Current staking rewards are quite unique as they're almost entirely paid in USDC and equal to 5-7% APR. SX is one of only two chains in the entire world - dydx being the other - that sustains itself entirely from USDC revenue, which is quite the achievement. However, this may become an issue during dead periods of the year such as the summer, when betting volumes fall due to lack of sports.
The solution is to provide some sort of floor staking yield through SX inflation. It will also encourage higher staking participation, further locking up circulating supply. Targeting a floor staking yield of 7% APR, in combination with lowering the unstaking time, should drastically improve SX staking experience.
This proposal asks for a 30m SX fund from the Community Fund to reward SX stakers with inflationary rewards over the course of two years at a rate of 1.25m SX per month. Staking participation will likely increase, which is factored into the slightly larger ask than necessary at the current staked SX rate (135m SX).