Transcript: Pylon Gateway Fund AMA

Pylon Protocol
Pylon Protocol

Finn 0:42
Hello and welcome to The Ether. Today is Sunday, December 19th 2021. This is the Pylon Gateway Fund AMA hosted by Papi and limowooj. limowooj? limowooj. That’s a dope name. Let’s take a listen.

Papi 1:00
Welcome, welcome.

Ed 1:01
Hey, Papi, how’s it going?

Papi 1:03
It’s going pretty well. Kind of exciting call. I read through that post. A lot of really cool stuff going on here. I don’t want to spoil it. So we’ll wait for Woojin to get into it.

Ed 1:15
Yeah, I saw Woojin just joined. Yeah, Woojin and the Community Council have been doing a phenomenal job coming up with some pretty awesome ideas, so super excited to kind of hear Woojin and folks talk about it.

limowooj 1:28
Yeah, hello guys, just logged in. How’s everyone doing?

Papi 1:32
Why don’t we… Yeah, why don’t we maybe just get into it? Or how many people we got here? Maybe give everyone another minute or so to join? Does everyone want to go share the Twitter Spaces post?

limowooj 1:45
Yeah, I think that sounds good. Just a couple more minutes, and then yeah, let’s get to it. So just to kind of preface the discussion. Yeah, we’ll be launching the governance poll after this AMA, and having a little bit more discussion about the parameters of the Treasury funds, and the Gateway Fund 1 idea. And so yeah, we’d love to open up a discussion and yeah, Papi’s great at hosting these AMAs, so looking forward to it.

Papi 2:11

Ed 2:12
Yeah, Papi is much better than the discussion I hosted with Do where he dunked on me a couple of days ago. [chuckle] So looking forward to a more friendly chat here.

Papi 2:22
It’s all good.

limowooj 2:23
Yeah, Papi, what’s new? How have you been? What have you been up to?

Papi 2:26
I’m working on a lot of things. In between TrackTerra, I’ve been building some interesting bots, trading different types of derivatives in the Terra ecosystem and other ecosystems, been studying up on CDP stablecoins, coming up with some ideas where maybe potentially Mirror could have its own stablecoin, backed by yield bearing assets similar to other CDP stablecoins. That’s essentially what an mAsset is. It’s like no different than any other CDP asset. So, yeah.

limowooj 3:03
Yeah, it’s pretty fascinating. Yeah. And like LUNA has been mooning today as well. So yeah, glad to see that movement.

Papi 3:10
I know. It’s very exciting. Next week should be interesting. The volume is going to be very thin. So it’s either gonna go way up, or we’re gonna go way down. Thanksgiving was brutal. They took advantage of that low volume.

limowooj 3:22
I think a good number of people have gathered. So yeah, we can kind of get kick started.

Papi 3:29
Why don’t you first give everyone an overview of this proposal and try to lay it out. And then we’ll go into the details, get some clarification, and then we’ll open it up to an AMA.

limowooj 3:40
Yeah, sounds good. And so to give a little bit more context of how this proposal ended up coming up… I ended up coming up with the proposal was, yeah, after reflecting on a number of different swaps and pools that happened on Gateway over the past couple of months, I thought this would be the direction… A better overarching direction for the protocol to head towards in the long run. And so I think, a first major pivot was an increased focus on building out a robust Treasury for a sustainable long term protocol, as opposed to simply liquidity renting and distributing LP incentives, right. And, secondly, I guess, spending yields accrued across all platforms solely on MINE buybacks, which, of course, it’s helpful to some extent, but in the long run, if that’s all of where the UST is going towards, it’s not a super sustainable model, especially if we have other interests that we want to align and other kinds of plays… Strategic plays that we want to do. So I think the first major proposal there that Ed brought up with kind of establishing the Pylon Treasury was kind of like a starting push in terms of this whole idea of, let’s focus more on the Treasury play, and on aggregating yields, in order to do so many more things as opposed to just simply focusing on pro-rata, per block token distribution, and simply on buybacks. And so, this proposal came out of a stage where we’re now even considering the collaboration with Olympus DAO. And that, I think proposal is like very close to or past quorum today. Yeah, it passed threshold. And so, even collaborating with Olympus Pro, and their DAO model in order to establish protocol owned liquidity, right. I think, taking more steps towards a Treasury building for the underlying protocol has made me think a little bit more about the shape of the platform, Pylon Gateway. And it’s kind of like, yeah, best direction as a launchpad.

limowooj 6:03
And so, part of that, comes with the idea to migrate this initial proposal of fixed swaps, to having more of a sustainable method of fundraising, that the protocol can value over time, instead of just like a one off event, right. And that’s the big issue with Pylon Swaps in the sense that, every time there is a new project that wants to launch, they have a limited, fixed allocation of tokens that they want to distribute, and add a fixed price. And given the abundance of new projects that are always coming on to Pylon Gateway, as the protocol continues to grow, despite the increased demand for new project tokens on the part of wider users. One issue is, they’re not being sufficient allocations, right, to meet that demand immediately, in these one-off situations, as opposed to… Sufficient supply on the part of the protocol, as opposed to having a more long term focus on building out a Treasury/fund, having users put in deposits that accrue yield over time. And that continues to build on itself, to be able to make more investments as more yields accrue. And so, yeah, kind of like making a core pivot towards a model that is a little bit more scalable over time, was the idea behind this proposal. And, yeah, you can take a look at the long forum posts that I made, as well as the Twitter thread, that’s pinned in my profile for a little bit more context on that, yeah. So yeah. Do you have any follow up questions?

