To date, 9,417,148 CFG have been awarded to both AOs and LPs in Tinlake on-chain. The protocol has only allocated a total of 8M CFG to the rewards wallet, which means that additional CFG must be minted to meet the rewards. Today we are proposing to mint 2M CFG to the rewards wallet and to keep the reward rates the same.
Voting Process
The forum vote here in this post is scheduled to end 16:00 UTC Wednesday 4th of August. This vote will inform what will be proposed to the council to vote on. The council will then vote on it end of day Wednesday, at which point it will go into a fast-track democracy vote for all token holders to vote on.
Proposal Parameters
The proposal being put forward is the following:
- Mint 2’000’000 CFG into the rewards account
- Keep Liquidity Provider rewards at 0.001 CFG per $ invested per day
- Keep Asset Originator rewards at 0.0002 CFG per $ originated per day
Background
Past forum discussions:
- 2021-06-29
- 2021-06-07
- Forum thread that @Ash started on informed decisions in future governance proposals .
Considerations
- CFG now has a market price, and the Tinlake UI has been updated to show the current reward rate APR
- DeFi yields remain low and the fixed yield of Tinlake assets continues to be attractive
- A modest amount of redemptions has occurred since the last vote, but TVL in Tinlake remains stable.
- At the current TVL and reward rates the supply growth is 2.7% per year
This is the 5th proposal that’s been voted on to update Tinlake liquidity rewards parameters (CFG rewards), the first 2 proposals resulted in no change to the rate of rewards or governance process, the 3rd can be found here and 4th here.
Forum polls serve to inform the chain council about the preferences of the community which are then put forward as proposals to be voted on. If the council strongly disagrees with a poll outcome, in the interests of the health of the ecosystem it can modify and pass a different proposal. Information on how council governance works can be found here.
Supply Growth
When governing a token supply the mid to long term view needs to be taken into consideration. Even though higher rewards may seem better in the short term for an individual investor, a high CFG mint rate leads to more tokens in circulation and if more tokens are in circulation, a single token becomes less valuable if there is not an equal rise in the value of the network (Learn more: Understanding Inflation in token networks ) This is not good for the project because if more tokens are minted and distributed than it has accrued value, it leads to overvaluation and a price correction follows.
In the last poll, the reward rate was voted to be reduced to 0.001 CFG per $ per day for Liquidity Providers and to 0.0002 CFG per $ per day for Asset Originators. At our current TVL (~$26.5 million) these parameters put us at a mint rate of 2.7%, within the intended CFG mint rate of 3%, giving room to grow Tinlake TVL before the mint rate becomes a concern.
DeFi Yields
After the market correction, DeFi yields have remained relatively stable over the past couple of weeks. Tinlake’s yields in comparison, now quantifiable with the market rate of CFG, remain attractive.
Redemption Concerns
Since the last reward rate adjustment the market has remained relatively stable. Tinlake has seen a small increase in redemptions but it has not led to a decrease in TVL.
Vote
- Yes
- No
0 voters
