I must admit that for once, I disagree with the points made above for the following reasons
1/ Exclusion from indices and punish institutional holders
Grayscale Defi fund does include many tokens which "disadvantage" passive holders i.e. holders whcih are holding the token in their wallet without doing anything. It has tokens with single type staking (e.g. Aave or Sushi through xSushi) or high inflationnary tokens (e.g. Curve esp. until the recent fall in emission rates), so shouldn't be a massive problem here. And even if this was the case, the single staking we are talking about is pretty much a bridge until DPoS launches and, while I am a massive SYN bull, I don't unfortunately expect Grayscale to include SYN in the index next month.
Not sure about how funds approach it (not my area of expertise tbh so can't say albeit mindful that some may not stake for tax reasons) but imo it shouldn't be that different than for those tokens
2. Downward trend in price action & dis-incentivizing liquidity
Before SIP-05 comes into force, we are spending, around $11m per month into Pool 1 liquidity. This relatively high inflation rate is multiple highers than single staking and benefits liquidity providers (which are obv key to the protocol, don't get me wrong!). All that inflation comes with no restraint and liquidity providers are allowed to enjoy their rewards in the way they want. This means that compared to single-staking, (i) inflation is multiple times higher and (ii) comes with no constraints and can be sold the second it is generated. When we are now looking at a framework such as single staking, the reflexivity coming from those rewards should be significantly lower as until the launch of the chain, the rewards would be autocompounding and as such, in order to sell them, an delegate would first have to unstake and wait for the cool-off period. This means that in practice, the inflation from single-staking will be quite sticky and reflexivity here will be limited. You could even make the argument that a large portion of the supply would end up being locked (for at least 7 days) which is obviously price positive (but imo its not that much of a valid argument so won't go there, albeit its a key consideration when looking at L1). Obviously not what Synapse is aiming for, but high inflation protocols with autocompouding staking features (e.g. OHM) have shown an interesting dynamic here from a game theory standpoint and shown that inflation can be successful.
I think the comparison with LP though is a valid one and one we need to cleary think about. However, if I look at the APY right now on SYN LP, I note that it is (i) around 80% of SYN/AVAX, (ii) around 110% for SYN/ETH on Sushi, (iii) around 195% for SYN/ETH on Synapse. The delta here is extremely high (way too high for my liking tbh as it means we are overpaying SYN/ETH right now unfortunately) and I thereby don't foresee any scenario whereby an LP would remove their liquidity at 195% to get sub 20% on single staking (which carries also comes with an isolated position which has disadvantages from a risk management perspective). Additionally one of the stated aims here if for the protocol to own its liquidity, not to earn it, and over time reliance on liquidity providers should reduce as a function of ohm pro (aaaah i am booonding). For reference, somewhat of a shocking stat, but we spent in two months 25% of size of SYN/ETH in SYN rewards... (ie over $5m) + obv at one point cex listing which would reduce our reliance on a thick LP in Sushi
When it comes to lending protocols, I think this is a fair consideration. However, I note that most protocols have some sort of single staking inflation and are still included in lending protocols. For example, yield on Sushi (through xSushi) oscillates between 10% and 15% a year (was obviously higher before). Cosmos is around 10%-12% on staking if I remember well. Solana is 8% but there are ways to get much higher (you can get to 15%+ with a couple of extra steps btw, DM for more info 🙂). All of them are subject to the same situation. This could however suggest a slightly lower yield than 18-20% if this is a key point here.
3. Preparing for POS validation
My gut feel is that participation in single staking will actually be slightly lower than once DPoS launches, just a function of ETH gas fees being a higher disincentive than slashing.
Re: tax, I get your point on income vs. capital gains tax but imo US tax considerations shouldn't be the main consideration here (probably easier if you are non-US based).
As such, I think implemented single staking would be EV+ for the protocol