Papi 7:53
Awesome. So yeah, why don’t we maybe break this down? So what does this look like from a protocol perspective? So like a prospective protocol wants to use Pylon to distribute tokens. They’re going to have to put up a governance proposal? And how does that process look?

limowooj 8:10
Yes, so right now, it’s completely via governance. And so… Even the GLOW pools that launched earlier today, they had to go through a governance vote on the Pylon Webapp. And so yeah, all of these new proposals, new projects that are hoping to launch on Gateway will, and via the method of these Treasury swaps, will, of course, have to go through the same process. But I guess, the main difference between this and like, Pylon Swaps is that we wouldn’t have to go on a per-case basis of like, MINE staking requirements, and, you know, sorting all of that out, as opposed to having one entrusted fund, right, in which in order to get in, you have to burn a certain amount of MINE that is proportional to the amount that you want to deposit. And then that kind of gets reinvested over time.

Papi 9:05
Okay, okay. All right. So, like, I’m a protocol, I want to distribute my tokens on Pylon. So I put up a governance proposal, it goes through, I give tokens to the Pylon Treasury? Is that the next step?

limowooj 9:18
Yeah, exactly. So it would be buying up those tokens I got at a fixed price of the Treasury, right. So the Treasury would make the swap at of fixed price. And then swap…

Papi 9:28
Okay, so the Treasury will buy those tokens from the protocol at a fixed price?

limowooj 9:33
Yeah, exactly.

Papi 9:34
Okay. And then, from the user perspective, is it going to be one token, or is it going to be multiple tokens as part of like this Pylon Pool where you earn a distribution of these tokens that are allocated to the Treasury? How does that work from a user perspective?

limowooj 9:54
Yeah, so as opposed to like the current Pools where it’s like, one Pool per token, right. The underlying Pylon Gateway Fund idea is a lot more scalable in the sense that it can accommodate a number of different projects, right, at the same time.

Papi 10:08
Okay, so from a user perspective, it’s going to be kind of like the liquid staking derivative like Psi, but it’s going to represent a share of multiple tokens.

limowooj 10:18
Yeah, exactly. But voted via MINE stakers, right. So…

Papi 10:23
Okay, and then how it’s gonna work from a user perspective… So then the yield from the initial deposit is then used to buy the project tokens from the Treasury at a discounted price, but higher than what the Treasury initially bought the tokens for, right?

limowooj 10:25
So in terms of the users, they would just… Because they initially contributed to the fund, right, they would just be receiving distributions of the tokens, so they’re not going to be re-buying it, right. It would just be that.

Papi 10:50
Okay, okay. I got ya. Interesting. Okay. So in this case, it’s not a lossless investment.

limowooj 10:58
It is, in the sense that, the underlying principle that you stake, you’re able to claim after… For instance, it’s like the vesting period. If the lockup period is 24 months, you’re able to claim that underlying UST by redeeming it with the DP token, that represents your share or stake in the pool. So yeah, it’s lossless in the sense of that the yields are reinvested. And yeah, kind of like yields grow from the Treasury, and contribute to that.

Papi 11:28
Okay, that makes a lot of sense. So you deposit your UST to put into Anchor, and then the Anchor yield is used in this Treasury to buy these tokens at a discount, and then you get part of those tokens, after the lockup period.

limowooj 11:40
Yeah, that’s like the simplest way to put it, in the sense that, yeah, it’s like a collective swap by the decentralized Pylon Gateway Community Fund, as opposed to these individual swaps, which are a lot more hard to predict, right. Because it’s per project, right. And yeah, I guess there are a couple of other issues, with first come first serve sniping, as well as kind of leaving the masses to play a zero sum game, to kind of fight for these IDO allocations with other community members, as opposed to there being one established body to deliver these community swaps. And yeah, the more people deposit and the more engagement and interest there is for this underlying fund, the capacity and the capital to reinvest or to do more swaps increases over time. So it’s kind of like a win-win for all parties involved.

Papi 11:40
Wow, very, very cool. Okay. So I don’t have any more questions. Ed, do you have any comments here?

limowooj 12:12
No, I think Woojin hit the nail on the head. I think what’s really exciting about this is, in theory, it’s more scalable. And it helps solve a lot of the problems that I think the community mentioned a few months ago with respect to Pylon Swaps. So in general, I think it’s a great move.

