One of the flagship features of Pylon Gateway is the “lossless” Pylon Pool, where users can stake UST in return for project tokens, with the projects receiving a portion of the yield and 20% of the yields contribute to value accrual for MINE stakers via buybacks.
Pylon Pool being the flagship and the backbone of the Pylon Protocol, one of the most significant costs of participating in lossless Pylon Pool was the lockup period of UST, and the lack of liquidity derived from such lockup.
Tokenized Pylon Pool
In order to resolve such issue; I propose Pylon Pool to be tokenized, so that “Pylon Pool Tokens” would be given to the depositors of the Pylon Pools, representing the UST value that the depositor has contributed to the Pylon Pool. Upon maturation of the Pylon Pool, any holders of the Pylon Pool Tokens should be able to claim the deposited UST in accordance of the Token’s nominal UST value regardless to the original depositors. Simply to put, 1 Pylon Pool Token would represent 1 UST deposited to Pylon Pool
I propose starting with Nexus Pylon Pool as a test-bed, and consider the future Pylon Pools to adopt the similar methods
Pylon Pool Token Design
In order to serve it’s purpose effectively, Pylon Pool tokens should have the following features in their design
- Pylon Pool rewards to be distributed to Pylon Pool Token Holders
- Pylon Pool Token to be able to receive message from anyone to claim the rewards that it’s entitled
- Claim rewards are only to be distributed to Pylon Pool Token holders regardless to the origin of the claim message
Nexus Protocol’s nAsset design could be a decent reference
Making Pylon Pool Liquid
With Pylon Pool being tokenized, now the depositors are free to send/receive or to trade Pylon Pool Tokens. In order to provide more readily available liquidity in the market, AMM DEX may be utilized. Pylon Pool Token - Project token pair would be the most efficient method to provide the liquidity, since the design of the Pylon Pool Token allows the Pool’s rewards to be claimed by Liquidity Pools, meaning that the liquidity providers would not have to bear the opportunity cost of forfeiting the yield.
Why would anyone provide liquidity to Pylon Pool Token - Project Token pair?
Pylon Pool’s beneficiary would have the primary interest to contribute to the liquidity pool as Pylon Pool with liquidity would inevitably be more attractive for the Pylon Pool participants. Thus my expectation is that the Project teams would be one of the first to contribute to the liquidity pool.
Also, Pylon Pool Token - Project Token pair could be more attractive farming alternative to Project Token - UST pair in longer term, as you would be yielding on the UST side for the Pylon Pool Token pair. (especially with the trend of Protocol Owned Liquidity emerging leading to decreasing opportunity for LP farming incentives.)
For project teams, liquid Pylon Pools may accrue more UST deposits, allowing more users to jump in without fretting about long lockup durations. For Pylon Pool participants, this upgrade means now users will now be able to freely exit the pools before the vesting period finishes. For Pylon Protocol, more active participation and utilization of Pylon Pools will improve and strengthen the value accrual of the protocol and MINE tokens.