Establishing the Pylon Treasury

[ed.pylon]

Problem: Many of Pylon’s ambitious long-term goals will require capital to launch (e.g., real-world partnerships, marketing, integrations, etc.). The current Pylon model redirects all fees to MINE buybacks for governance holders. We think there are better ways to use these funds.

The Pylon Treasury

To make a sustainable protocol with a sustainable token ecosystem that scales with the growth of our protocol, Pylon must build out a robust treasury so as to capture more value over time. Several amazing ideas have popped up on the Pylon forum that have captured the attention and imagination of the community (here and here), including but not limited to the following:

1. Creating new, ongoing streams of sustainable revenue
2. Moving from a rented liquidity model to a protocol-owned liquidity model
3. Building a DAO-operated fund to invest in IDOs (or treasury swaps)
4. Funding ongoing or one-off Pylon expenses, such as CEX listing fees and real-world partnership incentive programs

In addition, the Pylon Treasury will serve to provide intrinsic value to the $MINE token as, at any time, a vote can be proposed to distribute funds from the treasury to governance holders. The below proposal is a 2-step plan to develop this treasury…

A. Redirect all fees into a DAO-owned Pylon Treasury for Y (TBD) years.

Currently, 100% of fees are used to buyback MINE to distribute back to governance stakers. To date, we have distributed over 7.3M MINE tokens.

Instead of using generated yields to solely buy back tokens at market prices, we want to redirect them into a new multi-sig wallet that will be governed by MINE holders. Governed by MINE stakers, this treasury can be flexibly used for the following use cases:

• MINE buybacks (to be distributed to governance stakers, burned in a cold wallet, and/or sent to the community fund)
• Adding protocol-owned liquidity to the MINE-UST pool (where the MINE rewards generated from the LP can further bolster the Pylon treasury)

Given that MINE stakers will no longer receive regular distributions of MINE rewards via buybacks, we propose to:

B. Redirect all LUNA staking airdrops to a DAO-owned Rewards Vault governed by MINE stakers.

According to a recent analysis published by Flipside Crypto, airdrops for LUNA stakers on Terra aren’t necessarily bringing in new long-terms holders and users that are in line with our ecosystem’s growth, but rather generates a sustained selling pressure and inflation to the MINE token.

Pylon has already distributed its genesis token airdrop to LUNA stakers (500M MINE tokens) in addition to the current emission of 1B MINE tokens (over two years that are distributed in weekly airdrops to LUNA stakers).

Given that we’ve already provided enough homage to the mother coin of the Terra ecosystem, we believe that weekly airdrops to LUNA stakers have now outlived their purpose and should be used to incentivize active MINE holders instead.

Currently, the plan is to move 80% of to-be-airdropped MINE (from the time of the time of the proposal passing) into a Rewards Vault to be controlled by Pylon community governance… At current prices, this represents ~$X0M UST (X MINE). The first proposal for this vault will be to set a current rate for participating in MINE staking. For example, at a 20% rate and with 300M MINE staked, we could draw 60M MINE per year from the Rewards Vault. At this rate, the Rewards Vault would last Y (needs to be linked with fee redirection) years.

[rockygce]

Most important thing current now should be on how you can add value to the mine stakers in the short term … adding version of swaps or others form of launch ido specific to mine stakers that should be the priority first …

[roomservice]

Great proposal, as MINE stakeholder myself, I would love to support both changes.

I would like to throw in another aspect which B. will improve:
Looking at Pylon Telegram, I stopped counting people arguing that staked MINE doesn’t increase. Of course it does every few days with token buybacks right now but it’s not obvious for average DEFI user.

Could the staking contract be improved where the redirected linear MINE emission to MINE stakers will auto-compound like aUST on Anchor pretty much every block?

[bettercio]

Ed, This proposal is terrific. I really like it.

there are three ways in which your new proposal is superior to the one that our community group authored:

1. It eliminates a greater quantity of $mine emissions/inflation overall than our earlier proposal did (yes!);

2. It provides a mechanism to continuously replenish the new Pylon Treasury with all of the fees being redirected into the Treasury, and, this gives us optionality to continue investing IDOs if we have good deal flow or (if / when the community wants to do so) to pay special dividends to loyal $mine stakers;

3. It leaves the LP program intact until such time as we can obtain a CEX listing for $mine, and, as we are seeing in subtle ways through this community discussion, this also turns out to be the most valuable means by which the $mine community can pay our deep respects and loyalty to the core $Lunatic community through contributing to $UST demand in the LPs;

In light of the superior nature of your proposal in creating both immediate and long-term value for our loyal $mine stakers, and a better alignment with core $Lunatic community, I will discuss with the community group that authored the other proposal and advise against submission to governance as it becomes redundant and no longer necessary at all.