Papi 13:02
Awesome. Why don’t we open up the floor? So anyone who has questions, just request to be a speaker, we’ll bring you up here, you can ask your question. If you have multiple questions, we have time. That might be okay, so…

limowooj 13:14
Yeah. Oh wait, before we open the floor, there’s one last comment that I want to add as well, which is, this is kind of like the first iteration of a “fund/DAO”, that is fueled by Pylon Gateway. So currently, right now, as the current template allows, there are Pylon Pools, there are NFT raffles, and there have been Pylon Swaps and/or the scout model, which is being explored in light of the Prism launch, which has yet to happen, right. I think a cool opportunity this allows is, it opens up another alternative innovation for the site as a whole, which is… Yeah, the iterations of different funds and DAOs. So for instance, we can have a secondary Gateway Fund that does dollar cost averaging, and simply just buys up LUNA, or MINE, or ETFs on Nebula Protocol, right. And late stage projects can also launch growth rounds, as opposed to simply just focusing on very early stage projects, which would be kind of like the aim with the first gateway fund that we’re gonna establish, right. We can also see other kinds of DAOs that are emerging and this is kind of like my tweet with Esteban Midas. Yeah, we’re kind of ideating around creating a builders house/a developer ecosystem DAO, in order to fund developers to create tooling, documentation and educational tutorials in a way that is lossless and scalable over time, in the sense that, people who stake UST they receive the DP token that represents their stake in the DAO, and essentially their voting power/membership right within it. And because those DP tokens are liquid, I guess people can either, one, build more utility around it, like if you were to stake or burn that DP token, then there’s like X, Y, Z benefits, whether that be like, it’s redeemable for an NFT, or you can directly have a say in which kinds of protocols to be built. And the longer you continue to hold those DP tokens, like the more airdrops, I guess, or later down line that you receive. And so it kind of opens up a really new, interesting asset class of DP tokens, essentially, that are redeemable for… That essentially represents the locked UST that is in the pool, but also the value out of the fund, whether that be, intangible things like tokens, or NFTs, or more intangible benefits, like your membership, or your sense of community, and access to different kinds of discussions and tiers of developers are kind of like a power or an influence to have over the ecosystem and the next projects for the ecosystem to build.

limowooj 16:19
And so, we can also see iterations, like a Lottery Fund in which… It’s kind of like a large Pylon Pool, but not to receive a share of project tokens pro-rata, but the accumulated yields are going to go towards one random wallet, or part of those yields can go and be donated to Angel Protocol, right. And so it opens up space for really cool, different kinds of special purpose funds all around. And one can imagine kind of like a lossless DAO that’s centered around simply just buying up NFTs and fractionalizing them. And putting that up for auction and redistributing the proceeds from that auction to stakeholders/the DP token holders, right. And so, I think there’s a lot of room for cool DAO play that can be done, as well as like, let me give a shout out to GT Capital, because you guys are listening in as well, right. Yeah, allowing different community members to access specific kinds of venture DAOs in lossless way. So yeah, I think there’s just a lot of innovation and room for innovation that can be done from this pivot, which essentially, repositions Pylon as like a fund of funds, as opposed to like a singular fund. So yeah, kind of like had a long spiel, but opening up the floor to more questions.

Papi 17:52
Yeah, anyone who wants to come up and ask questions, feel free to request. In the meantime, I will just start spewing out questions, or if you guys have anything else you want to say. I don’t see anyone requesting to be speaker just now. Here’s a question. So right now Pylon relies primarily on Anchor, have you considered the possibility of integrating with Mars Protocol in the future?

limowooj 18:16
Yeah, of course, dialogue is open with them. And yeah, when they were in an early stage of building and for us as well, we’ve been in conversation about integrating them as a possible source. I think in terms of the field of yield diversification, I think the main thing at stake is finding and routing different sources of sustainable yield, whether that be within Terra, or whether that be cross-chain, for a little bit more durability, for platforms. For Pylon Gateway and like Glow creators to easily build on top of, right. And so I think that’s one way to look at it, in terms of the stablecoins. A second way to look at it is, as Prism launches, it doesn’t actually have to be that your underlying deposit is in UST. You can imagine things like, staked yLuna, or steaked… Like a derivative of like a… Yield generating token, as opposed to simply just being a stablecoin. So I think that also leaves a lot of room for innovation. Because to some degree, like Anchor’s yields… And of course, they have a great team. And they have a lot of internal innovations coming up. But in the long, long run, whether or not that APY is sustainable, we’re always exploring different options, whether that be… Not just focusing solely on UST as the primary source, but yeah, for you to stake yLuna, or for you to stake LunaX, or another derivative and be able to receive the same kind of benefits, but current like users of Pylon Gateway are receiving.

Ed 19:57
But one thing I’ll add there is, I think there is definitely opportunity for us to use leverage. That’s something that we haven’t done in the past. But you know, if you want to be able to create more yields for our partners, I think leverage is going to be super powerful. And so I’m excited for Mars, and I think there’s going to be a lot of cool opportunity there.

