Lowering $mine emissions to end downward pressure on value and harm to $mine governance stakers

TLDR; This proposal reduces $mine emissions to 10% p.a. and redirects these emissions 50% to $mine governance staker wallets and 50% to a new Pylon Treasury.

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As of today on Apollo DAO there is $32m TVL locked in the $mine-$UST LP yielding 118.7% APY.

In order to pay-out this APY our community must issue USD $40m worth of $mine token inflation p.a., which translates into ~400m new $mine tokens p.a. assuming $0.10 per token.

With a circulating supply of ~600m $mine tokens today, if we had to issue 400m new tokens in the next year, this would be a 67% rate of inflation p.a…

This high rate of inflation for Pylon protocol is misdirected and does nothing to add value to $mine stakers who are here to participate in IDOs. Also it can contribute to a farm-and-dump mentality for some ecosystem participants which puts a negative drag on value of $mine token price.

Also, this high rate of inflation is disproportionately harming the value for $mine governance stakers, who are unable to enjoy the high LP yields on Apollo DAO for fear of unstaking and losing access to IDOs.

To fix the misalignment of interests that harms the $mine token price and the core $mine governance staking community, we propose the following resolutions:

  1. As a community we move to cap the annual inflation rate of the $mine token to 10% of the circulating supply p.a.

  2. As a community we move to direct 1/2 of $mine inflation emissions directly to $mine governance staker wallets pro rata to the proportion of $mine staked by each wallet relative to total $mine staked overall;

  3. As a community we move to direct the other 1/2 of $mine inflation emissions to a new Pylon Treasury for usages TBD by future vote of the community.

Before putting the proposal to community governance vote, I look forward to hearing feedback from the community and incorporating it into the proposal.

7 Likes

I’m definitely keen to reduce emissions, feels kinda crazy putting so much capital/tokenomics design into buying MINE back for gov stakers only to have just as much/more MINE being emitted elsewhere.

To confirm, would you be looking to reduce emissions from just the LP rewards, or also things like airdrops for LUNA stakers?

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Thanks, @Woody. That’s a good question.

There are certainly other proposals being discussed in the Pylon Forum involving ending $Luna airdrops and they are getting a lot of positive feedback.

When I drafted this proposal, I was thinking to keep it clean and simple so that it could get passed by governance easily, basically focussing on ending the worst source of inflation, i.e. the Apollo DAO $mine-$Luna LP inflation.

Does anyone know the current rate of airdrop inflation to $Luna stakers? Maybe @Ed or @Woojin can share information on this item? It would be interesting to compare the relative size of the Apollo DAO emissions to that of the $Luna airdrop emissions to know which one to prioritize and solve.

One topic we should discuss in context of potentially ending $Luna airdrops: As a $mine community, do we feel any sense of obligation to continue to show our gratefulness to the core $Luna community for establishing this L1 ecosystem that we live in, and to continue to be community-spirited with our airdrops to$Luna shakers?

Or have we paid enough to the $Luna community now, and our own Pylon project needs the resources to get back onto a strong track?

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hey:)
to say it have no value is ignoring the importance and cost of LP, i do agree that 110% is a bit high, it is finding this balance that we have a big enough LP pool and not too big and that’s done by playing around with APY and targeting the appropriate group of people who provide LP.
also LP mine are not part of the IDO/ lottery, which benefit MINE stakers.

i would also look at how to bring more utility to the MINE token, i think if we had a utility like Pancake swap where we can stake MINE to farm other projects and not just with UST , this would give the tokenomics a great boost!

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Thanks for clearing that up for me.

Yes, I think reducing the emissions from LP rewards is a good idea. With that in mind, I think it is fair to cut them back to what other projects currently offer. Looking at ANC and MIR a fair amount might be closer to %50 APY/APR.

There is already a thread here Establish a Treasury + Redirect MINE Airdrops for LUNA to MINE stakers on LUNA staker’s MINE airdrop redirection, I think it would be good to continue this part of the discussion in that thread.

Here are my thoughts on the redirected MINE.

If we have 50% of MINE redirected to MINE stakers from previous LP rewards, the current APY of 20% (which will potentially increase with more Pylon pools) for MINE stakers, and potentially more MINE redirected from Luna MINE airdrops, are we now giving too much APY MINE to governance stakers? I feel we might be better off adding more MINE to the treasury instead.

