There are a couple obstacles to Paladin of Atonement being usable in modern. The first is that it's sloooow. It needs to trigger two or three times to be worth its mana cost, which, without a dedicated life loss outlet, requires multiple discrete life loss events. This makes it downright glacial compared to the likes of Gurmag Angler and the other secondary threats that accompany Death's Shadow while also being vulnerable to all of the format's most popular removal spells.
The second problem is that the sacrifice ability, the paladin's other big draw, is utterly at odds with what DS decks try to do, unless it's being used to nuke Bridge from Below. See, the vampire life loss mechanics in Ixalan block were designed so that life could be gained back via the various lifegain effects and lifelink that the vampires had. In contrast, DS decks try to maintain their life totals at low levels to leverage their signature creature to the maximum extent possible. In such a deck, the sacrifice ability would be an "oops" button in situation where either a loss is imminent anyways, disruption would be preferable, or the DS would be better off pushing for a win.
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The second problem is that the sacrifice ability, the paladin's other big draw, is utterly at odds with what DS decks try to do, unless it's being used to nuke Bridge from Below. See, the vampire life loss mechanics in Ixalan block were designed so that life could be gained back via the various lifegain effects and lifelink that the vampires had. In contrast, DS decks try to maintain their life totals at low levels to leverage their signature creature to the maximum extent possible. In such a deck, the sacrifice ability would be an "oops" button in situation where either a loss is imminent anyways, disruption would be preferable, or the DS would be better off pushing for a win.