Papi 20:18
Awesome. So you see DP tokens as potentially being collateral for loans. So you could go leverage long on a DP yield position.

limowooj 20:29
Yeah, that is also a possibility given that at the very end of the day, these DP tokens are essentially backed by that locked UST.

Papi 20:39
In that case, would you consider Pylon having some sort of contract that allows Mars to liquidate collateral? Even though it’s a locked staking derivative? I don’t know. That’s something to think about.

limowooj 20:54
Yeah, for sure. There’s so many possibilities in the space that have yet to be worked out. But yeah, I can imagine there being a lot more interoperability with the DP tokens as more DAOs and more projects come to accept that. ‘Cause like, it kind of is its very own unique asset class that builds on top of the Terra ecosystem, in the sense that, it’s representative about locked UST, that’s redeemable after a certain period of the pool expiry date, on top of this different tangible and intangible value adds of the different DAOs and funds. So yeah, one can imagine, for instance, like a BUILDers DAO token, this is like just a pure hypothetical, like a BUILD token, that you can only mint via depositing like 1 UST into the, for instance, 12 month Pylon Pool. So by depositing that you receive a BUILD DP token that is representative of your stake in that pool. So by holding on to it, you can receive airdrops, or benefits from being part of the BUILD DAO, or the BUILD community, while at the end of the day, still being able to redeem that for the underlying deposit. So, yeah, a lot of interesting innovations to be built on top.

Papi 22:19
Well, I even see this as a way you could leverage liquidity, if you allow liquidity to be a asset to mint DP token, and then earn staking rewards, and then you use that as collateral, or you can go leverage long. That’s a really interesting… It’s really interesting the direction you’re going in here. I see a lot of use cases. So Chinoman, I just requested to be a speaker. Chinoman, you have a question?

Chinoman 22:45
Hey, yeah, I do. Before I get into it, I just want to say, really good job with Pylon. It’s been months since I wanted to get into it, to get my feet wet, but I’ve been so busy that I’ve only recently been able to get the opportunity to actually use it. And it worked flawlessly. Really great job on everything, and I’m loving what I’m hearing as well, right now. In terms of question, it’s not necessarily about these new developments but more generic points. What is the best channel of communication to talk with you? limowooj or someone from the pylon team? Is it the Twitter page or you directly? Just because I’ve been trying to get in touch for a few times and haven’t gotten some answers? So it’s not because of me? I’m just wondering, maybe some other people might be missing out on the communication side. So is there like an official channel where people should reach out to or what would be the best way?

limowooj 23:59
Yeah, for sure. Make you join our Telegram, and you can always ping me a message on Telegram anytime.

Chinoman 24:05
Okay, I tried that.

limowooj 24:08
Oh, really? [chuckle] Oh, my bad. [chuckle] Yeah, there’s a ton of messages, always, so it’s hard to kind of keep track. So if I don’t respond for a while, then maybe just a polite ping would get it back on on track.

Chinoman 24:23
Yeah, for sure. I know, I was just wondering if there was maybe an official channel or something where… I don’t know, some contact form or something. But, that’s alright. No, no worries there. [chuckle] Thanks.

limowooj 24:36
Yeah, for sure. Just give me another ping and I’ll get back to you right away.

Chinoman 24:40
Sure thing.

Papi 24:42
Cool. Any other questions? Okay, I got another just hypothetical for you, Woojin. I see a lot of like… Looking at the whole Astroport Lockdrop, I see this could be like a model for… A way to incentivize long term liquidity and pay staking rewards in a way that’s liquid. Have you thought about that at all?

limowooj 25:08
Yes, for sure. In terms of being able to deposit LPs, and with the recent liquidity bootstrapping launches that have been happening on Terra. Yeah, that’s another model that we’ve been aware of and looked into. And, I think like your first step, in terms of like a play with LPs would be like a collaboration with Olympus Pro to develop a protocol native fund that is a good protocol owned LP Treasury. But I think when it comes to other kinds of projects that want to launch on Pylon Gateway, in particular, with that kind of liquid LP launch model, I think, yeah, we were considering that and thinking about what’s the best way to move about it in a way that can integrate current models of yield redirection and kind of benefiting users on top of that. As well as sorting out all these different stakeholder interests that are at play. So, yeah. Ed, do you have any thoughts when it comes to that?

Ed 26:15
No, no, no thoughts specifically, but I agree with what you’re saying.

limowooj 26:20
So yeah, I mean, yeah, It’s definitely something that is on the plate for consideration that we’ll have to dig a little bit more deeper into.

Papi 26:31
Cool. So with the Olympus Pro integration, is that going to be on Ethereum, or is that going to be Terra native?

limowooj 26:40
Oh, yeah. So they’re gonna be built on Terra. So they’re going to be launching a Terra cohort in early January. So yeah, the recently passed a governance proposal, and they made a long post on the Pylon forum, to kind of tell their parameters and provide a little bit more context of their liquidity mining rehab that they’re trying to do. So, yeah, it’s gonna be fully Terra-based.