With this in mind, I thought one good use for the additional treasury MINE is to use of for “treasury swaps” with projects launching on Pylon. This could work well with more projects looking to create diverse and robust treasuries.

In essence we would give x amount of MINE to new projects which launch on Pylon for them to keep in their treasury and have it locked/vesting for y period of time. In return they also give us z amount of their tokens which we have locked/vesting for y period of time. This creates a decent amount skin in the game for both parties and also rewards MINE stakers (given we direct the project’s tokens to MINE governance stakers).

Hi @Hogsss! Fair point. For the time being, we do need the LP pool to maintain liquidity in and out of the protocol. In the proposal that goes to vote I’ll dial back to similar to ANC or MIR inflation, and we can revisit later.

Thinking medium to long term as a “greedy $mine token holder” here are two additional observations:

  1. we could also achieve liquidity for $mine token holders by getting a KuCoin listing,

  2. if we do an excellent job in defining Pylon tokenomics and positioning Pylon as the first-choice for any protocol founder who wishes to raise capital, and if we can invest in 50 new protocols over the next 5 years, then we will end up with a situation where the community of chads who are part of Pylon will be very proud of their membership, they will see their bags grow from $0.10 to $50 with the growth of our Pylon Treasury value, and they will want to stay involved as loyal and active community members for a very long time! This is how maximum success for Pylon protocol would be achieved!

If this situation of maximum success being reached, a lion’s share of tokens will be HODL’d, and HODL’ing $mine token would be like maintaining a precious membership, eg. AMEX Black Card or Star Alliance Gold Membership. In fact, there wouldn’t need to be a lot of trading or liquidity for the $mine token as most true, loyal members of the club would never want to sell at all. In this situation of maximum success being attained, if 1 individual seller of $mine does actually appear on the market then immediately 10x others would be in line to snap up the position & at premium pricing!

On the other hand, if we run a high inflation rate, have all of this farm and dump going on, continue to undermine the value of the long-term, loyal club members via unnecessary inflation and farm-and-dump activity … we are going to make it much more difficult or even impossible to ever achieve positive-value accrual tokenomics, and this will cause the entire community of smart chads whom we want to attract as members of the club to abandon the club, not to have pride in membership, not to HODL their $mine tokens, and the whole proposition of attracting all smartest chads into the $mine community with a long-term aligned structure to collaborate together in seeding future growth of the ecosystem is basically ruined, obliterated, trashed!!

Two questions for you:

  1. If we had a KuCoin listing, is there any point to maintaining LP Pools for liquidity over the next 2-3 years?

  2. If you strongly believe we should maintain an LP Pool, what level of your personal investment in $mine token could you personally tolerate being destroyed by inflation each year before you’d get fed up?

Looking forward to your feedback!

2 Likes

@Woody, Riffing on your ideas to get to a simple and community-acceptable proposal to curb $mine emissions, how about the following:

  • the community moves to eliminate 50% of $mine LP rewards
  • the community moves to redirect 50% of $Luna staker rewards to the new Pylon Treasury for purpose of establishing a Treasury Swaps program to buy IDO tokens on behalf of $Mine stakers
  • the community moves to redirect other 50% of $Luna staker rewards to wallets with a score of 10 or higher on Flipside Crypto wallet ratings

Does this pretty much get to the heart of it? Is anything being left out? Is there anything in this writing that would cause us to fail to reach widespread community support?

I’m not sure the idea of asking new project founders to lock-up their $mine would be “market acceptable” for most hot projects. Most project founders have a real and practical need to receive $UST or $USD in order to pay their employees & contractors.

I really like the name “Treasury Swaps” a lot, that is a good branding concept to build this mechanism around, will def include it in the next version that goes to vote :slight_smile:

Lets sleep on it another day or two, and see if any additional community feedback comes in, and then put it forward to governance vote

2 Likes

Sweet. Looks like it is coming together nicely.

  • One downside might be LP backlash. I assume a decent amount of LP are also closely following Pylon communication channels, so hopefully they see this proposal before it goes to a vote.

  • The only thing that wasn’t clear for me was what we would be doing with the 50% of MINE that was previously provided for LP rewards? I am inclined to think we give it to the treasury to do as pleased, that way the community can decide at the necessary time if we further use it for treasury swaps or give it back to MINE stakers.

