The selective pressures of your model reward dishonesty (under promise over deliver / make estimates as high as possible to mitigate downside and reduce pressure). Why is that making your team better?
If my estimates are padded to the point where I always complete what I commit to and my boss is happy with my output, what’s the problem? My boss gets value from being able to accurately convey estimates to clients, the client 9/10 gets the work done on time or maybe even gets a couple extra features completed in the same timeline, and I as the engineer, have a relaxed work environment, free of the stress of cramming every story point possible into 40 hours a week.
Seems like a win win win to me.
All this teaches employees is to lie to make themselves look good. If you really want to increase development velocity, implement better coding practices and devops and tooling and training and invest in your employees instead of making jump through stupid hoops like circus animals.