Papi 27:10
Very cool. So once again, I’m gonna invite the community if you want to come up here and ask a question, feel free to request to be speaker. Anything else you guys want to cover here?

Ed 27:23
I guess the one thing… Now that I’m thinking about the Astroport question, and Papi I think your question was basically like, the Astroport model seems really good, this Lockdrop thing. How can we as Pylon potentially incorporate that as a model, right? It feels like the Lockdrop, in a way, is very similar to how Prism wants to do their Pylon launch, right. So it kind of feels like a scout model, where you have a fixed number of tokens, and the price of the token kind of gets set by the number of people who are depositing liquidity or depositing UST funds inside that token. Is that kind of right, Papi? Or am I thinking about it wrong?

Papi 28:14
Well, I was just thinking, for an initial token distribution, you could mimic the Astroport model, I mean, except for the moving of the liquidity part of it. But as a way to incentivize liquidity, and as a way to lock liquidity for a protocol, you could say if you deposit your whatever token LP, into this Pylon Pool, you get a DP token, and that DP token represents your LP token, and you get that back after 24 months or whatever. And you also are earning staking rewards for the protocol and it could be a way to distribute staking rewards for LP, in a way that locks the LP in a liquid way.

Ed 28:58
I see, I see, I see. Okay, got it. So you’re trying to make the tokens on the other side slightly more useful, right? So it’s not just like you’re waiting for tokens, it’s that you’re also participating in the LP?

Papi 29:12
Correct. It’ll also be a way to leverage LP, like for staking rewards. So if my Mirror-UST was tokenized as a Mirror-UST DP token, I could then use that on Mars to take out a UST loan and create more LP and create more DP token and then I could have leveraged LP, with leverage yield from rewards. So I mean, it’s just like a whole rabbit hole of things you could go down with, with these derivative concepts.

Ed 29:43
Yeah, really interesting. I haven’t thought about that so much. But there has been a lot of chatter on the forums about, how can we make these Pylon Pools like more capital efficient, which I think is very much a DeFi 2.0 trend. And so, definitely something that we can think about and yeah, when you start adding more and more of these DeFi primitives, like the leveraging, the DP tokens, and stuff like that things get really, really confusing really quickly. And so I’ll need more time to chew on it. But yeah, it sounds like a really interesting idea.

Papi 30:13
Yeah, just something to think about. So we got a couple more speakers up here. So, RoyalPirate.

RyanLion 30:20
I come in, Papi?

RoyalPirate 30:23
Oh, yeah, go ahead, Ryan.

RyanLion 30:26
Hey, guys. Woojin, Ed, great work on the stuff you’ve been doing on Pylon recently, huge congratulations, really impressed to see. And I’m sorry, if you covered this slightly already, I was a few minutes late to this call. I’m really just trying to wrap my head around how this Gateway Fund works from an ongoing perspective. So like, I get that… So people deposit and then the yields used to make the swap. Here’s what I’m thinking about is, when a swap is made, is it then fixed so that the current depositors are entitled to the share of that swap? Or can someone then contribute after that swap has been made to the Gateway Fund and still be entitled to a portion of that swap? If that makes sense.

limowooj 31:17
Yeah, so the best way for me to explain it is the way in which the airdrops were rolled out for MINE stakers. So right now there’s like the Valkyrie airdrop, there’s like the Nexus airdrop, and the Terra World airdrop that is still ongoing. In the sense that, there was these… The point at which these airdrops are calculated is a daily linear vesting for, for instance, 12 month period of time. But it’s kind of cool in that you could still do lump sum airdrops respectively, so after the after the fact, by still being able to calculate different blocks of whether you’re staking MINE at X point in time. And so, for instance, with the Valkyrie airdrop, it was launched on November 23rd, but the day in which we airdropped, or started these airdrops was a little bit past that. So, yeah, we were able to do retrospective airdrops in a lump sum way, that covers those who have been staking all this while but also opening up the space for those… If you were to stake today, you’re still able to receive a share of the Valkyrie token in the remaining periods in which it vests. So that was kind of like a simple way in which I was thinking about it in the sense that, if there’s like a 12 month, or like a 14 month vesting, the point in which these tokens are released, that could be a lump sum drop for those who’ve been staking this whole while but also opening up still a portion of those tokens to those who are still wanting to come in and mint the DP token in the pool. So, yeah.