Let’s get your proposal passed, not a moment to lose, $Mine is now down to $0.075 today.

PS - One point of feedback: it seems necessary to have funds in the Treasury asap so that we can participate in Treasury Swap IDOs, and I don’t see this provision in your proposal? For example, I am in discussions with founders of a protocol that is a big community favorite, and we have a path to having Pylon take down ~1/2 of their seed round alongside private investors pari passu, and this could happen very quickly following establishment of our new Treasury. However, we’d need to have ~ $3m in the Treasury to get this 1st Treasury Swap done!

Thus, can you pls think through how to get the Treasury funded w/ initial balance of UST $3m (or preferably $9-12m creating capacity to do 3-4 of these deals over next 60 days), and we can bring this 1st Treasury Swap proposal to governance ASAP?

It is a hot deal and loyal $mine stakers would be celebrating to see it come to governance!

[semgmp]

One good thing will be for the Treasury fund to maybe buy the token from new projects with the fund and distribute it to Mine stakers, this will make long terms investors stay for a very long time.

[ed.pylon]

I don’t think we’re going to be able to distribute enough tokens to MINE stakers to make it worth it (there are too many MINE stakers and probably not enough of the IDO token)… We can, however, potentially hold it in the treasury and use it to foster more intrinsic value for the $MINE token.

[SimonSez]

Seconded. I particularly like the last part about the analysis from Flipside Crypto. Airdrops are a double edged sword. You are absolutely right that the weekly airdrops to LUNA stakers should be stopped, Pylon has given enough there.

We need to lower emissions and selling pressure. I propose to not only redirect airdrops to LUNA stakers to MINE holders/treasury but lower LP reward incentives as well.

[novoky]

both A and B is viable.
Perhaps use Apollo as an example - take the LP rewards from compounding and direct it into the treasury.

HOWEVER before all this, simpler thing to do is to increase MINE’s intrinsic value, meaning - a - deliver on deadlines, b - respond effectively on telegram and other channels, c - regulate airdrops, staking rewards carefully, d - and finally REWARD stakers!

Getting a-b-c-d done will resolve most of these issues on its own. If you have a project that is keeping its community happy, then asking for a fund, warchest, treasury whatever it is will be immensely easy. Just Look at SFUND or ByBIT and their launches, staking rewards etc. !

[psychoet]

It is really hard to satisfy all stake holders in this game. But personally I would not prefer to do any harm on Luna system, which is the basis of all Terra eco-system. Remember this: Pylon can only exist and became popular because of Terra protocol. If Terra protocol becomes less attractive in the crypto market, no matter how great innovation it brings, then Pylon would be withering together.
What I want to say is that the proposal should be beneficial to both Terra AND Pylon protocol, or at least not doing harm on Terra as the first principal.

[psychoet]

Another point I want to mention is that:
(TL;DR) it is important to make the governance system critical on any decision made inside the protocol. If there is no value on the governance, then there is no single reason that the governance token should be in a high value/price. And to achieve this, it is necessary to endure the pain for some time, keep the trust, and discuss for better future continuously, until the governance system gains some power on the protocol itself. For now, I think $MINE token is literally a ‘token’ of promise between dev teams and investor. And Staking it now means more like a vesting, so it seems very natural to lock those tokens for a certain period, e.g. until a certain reasonable milestone is reached, if and only if such milestone is provided. And governance system can be used as a lock-up/vesting tool (something like a Pylon pool inside the Pylon protocol).

(The intention of this long comment is just to explain why current Pylon governance token price is decreasing in these days. There is no intention/purpose to blame any blockchain protocols or its dev teams.)
Currently, as far as I know, most of DeFi system depends on worthless ‘rewards’ system, which is only good for short term holders/traders. It might be a good strategy to seduce many speculators or investors in a short time at the beginning, while the system will collapse since those rewards are meaningless/worthless.
Membership concept might be useful to overcome this issue, to enhance the intrinsic value of those “rewards,” however I think this concept only goes well with whales or other institutional investors.

Why do we need “$MINE” token in the launch pad for the first place? For DAO governance? Or just to sell it in a higher price?
If original intention is to make the Pylon protocol in a DAO form, then $MINE token is not necessarily in a high price now since there is no well-established governance system in the Pylon. It is even natural to have lower price once the initial heat is gone. How can we expect high value on the governance token on the system if there is no governance built yet?

