I expected a bit of a regression in the HR/9IP. That is a given moving from Safeco to YS. Add in the rocket ball and it's even more. But he has disappointed this year, no doubt. He had his yearly injury resulting in a 3 week stay on the IL. Since then, he has been inconsistent. Prior to the injury, he was nails. From the sounds of it, the issue with the knee isn't entirely gone and I wouldn't be surprised if he has offseason knee surgery.
That being said, when I see a guy in decline phase, I think of what anyone rational would look at, and it's velocity. Paxton has been incredibly consistent the last 3 yrs, within 0.1mph and he has shown no signs of slowing down. He has also seen a .346BABIP and a rise in HR's, meaning he is getting hit far more than before. I think this year is one of two things. One, it is adjustment. A lot of good pitchers have an adjustment year in the Bronx. Doesn't mean they get shellacked, but they usually are a touch below their baseline. Paxton has been far below his baseline, but the expected FIP and the BABIP point towards better results coming.
The second thing I look for in a decline phase is command. Is the pitcher selling out for velocity? Paxton's command has been spotty, so maybe you have a point there. But I don't see it as a guy trying to muscle up. I see it as a guy who isn't going in on righties as much. He is getting hurt going away far more than I expected and maybe the Yanks need to work on their pitch calling. I have seen him give up more oppo homers than I would have expected.
If Paxton stays healthy, I expect him to be something closer to last year's production. His K rates are big, he can lower the BB rates and maybe cut the walk rate a bit. Now, maybe he isn't gonna be healthy. Maybe he sees a drop in velocity. Hard to tell, but on a one year deal and with his stuff, it is pretty enticing to see