RyanLion 33:09
I get how the airdrops work. And I guess that’s slightly different, because, you’re vesting those tokens to… The MINE stakers themselves, I guess, haven’t contributed any capital towards the actual purchase of those airdrop tokens. So it makes sense that you could do that. I’m just thinking that, at the point in time where you make a swap, you’re taking a lump sum of capital yield, and purchasing a chunk of tokens. I guess what I’m thinking is if you’ve taken my yield, and made that swap, but then if someone comes in later down the line into the pool, they’re going to dilute my percentage of that swap and dilute the yield that I’ve put forward towards making that swap. Does that make sense? It doesn’t… I’m not sure if it sits quite right with me from…

limowooj 34:09
Yeah, so I think one way to think about it is that, oftentimes, these swaps, the tokens aren’t directly, distributed in lump sum from day one. And oftentimes they might have some kind of vesting that might accrue. And oftentimes, if somebody were to deposit $1,000 from day one, right. Day two, and then there’s like a swap, right. There isn’t as much of a yield contribution up to that point. So it’s kind of an interesting way for you to calculate. And then at what point do you start distributing and all of that. One way to think about it is that, per project that we collaborate with, we can kind of like set terms, where it’s like, oh, the people who have contributed up to this point, they receive a higher percentage of the tokens or a greater weight of the token distribution, but also still leave room for those joining late to have their share where the early entrants… Because there isn’t as much token dilution in terms of the Pool dilution there, they receive a much significant share of the initial tokens and for depositing early, right. I think that’s strong enough of a benefit, and an incentive for you to make early deposits.

RyanLion 35:44
So do you anticipate actually using some of the principle from the Pool to make the swaps then, as well?

limowooj 35:50
I think in part, that is a possibility that we can explore later down the line, but I think for now kind of, like, using the yields for now. I guess, because it gets a little bit more tricky with projects that want to enforce KYC requirements, if direct principle is involved. Whereas if it’s just investing your yields, there’s less of a need for KYC. But well have to look into that. But yeah, we’ll have to have terms in which like a project also gets funded like every month or receives yield stipends, as opposed to receiving that full lump sum from the get go, right. So…

RyanLion 36:37
Right, gotcha. I mean, yeah, I think you can do it in that…

RoyalPirate 36:40
Can I jump in?

RyanLion 36:40
Yeah, sure. Go for it

limowooj 36:41
Yeah, for sure.

RoyalPirate 36:42
So, I know, there’s two parts to Pylon, there’s an IDO metric, and there’s the lossless investment. What finds me… I’m an early investor in LUNA. Ay, shout out to all time high, I think just recently. But what I’m confused about is why are we so fixated on all these new protocols and tokens? Why aren’t more protocols incentivized to maybe buy a Treasury on Anchor, and then build on top of Anchor and add utility to it? All these tokens are coming into the market, and we’re talking about trading 10s of billions of shit coins, when we could be adding utility to LUNA, to UST, to Anchor, to Mirror, the baseline protocols that have made us all, I’m sure, fairly wealthy. I just thought, why are we so fixated on these fucking airdrops and the shit tokens when we could be adding more to the ecosystem as a whole?

limowooj 37:47
Yeah, I think that’s an interesting point. And that’s where this lossless DAO/funds idea come in, where we can launch a Gateway Fund that’s centered around just doing dollar cost averaging for the core Terra assets, like LUNA, or like ANC or even MIR. And one can imagine another DAO that emerges on a lossless basis, that’s solely focused on burning… Buying up and burning those assets, and giving… Providing sufficient incentives in return, sorted out by the DAO.

RoyalPirate 38:23
Right, and that’s mainly my only turn off about the Terra ecosystem is, we’ve seen 10 billion, 1 billion drop tokens that are just meant to sell, even from MIR. Anchor might be the only exception, but every token’s meant to be sold, and everyone just wants more LUNA. So why aren’t… I’d rather pay a 1% fee that pays off your investors at a two times principle, than buying some shit token that’s going down from $1 to 10 cents.

Papi 38:59
So I mean, I don’t know that this is totally relevant here. But Pylon Protocol is a protocol that builds on top of Anchor to de-risk investments in new protocols in the ecosystem. They’re not all shit coins. Some of them are, for sure, but it’s a very subjective term. And I think you’re a little too drunk for this conversation. So I’m going to mute you now. Okay, moving on. Anyone else?

Chinoman 39:22
Hey, Papi, yeah. Sorry, I dropped off a couple of times. My Twitter app was crashing. I was meaning to ask another question. So I know Pylon is mostly focused…

Papi 39:36
Oh, he’s gone. [chuckle] I’d like to… Oh, we got another person here. Oh, Hhsd, did you have a question?

Hhsd 39:48
Yeah. A simple idea is to… If you’ve invested in a pool, and the token has staking possibilities, like Valkyrie and Loop, what why not leave the… Put the vesting protocols into the staking pool, so then you get additional rewards?

Papi 40:11
Well, that would really be up to the individual protocols. But that’s certainly an idea and something this enables. I don’t know. Anyone else have a comment on that?

limowooj 40:18
I think part of it is that, because these pools are designed to be like an early stage IDO allocation where you can kind of buy out those tokens at a significant discount. Yeah, there are sufficiently longer terms that investors have to wait, before they’re actually able to stake or interact with the protocol. But yeah, I think it’s definitely an interesting option that you could explore, for instance, especially with DP tokens, given that they’re liquid, they can essentially represent the stake… Your stake of UST in the underlying pool. So if a protocol were to accept that as part of their staking tokens, that’s completely doable. But I guess, to reiterate, it would be up to the protocols themselves to accept those tokens or not.

