Pylon Protocol: A Lossless Payment and Savings Platform Based on Yield Redirection

What is Pylon Protocol

Friends, imagine you have a special “magic piggy bank.” You put money into it, but the magical part is that your principal never decreases, and this piggy bank generates some “interest” every day. Pylon Protocol (project ticker: MINE) is built on this concept—it’s a decentralized finance (DeFi) framework developed by Terraform Labs (TFL) on the Terra blockchain.

Its core idea is: you deposit some stable digital currency (such as TerraUSD, abbreviated as UST, a stablecoin pegged to the US dollar) into a platform supported by Pylon Protocol, your principal is protected, and the yield generated from these deposits (like the interest from the piggy bank) is used to pay for services, acquire project tokens, or other rewards. This way, you don’t need to spend your principal directly, but instead use the yield generated from your principal to enjoy services or invest, and at maturity, you can withdraw your full principal.

Pylon Protocol’s main product is called Pylon Gateway, which you can think of as a “project incubator” or “crowdfunding platform.” Here, users can deposit UST for a period of time, and in return, they can receive new project tokens and gain rights to participate in project governance.

Project Vision and Value Proposition

Pylon Protocol’s vision is to build a series of consumer-friendly payment and savings platforms, integrating complex decentralized financial payment infrastructure through simple deposit operations. Its mission is to enable sustainable value exchange between long-term value providers and consumers through customizable deposit contracts and yield redirection.

The core problem it aims to solve is the limitation of the traditional “one-time payment” model. For example, for early-stage startups or crowdfunding projects, receiving all funds at once may lack the incentive to provide long-term value. Pylon Protocol incentivizes service providers to deliver quality services over time by allowing them to continuously receive yield generated from user deposits, rather than charging a one-time fee, thus aligning the interests of users and providers for the long term.

Compared to similar projects, Pylon Protocol’s biggest feature is its “principal protection, yield payment” model. Users don’t spend money directly, but pay with the yield generated from their funds, providing a “lossless” investment or payment experience.

Technical Features

Pylon Protocol is built on the Terra blockchain. Terra is an open-source blockchain platform known for its algorithmic stablecoins (such as UST).

Its tokens MINE and PylonDP are CW20 tokens, which you can think of as a digital asset standard on the Terra blockchain, similar to ERC-20 tokens on Ethereum, but optimized for the Terra ecosystem.

The “magic” of Pylon Protocol lies in its ability to leverage other low-volatility, high-yield protocols to generate returns, with the most prominent being Anchor Protocol. Anchor Protocol acts like a high-yield savings account; Pylon Protocol deposits user funds into Anchor, then distributes the generated yield.

Its core products include: Pylon Gateway (project launch platform), a yield integration widget, and a dashboard for staking rewards. The smart contract code for Pylon Protocol can be found on GitHub, indicating its technical implementation is open and transparent.

Tokenomics

Pylon Protocol’s token is called MINE.

• Token Basics

  The MINE token is a CW20 token on the Terra blockchain. Its total supply is capped at 10 billion, designed to avoid inflation. According to CoinMarketCap, the currently self-reported circulating supply is about 600,859,554 tokens, accounting for 6.00859554% of the total supply.

• Token Allocation (Initial 2.5 Billion MINE)

  The initial 2.5 billion MINE tokens were allocated as follows:

  • Pylon Launchpad: 400 million (16%) for early “deposit-to-earn tokens” pools on Pylon Gateway, rewarding community investors.
  • LUNA Staking Airdrop: 500 million (20%) airdropped to LUNA token stakers.
  • Community Fund: 1.6 billion (64%) allocated to the community fund pool, governed collectively by MINE token holders.

• Token Utility

  The main uses of the MINE token are:

  • Governance: MINE is the native governance token of Pylon Protocol. Holders can initiate and vote on community fund grants, protocol upgrades, Launchpad projects, parameter changes, new feature development, and treasury allocations.
  • Value Capture: MINE is designed to capture a portion of the yield generated by all Pylon platforms and projects. For example, Pylon Gateway charges a 20% platform fee, and these proceeds go into the Pylon treasury.
  • Incentives: The MINE token also serves as an incentive mechanism, encouraging users to deposit into platforms supported by Pylon Protocol.
  • Staking Rewards: MINE stakers can benefit from weekly MINE token buybacks and rewards from the MINE-UST liquidity pool.

• Treasury Allocation

  According to a governance poll (Governance Poll #8), the yield accumulated in the Pylon treasury is allocated as follows: 25% for weekly market buybacks of MINE tokens, distributed linearly to stakers; 25% to provide additional liquidity for the MINE-UST trading pair, with LP rewards also distributed linearly to stakers; 50% stored as aUST in Anchor Protocol, with further use governed by stakers.

Team, Governance, and Treasury

Pylon Protocol is built by Terraform Labs (TFL). TFL is a company dedicated to developing price-stable cryptocurrencies and next-generation decentralized application (DApp) infrastructure. While specific individual core members are not listed in detail, TFL is the main development force behind the project.

Pylon Protocol adopts a decentralized governance model, meaning MINE token holders can vote to collectively decide the future direction and key parameters of the protocol. This model is designed to give the community greater influence.

The project’s treasury captures a portion of the yield generated by the Pylon platform, and the use of these funds is also decided by MINE token holders through governance.