But all in all I reckon you’ve definitely got to the heart of it. It does seem to bring together a lot of what has been discussed across different threads in this forum :wink:

I didn’t do a good job communicating the context in which I saw the treasury swap happening whereby both parties lock the tokens for x period of time.

The context for this was with projects looking to solely do Pylon pools or Pylon Scout. Currently, at best projects doing this have provided MINE stakers with an airdrop. This usually isn’t a huge amount of tokens. Alternatively, if we offer a treasury swap then we can ideally acquire a lot more tokens than we would have gotten via an airdrop. Given the projects will still have the Pylon pool or scout to raise funds, they won’t need to MINE as initial capital to run their project. Thus we can ask to have the MINE locked for x period of time. This seems like a win/win solution atm, especially with so many projects only doing pools or scout.

Ah. I got it. Ty. Yes the additional context brings the idea to life! Let me noodle on it!

Re LP backlash, yes that could surely happen, it could get interesting! You are right for sure! :slight_smile:

Imho we need to have that discussion and decide which set of voices within the Pylon community are the path to real riches for all of us! There is the voice of the ST thinkers who want a fast buck and will sneak off into the shadows once they make it, as they farm-and-dump all of us into the ground. Or, there is the voice of the chads who want to do IDOs and seed investing to build value together in the ecosystem over many years!

My personal opinion: TBH, I’d be happy to expel all of the ST farm-and-dumpers from the club altogether by cutting off the LP rewards more severely, there are plenty of other LPs they can go play around with these days, they don’t need to be here eroding the value of the LT thinkers who see the potential of this important new institution for the Pylon community, which can fund projects and create value for the Terra ecosystem and $mine token holders for many years to come if we get the alignment of interests optimized correctly to achieve this end!

Anyways, given we don’t have a Kucoin listing yet, and to be respectful of other community members who see some value in the LPs today, I am only suggesting we ask for a 50% reduction in the LP rewards at this time. So it is a bipartisan, watered-down, compromise proposal, designed to PASS, that at least gets us moving in the right direction quickly without wasted time!!

Yes, that sounds perfect!
So how do we write this into the proposal for the community to vote on?

How about the following draft language:

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  • the community moves to eliminate 50% of $mine LP rewards and to redirect the sum of 50% of the initial quantity of $mine [should we state the actual number of $mine here? what is the #?] that was provided for LP rewards into a new Pylon Treasury***
  • the community moves to redirect 50% of $Luna staker rewards into a new Pylon Treasury***
  • the community moves to redirect other 50% of $Luna staker rewards to wallets with a score of 10 or higher on Flipside Crypto wallet ratings

*** Note: Based on community discussions that are unfolding here in Pylon Forum, it seems quite likely that the new Pylon Treasury will be used for purpose of establishing a Treasury Swaps program to buy IDO tokens on behalf of $Mine stakers. Additional community work is necessary to define the mechanism of the Treasury Swaps and to pass a motion to enable the Treasury Swaps concept. For clarity, the present proposal does NOT authorize use of any of the funds in the new Pylon Treasury for any purpose, and an additional vote of governance shall be required to authorize use of these funds.

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That looks excellent. I really like the idea of deciding the functionality of the treasury on a different vote. Will make it easier to come to an agreement on this and wrestle through each problem properly. Only one question, what do you think about upping the Flipside Crypto rating? We could potentially make it 15-25.

It looks like Do Kwon is right behind you with the same ideas https://twitter.com/stablekwon/status/1460319258131382274?s=20. It looks like the Terra ecosystem might go the way of Flipside crypto ratings and reduced/no LP rewards. Seems more and more people are coming to the consensus it is doing harm to token value and communities.

So with this, I think we are in the perfect place to be the leading project in this move. Let’s lead the Terra ecosystem in the right direction.

1 Like

yes,we do need a change ,esp for those who staked mine for governance. there is little benefit for staking mine alone ,but too much mine emissions harm the stakers

Excellent! Yes I was just having a discussion about this with some other communities. If we HAVE to do airdrops, incentivize LP, give bigger allocations or give allocations to those with higher wallet ratings. This will incentivize people to hodl.