Hhsd 41:08
So why doesn’t pylon promote the protocols to actually do that to… Which would augment the yields and then people would be more incentivized to contribute to the Pools?

limowooj 41:22
Yeah, I think ideally, we would have just liquid pools all over. But I guess in order to have those available, you would have to have, for instance, like a TerraSwap pool with the DP token and UST, or with that DP token and their own protocol native token, which I guess is what Nexus did. But for projects that are very early in the process, and don’t have sufficient capital to even bootstrap that from the get go, I think, it’s kind of hard for them to launch a liquid pool. So I think that is more akin to like, post IDOs.

Hhsd 42:03
Valkyrie and Loop both have staking. So why can’t those vesting tokens be staked and earn additional yield while we’re waiting for the vesting procedure to complete?

Papi 42:19
So this really isn’t the place for that question. This isn’t something we have control over, this is up to the individual protocols. And there also needs to be more staking derivatives to develop. That’s something that we can maybe do later down the line, but I don’t know that we should get fixated on it just now. We have a few other people up here asking questions. TacMan, you want to go up?

TacMan 42:41
Hey, Wooj or Woj, I noticed in your Tweet storm you talked about maybe real word investments, kind of like the Constitutional DAO did, their model of trying to get the Constitution? Can you talk a little bit more about that, about other use cases? I’ve also heard thrown around, maybe funding like a Kpop music type thing? So maybe you can talk about some use cases involved in this Fund, or potential other Funds, besides investing in decentralized applications?

limowooj 43:19
Yeah, no, I think in terms of those cool kinds of side DAOs, or special interest DAOs that can emerge, it would be besides the Gateway Fund 1, which should simply be focused on very early stage IDOs. But yeah, in terms of, for instance, Constitution DAO, I can imagine a DAO forming on top of Pylon Gateway, or at least integrated with the Pylon Pools, that creates a lossless way for multiple users to pitch in and chime in their capital in order to invest the yields. And literally, it can be anything, right, whether it be to use the yields to bootstrap events, or host cool meetups, or even buy real world assets together. And then I think it would sufficiently have to be over a long period of time, given that it’s building off of the yields that are being redirected. And so all the way from things like buying up rare and NFTs and fractionalizing them to like supporting content creators. But I think the difficult part there would be providing sufficient incentives for depositors besides the DP token, and kind of creating more utility around the DP token, to incentivize more buys… Direct buys of the DP token and/or mints via depositing UST into the pool. So yeah, one idea could be, similar to Constitution DAO, gathering people to buy up something together, that’s an interesting united purpose. And then once you buy that you can fractionalize that and kind of distribute the tokens pro-rata to how much you’ve staked, and the duration you’ve stated it for, similar to linear airdrop logic, like the retrospective, linear airdrop logic that we used.

limowooj 45:14
So, yeah, it’s certainly open to your ideas and feel free to suggest really cool shared interests. And so it can just be like a group of designers banding together and deciding, “Yeah, we’re gonna open up a lossless Pool/DAO, and like a membership token is going to be like, I don’t know, like, ticker design. And that could be the DP token that represents the Pool. But I guess the difficulty there would be, so then what do people who have the DP token get? Is it our customized designs? Or can they contribute to governance, to decide what that design fund or design DAO would continue to build together? So yeah, it’s really up to… And up and open to your imaginations in terms of these shared hobbies or interests and feel free to suggest. Just ping me some ideas and we can maybe organize something together.

TacMan 46:19
Something jumps out at me would be like a music catalog of The Beatles or Michael Jackson or somebody historic. The DAO would own it, and then, obviously, you can get royalties by how many times a particular song is played or something like that. Let me ask you this. Do you also see it possible with this DP token to maybe provide in Mars and take out a loan in UST? Is that something that you guys are all talking about? Or is that no, not in the works?

limowooj 46:53
Well, first off in terms of Beatles, buying up Beatles, I think it’s a really cool idea. If there’s a sufficient group of LUNAtics who might be interested in this, yeah, get them together and we can launch a DAO on Gateway. In terms of like the second part, in terms of providing more utility to the DP tokens, for instance, as collateral on Mars, or on Anchor, because they’re backed by the locked UST, I guess there might be some way in which to work around it. But yeah, more details would have to be flushed out.

TacMan 47:32
Great. Thank you. I appreciate it. Great job, by the way, with the DAO.

Papi 47:35
Alright, thanks for your question. We’re gonna give Chinoman another try here.

