Auto staking for pool rewards

Why

Many of the tokens launched via the Pylon Pools have highly inflationary tokenomics. Since token rewards are locked for 1-12+ months, these tokens lose the majority of their value over this period, unless they compound through staking or LP incentives. For example, Valkyrie Protocol’s staking reward is 232.82% APR right now. For a 12 month lock period, this means you end up losing the majority of the token value (considering APR to APY metrics and daily compounding). This is a really shitty proposition for an investor, and personally, makes me regret entering the Pools in the first place.

How to fix this

Enter any distributed tokens into the respective protocol’s governance staking programme, where they can compound rewards. When the tokens are unlocked, users can choose to withdraw them from the respective governance protocol’s, or continue compounding rewards.

Bonus points if we can make this happen

Offering users the options to add UST to their compounding Pylon Pool, and switch to LP provision via the protocol, would be great, since often much higher APR is offered for liquidity provision. For example, PSI (Nexus) offers 7.6% for governance staking and 397% for LP provision. Doing this benefits users, and the protocol, since it will increase liquidity in a way which is locked for a certain amount of time.

If we don’t do this, I’m afraid we’ll piss off many of the early supporters of the protocol, since the value of our rewards has been eroding rapidly, especially in the case of Valkyrie.

5 Likes

Love the idea, definitely think utilising projects governance rewards is beneficial. Not sure how feasible this is to implement though. Are you thinking the users will be able to vote in the project’s governance or just collect APY?

With that said, I saw this thread the other day https://twitter.com/SmartStake/status/1459375190484393986?s=20. Looks like people in the Terra ecosystem are now beginning to understand the drawback of these high inflationary tokenomics, hopefully projects take note of this issue.

2 Likes

I think it’s ok if Pylon Pool investors just collect APY from staking (and if possible, are able to opt for LP instead by adding more liquidity), and until the tokens are unlocked and people claim the tokens into their own wallets for self management, they don’t need to be able to use them for voting.

And, although this is mainly necessary in the case of highly inflationary tokens such as Valkyrie, it also makes a difference on less inflationary tokens which only offer a modest APY - since every % counts, especially in the case of stablecoin yield ($UST which is inserted into the Pylon Pools).

this seems to be a good idea

1 Like

Is there any way to put this up for governance vote?

I think auto-gov staking is a good plan. I don’t think auto-LPing is a good idea, that is complex and can incur losses for new investors who just see the big APYs. So I’d vote yes without the bonus provision. Also no gov voting power until the tokens actually vest.

1 Like

I would also add to this that it mirrors compensation models for many core teams and investors in this space, where tokens subject to a vesting schedule are counted as being in a governance staking pool - accruing rewards without having governance power - until the moment of release.

This is not something novel, it is something reasonable and fair.

LOVE this idea.

As long as the high inflation policies remain, investors in Pylon pools need to be able to add the tokens they’ve won to the LPs so that they can be protected from the inflation.

+1 to put this up for vote!

1 Like