Some may say about TVL as a measure that reflects potential value of a blockchain protocol, but it is still only potential. Moreover, if ‘governance’ has no impact on the protocol itself, then that token is just invalid one.

[CryptoCheckMate]

I would appreciate if Pylon team can bring these idea to life with quick turn around
so that community can contribute with more enthusiasm.

Cheers!!

[Rrrah]

Hi, what about all the investment that Pylon is doing in Terra projects?
Is not a secret that Pylon participates as an investor in Seed and Private rounds of projects before they go live on Pylon.
If we are talking about being a DAO, we should start talking to decentralize everything.

[Woody]

Hey Ed,

Love the proposal, it captures and succinctly directs the discussion in this forum.

The one question I have is in regards to section A. Could we just directly add UST to the treasury instead of buying MINE with the UST and then providing that to the treasury? This way we have more flexibility with the potential community fund.

Beyond the one question, I am fully behind this proposal and would be very keen to have it go through as soon as possible.

[psychoet]

After seeing my comment, I feel like the comments might seem a bit not misaligned to the original post.
So I would like to make more aligned version of my previous comments:

• A: I basically agree with an idea of building treasury for Pylon DAO, but it is not the most critical thing as of now. More important thing is to build a confident/clear governance system properly at the first place. As a first step, the founder/dev teams can show how much influence they have on governance poll. If they have too much power in governance, then they can lock their partial or all asset for some period, e.g. 4 years until final token distribution milestone is reached, so that $MINE staker can be confident that the governance system cannot be controlled by dev teams or founders. After building such clear and confident governance system, we can go forward to have treasury and further. I already made a post regarding this (LINK), so please take a look if interested.
  With the treasury, I would like to propose buy $ANC and $LUNA since both are necessary conditions that allows current Pylon protocol to survive/get profit. There are several advantages for having some stakes on those protocols:

1. Pylon governance should have some power to protect its own profit from any policy changes made by the governance of those protocols.
2. We can use those staking profit for additional airdrop or for buying more treasury based on governance agreement.
3. It can increase the bond/link/dependency among the protocols, which will increase the level/complexity of decentralization.
4. Slight buying pressure on $LUNA/$ANC
5. No need to mention, but anyway it can also diversify the portfolio of Pylon treasury.

• B: Let’s assume that we have made a poll on Terra Station if it is reasonable and okay to reduce 80% of airdropped $MINE. As a $LUNA staker, one would vote to “No (with veto)” probably to protect his/her own rights or not to lower financial expectation on $LUNA token. Some very considerable one who cares Pylon Protocol might vote “yes”, but I don’t think it would be dominant to make the poll passed. The most desirable way to do this is to buy and stake huge amount of $LUNA with Pylon DAO treasury, if passed by Pylon governance, then use that amount of influence to reduce the amount of airdropped $MINE.

[blackbird]

I believe the buyback works and will work exremely well. i expect till 1mnust per week buyback going further. It is enormous.
I like a lot also your idea but my opinion is that pylon is not built for that and we need a coherent development. The project for governing a threasury since inception is apollo which has the gov token studied for that, the apollo safe, the lp approach and many other features.
i am a believer of pylon success (not only pylon…) and i think we are overlooking how gateway can provide with 300mn ust locked a terrific return and a base for further development.
Yeld redirection is still not properly used and staker airdrops have still to come. The project at current evaluation is a sleeping giant.

[ed.pylon]

100%. The proposal is to use $MINE to distribute to governance stakers instead of using $UST to buyback of $MINE. That $UST will then go into the treasury that we can use however the DAO sees fit… Whether that’s just putting it in Anchor for 20% rewards or participating in IDOs, it will be left up to the community to decide!

[ed.pylon]

So I think the difference is just whether we’re investing for the future or trying to pump the price in the short-term. Generally, companies do buybacks if they don’t have good uses for the money, but we have a huge list of things we’d love to fund… If we can set up a large enough treasury, then we’ll be able to run exciting initiatives (e.g., sponsor hackathons for $MINE, run marketing campaigns, pay for partnerships, hire moderators, etc.)!

[CryptoPanda]

support this proposal! Please start voting as soon as possible！I can not wait any more

[sudas]

I agree with you. Pylon swap for governance mine stakers should be the first priority.

[blackbird]

After having read many posts I like the treasury idea. I would like to make sure that:

• we have a multisig wallet like apollo safe (btw: will be open sourced …)
• the ideas of adding to the mine ust pool are discussed before proceeding as there could be better capital allocation
• we consider to make a pre offer to projects where pylon can act as a VC (the proposal you did to sayve could be a template). This cut out bots and is a great advantage for stakers.