Chinoman 47:41
Hey, yeah, my app keeps crashing. I’ll try to be quick this time. So Pylon is focused on lossless investments, right? I know, at the beginning, it also had something to do with lossless payments. I know that Suberra is the one that is focused on that, at least I think so. But the… At least as far as I know, the Delphi Digital newsletter is still being paid or whatever, by Pylon. I was just wondering, is this really a road that Pylon will cease to explore? Or is it just something that is just further down the roadmap because it’s not as high priority?

limowooj 48:27
Yeah, of course. When I was coming up with the concept for Pylon, that was one of the top parts of the roadmap, but I guess as we launched Gateway, there has been more focus on that. I think it’s just been a matter of sorting priorities, and whether to continue building on Gateway, or to kind of focus on with the SDKs to be able to have third-party devs be able to build all of these things together. And so, I think the current plan, in terms of like a roadmap is, to focus on fleshing out Gateway, adding on the fund/DAO feature that essentially allows anyone to mint a DP membership token, that is representative of the value add of the fund or the DAO that you create, on top of the locked UST, which is yield-bearing, right, for the DAO to spend on a collective shared purpose together. And so kind of like building that out by the end of the month is the main goal right now. In terms of next step would be to release the third party integration documentation. So that would be… Like our partnership with Glow, which just launched their Pools today. You guys should take a look on Gateway. But yeah, we’re going to be co-launching a platform called Glow Creators, and that’s going to be built on the Pylon SDK. And so once that’s readily available, we’ll be able to ship and open that up to other protocols. And we’ll actively be hosting hackathons for third party developers and teams to make use of that SDK and build out, whether that be a front-end payment interface, or all these different kinds of creator applications, or front-ends for the DAO interfaces that we have for gateway. And so, yeah, that’s kind of like our roadmap. The payments, stuff is all there. I know, Suberra has definitely been focusing on that. But once we have sufficient resources, and once we take off the big markers and roadblocks, we’ll get there.

Papi 50:38
Awesome. Oh, we lost, Chinoman again. This will be in the recording, he can listen to it later. We’re just about at the top of the hour, I want to follow up with just one last question. I invited Chinoman back, he might probably ask a follow up. But I want to kind of just wrap this up into one question. And one we didn’t really cover throughout this is, what does this mean to MINE stakers and MINE holders? What kind of value capture is this going to create for the ecosystem participants or stakeholders?

limowooj 51:11
Right. So I think one of the major complaints on the part of MINE stakers for some of the previous IDO models was there not being sufficient MINE gates, and it often being gamable in the sense that, you can stake, unstake, before and after a Pylon Swap launch. But I think a cool pivot in the Gateway Funds model at least is, this kind of a MINE burn requirement in order for you to get in. So in order for you to actively deposit, for instance, like $10 of UST, you have to burn one MINE. So yeah, by providing that MINE burning gate, you, A, create a constant burn pressure the more there are these UST deposits, and the more people use Pylon Gateway, there is a constant buy/burn pressure that isn’t backtrackable or gamable, in the sense that, you can stake and unstake, buy and sell right away. So, yeah, that adds a new dynamic to benefits for MINE stakers. And I think one way of putting the whole Gateway 1 Fund would be kind of as a community VC fund with a lot of parallels to traditional VC setups. In the sense of, as general partners, MINE stakers will actively engage in community due diligence, as well as governance over which projects and proposals to upvote and feature for these Treasury swaps. So they have all the power in terms of governance and decisions that affect the core of the Fund and the UST stakers. And, another part of it is that they received a portion of carry in, A, the project token airdrops, which we strongly encourage, all projects to drop. And so for instance, Glow is going to be airdropping 1% of its total token supply to MINE stakers, which is a pretty significant amount. And secondly, as the TVL of all protocols that integrate the Pylon Pools grows, the more that accrues to the Treasury. So right now, there’s been the major Treasury proposal for 50% of the yields to go towards… To accrue more value in aUST, and then 25% to go to MINE buybacks, and 25% to go towards providing liquidity for the MINE-USD pair. So yeah, because that proposal recently passed, we’re going to be implementing that by the end of the month, and sufficiently adding more long term value add for stakers, in which they now have control over what to even do with those Treasury funds, whether to simply use the rest of it for MINE buybacks and distributing it again, or to buy other kinds of assets, or even reinvest that into like the Gateway Fund 1, and then redistributed rewards to MINE stakers. So the possibilities are open. And I think the coolest thing is that from a model in which you’re just like, 100% of the yield goes towards MINE buybacks, now we’re kind of opening up space for MINE stickers to be able to pitch in and actively vote. And yeah, I think this turn towards decentralization is a really critical and pivotal moment for the protocol.

Papi 54:38
Very cool. Well put, Woojin. Just to wrap things up… Oh, we lost Chinoman again. Okay, why don’t we just wrap things up there. Thank you for coming out. This is very informative. Anything else you guys want to add before we close it out?

Ed 54:53
I’ll just say quickly, thank you to everyone who is continuing to participate in the forums. I think we are getting tons of great ideas and we love all the great participation and we can’t do it without the community. And so, thanks again for participating and keep it up.

limowooj 55:10
Yeah. Thank you so much, Papi, for hosting this.

Papi 55:12
Yeah, my pleasure. Cool. This was recorded guys. So I’m gonna post this. I think Terra Crumbs will share it, other people will share it as well. So look out for that. Thanks, everyone.

Finn 55:23
Thanks for checking out another episode of The Ether. That was the Pylon Gateway Fund AMA hosted by Papi and limowooj. Recorded on Sunday, December 19th 2021. For, I’m Finn, thanks for listening.