Vote to reduce APY to 1000% to ensure sustainable growth

TLDR:

Sky-high APYs are good if we have utility. Currently, we’re still developing it, so let’s not shoot ourselves in the foot. This vote proposes to lower the APY temporarily to decrease inflation substantially and stop the price from bleeding. Other OHM forks have implemented a similar strategy, which has helped stabilize their prices. We will also create profitable bonds that increase the treasury and liquidity pools.

Background:

The primary mechanism of staking with an enormous APY was key to our success throughout the past couple of months. While this provided much needed short-term growth, it does not support long-term growth for Tempo DAO.

Our community has shared their concerns about the price volatility in previous weeks. This volatility is due to APYs being as high as they are. High APYs reward holders, but they hurt the project as well.

We need not but analyze the rest of the rebase token market to understand the common trend. Minting tokens at such an intense rate creates huge selling pressure, limiting the price of TEMPO. The minting process’ increase of the global supply of TEMPO leads to dilution. Why is this bad? It further contributes to reducing the price of TEMPO over time.

For this reason, we used the astronomical APYs offered in the past over very short periods of time. For a project with long-term ambitions, they are not sustainable.

Why lower APYs provide an enormous benefit to TEMPO

By lowering the APY, holders will receive smaller rewards, but will not suffer the same negative effect from dilution. In other words, fewer tokens are minted, reducing the rate of inflation. It will also reduce the selling pressure, adding further stability to the price action.

We will also create profitable bonds that increase the treasury and liquidity pools.

This is far more sustainable and will only benefit TEMPO holders.

While huge staking rewards have been key to the successful launch of Tempo DAO, we understand that this single aspect is insufficient for a project with our ambitions and use case to succeed in the future. If this vote is approved, it will be a pivotal moment in our history to continue building towards expanding our gaming studio offerings.