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.