fast blockchain messenger protocol

To participate in the community, please join the Paloma Discord: Paloma