[Proposal] 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.

8 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.

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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).

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this seems to be a good idea

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

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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.

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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!

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Pushing this up the list again - hopefully the team sees it?!
@admins how can we get this up for a vote?

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While I also believe that this is a good idea, I think we need to have a talk with the tech-team too.
To ensure that this proposal is even remotely possible.

@ed.pylon is this something you can facilitate or outright tell us now whether it will or won’t work.

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Any word from the devs on this?

@ed.pylon let us know!

Just let you know, the team has been contacted directly. They’re extremely busy atm so it might take some time.

It has been two weeks - with many other proposals actually going to a governance vote - can we push this to a vote before the end of the year? Every day we don’t do this, stakers lose out on potential gains.

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Woojin have discussed it on the AMA he had,
it can be done thoeretically, but the idea of the pool is to allow vesting same as any other presale\seed sale. it more depends on the project itself to allow it then for pylon to execute it. so making it a neccesity is probably unrealistic and not beneficial for pylon.

my personal opinion -
It can be seen as unfair, as the tokens shouldnt be out in the market so they shouldnt have governance power/staking rewards. same as for presale investors\seed sale that usally cant stake their token until the vesting time is over.

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The fact of the matter is that the way it is currently set up is not the structure typical presale investors are offered. I have been offered VC / seed angel type allocation with a lockup, and without even a single exception these allocations have always been subject to staking rewards (without voting power) during the lock up period.

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Just note that: here we are going through a pool. The presence of not of staking rewards is reflected in the UST locked in the pool. If staking rewards would come (which I consider a mistake for the same reason of the post above from @quasy ) simply more UST would join the pool with a correspondent lesser distro of tokens. Note that governance can also stop staking rewards: this would create potential unfair conditions for pool partecipants.

I havnt encounterd the terms you are discribing here on the terra eco at all. you are welcome to share it (ofc you dont have to, and probably cant) here\DM me in tg i would like to see those proposals and might change my opinion if that is the case.

to add to @blackbird answer, the main reason this isn’t implemented is because it is not in the power of pylon but in the power of the respective project to decide it. this will dilute the rewards for their active users who already using the project and probably will hurt their project credability and “fairness”.
If a project agree’s to it in the launch disscusion then it can be done. I really doubt any project will agree to this (without decreasing allocation to the pool/other stuff), to make it a mandatory is not something profitable for us the community cause project will just go to other places.

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Personally, I haven’t known of a seed round to include staking rewards. Seems strange. If it is a common thing, it would be good to know. Are you able to share some of the projects doing it?

This is def a good idea, i have been asking questions around this on telegram for a while now