Roadmap

Pylon Protocol has gone through several important milestones and plans in its development:

• Historical Milestones

  • August/September 2021: Successfully launched four token projects on Pylon Gateway: Loop Finance, TerraWorld, Nexus Protocol, and Valkyrie.
  • October 2021: Collaborated with PRISM to experiment with a new type of IDO (Initial Decentralized Offering) called Pylon Scout.
  • December 2021: Established the Pylon treasury, launched new protocols in the Terra ecosystem via Pylon Pools, and innovatively introduced liquidity Pylon Pools and DP tokens, as well as concepts like “Pylon Funds” and “DAO DP membership tokens.”
  • Q1 2022: Acquired the Glow project, introduced the “Mineral Grade” scoring system to measure MINE staker loyalty, improved staking features, and added new pools to Pylon Gateway.
  • April 2022: Conducted a fixed swap from Glow tokens to MINE tokens to better align the long-term interests of the Pylon and Glow communities.

• Future Plans (as of April 2022)

  Pylon Protocol plans to launch more new decentralized applications (dApps) under the Pylon brand, aiming to drive UST adoption across various fields through attractive “lossless” products. They also plan to accelerate integration of the Pylon yield redirection SDK, explore cross-chain solutions to diversify yield sources, and further enhance Pylon’s “principal protection” value proposition.

  Important Note: Pylon Protocol is built on the Terra blockchain. In May 2022, the Terra ecosystem (including LUNA and UST) experienced a major collapse. The official Pylon Protocol documentation states: “In light of recent events on Terra Classic, Pylon Protocol continues to explore all possible options. We remain committed to our vision of building platforms around yield redirection and deposit contracts.” This means the project’s future direction and specific implementation may be significantly affected and require ongoing attention.

Common Risk Reminders

Investing in any blockchain project comes with risks, and Pylon Protocol is no exception. Here are some common risks to be aware of:

• Economic Risks

  • Dependence on the Terra Ecosystem: Pylon Protocol’s operations are highly dependent on the Terra blockchain and its stablecoin UST, as well as yield-generating protocols like Anchor Protocol. The collapse of the Terra ecosystem in May 2022 had a major impact on Pylon Protocol’s underlying mechanisms, and its future economic model and yield sources face significant uncertainty.
  • Insufficient Demand for MINE Token: The utility market for the MINE token may lack necessary demand and real-world application, which could affect its potential growth and market acceptance.
  • Price Volatility: The MINE token has shown inconsistent price volatility in the past, with a medium risk level. While it may offer long-term returns, uncertainty remains.

• Technical and Security Risks

  • Smart Contract Risks: DeFi projects are generally exposed to smart contract vulnerabilities. Even if the project code is audited, potential bugs or attacks cannot be completely ruled out.
  • Protocol Dependency Risks: Pylon Protocol relies on other protocols like Anchor Protocol to generate yield, and any issues with these underlying protocols could affect Pylon Protocol’s stability.

• Compliance and Operational Risks

  • Regulatory Uncertainty: The global regulatory environment for cryptocurrencies is still evolving, and future regulations may impact Pylon Protocol’s operations.
  • Competitive Risks: The DeFi space is highly competitive, and Pylon Protocol must continue to innovate to stand out among many projects.
  • Community and Developer Support: Some comments have noted insufficient developer support and poor communication in the MINE community. After the collapse of the Terra ecosystem, the continued commitment and adaptability of the project’s operations and development team are crucial.

Verification Checklist

Before delving deeper into Pylon Protocol, you can verify through the following methods:

• Block Explorer Contract Address:
  • MINE token (Terra chain CW20): You can look up its contract address on the Terra block explorer, for example, the address shown on CoinMarketCap is
    terra1...qtcrpy
    . Please note to distinguish Pylon Protocol (MINE) from other similarly named projects on different chains, such as Pylon Network (PYLNT).
• GitHub Activity:
  • Visit Pylon Protocol’s GitHub page (e.g.,
    Pylon Protocol - GitHub
    ), check the update frequency, code commits, and issue resolution for its core contracts (such as
    pylon-core-contracts
    ,
    pylon-token-contracts
    ,
    pylon-gateway-contracts
    ) to assess the project’s development activity.

Project Summary

Pylon Protocol is an innovative project in the DeFi space, aiming to provide users with a unique lossless investment and payment experience through its “principal protection, yield payment” model, and to establish a sustainable incentive mechanism for service providers. Its core product, Pylon Gateway, served as a project launch platform supporting new projects in the Terra ecosystem. The MINE token, as its governance token, gives holders the right to participate in protocol decisions and captures the value generated by the protocol.

However, Pylon Protocol’s fate is closely tied to the Terra blockchain. The collapse of the Terra ecosystem in May 2022 undoubtedly brought great challenges and uncertainty to Pylon Protocol. Although the project team has stated their commitment to exploring a way forward and to their vision of yield redirection, its future direction, technical implementation, and economic model all need to be reassessed and adjusted in the new environment.

For anyone interested in Pylon Protocol, be sure to conduct thorough independent research (DYOR), understand its current status, the latest team developments, and specific plans in the post-Terra era. Remember, the above information is for project introduction only and does not constitute any investment advice.