CP163: AIR to CFG Token Swap Pre-Altair Chain Deprecation

Centrifuge Governance Proposals
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cp: 163
title: Proposal for AIR to CFG Token Swap Post-Altair Chain Deprecation
authors: @TheMarcus
contributors: none
uses-component: cp4
technical-proposal: no
requires-onchain: no
impacts/modifies: none
status: rfc
date-proposed: 2025-07-29
date-ended:

Short Summary

This proposal outlines a fair and equitable mechanism for swapping Altair (AIR) tokens to Centrifuge (CFG) tokens as part of the deprecation of the Altair chain on Kusama and the migration of Centrifuge’s governance and operations to Ethereum.

High Level Objective

The goal is to protect AIR token holders’ value, maintain community trust, and align with Centrifuge’s transition to an EVM-based protocol. The proposed exchange rate is 100 AIR to 1 CFG, based on market data, token utility, and community feedback, with the assumption that Treasury-held AIR tokens will be burned.

Background

Centrifuge has successfully migrated its governance token (CFG) to Ethereum as part of CP149, consolidating legacy CFG and Wrapped CFG (WCFG) into a single ERC-20 CFG token with a post-migration total supply of 675,000,000 CFG (including 115M newly minted tokens for strategic initiatives). The Altair chain, operating on Kusama, is proposed for deprecation, rendering the AIR token obsolete in its current form due to its primary use for transaction fees and governance on the Altair chain. This creates significant sell pressure on AIR and negligible buy pressure, risking value loss for AIR holders.

The community has expressed interest in an AIR to CFG token swap to preserve value for AIR holders, as discussed in the RFC for an AIR to CFG Token Swap. This proposal builds on that discussion, incorporating market data, token economics, and community sentiment to propose a fair exchange rate.

Description of Activity

The proposed exchange rate of 100 AIR to 1 CFG is derived from a combination of market-based valuation, token utility analysis, and community considerations. Below is the rationale:

  • Market-Based Valuation:

    • As of July 23, 2025, the price of CFG is approximately $0.24 USD (CoinMarketCap,), while AIR’s price is approximately $0.0024 USD (CoinGecko, Altair). This results in a market price ratio of approximately 100:1 (AIR:CFG).

    • Historical price ratios from CoinGecko data (2023–2025) show AIR trading at 1–2% of CFG’s value, supporting a 100:1 exchange rate as a fair reflection of market dynamics.

    • The market cap of AIR is significantly lower than CFG’s due to its limited utility and smaller ecosystem. As of recent data, AIR’s circulating supply is approximately 495,000,000 AIR (CoinGecko, Altair), with a market cap of ~$1.19M, compared to CFG’s ~$162M market cap (675M CFG at $0.24).

  • Token Utility and Ecosystem Role:

    • CFG is the governance and utility token for the Centrifuge protocol, now fully EVM-based, used for transaction fees, governance, and incentivizing liquidity providers on Tinlake. Its utility spans the entire Centrifuge ecosystem, including Centrifuge V3’s multi-chain capabilities (CP141).

    • AIR’s primary utility was tied to the Altair chain for transaction fees and governance. With the Altair chain’s proposed deprecation, AIR’s utility is effectively nullified, justifying a swap to CFG to maintain holder value.

    • The 100:1 ratio accounts for CFG’s broader utility and higher demand in the EVM ecosystem, while ensuring AIR holders receive a fair portion of the new protocol’s governance and utility token.

  • Community Feedback:

    • Comments on the RFC for an AIR to CFG Token Swap (https://gov.centrifuge.io/t/rfc-air-to-cfg-token-swap-post-migration) highlight community concerns about fairness and the need to protect AIR holders. Suggestions included ratios ranging from 50:1 to 200:1, with some advocating for a market-based approach and others emphasizing simplicity.

    • A 100:1 ratio was frequently mentioned as a balanced compromise, aligning with market prices while being easy to communicate and implement.

  • Treasury Burn Consideration:

    • Per the proposal’s assumption, Treasury-held AIR tokens will be burned and excluded from the swap. This reduces the circulating AIR supply, potentially increasing the value of remaining AIR tokens and simplifying the swap process. Assuming ~50% of AIR tokens are held by the Treasury (a conservative estimate based on typical Polkadot/Kusama project distributions), the effective circulating supply for the swap is ~247,500,000 AIR.

  • Impact on CFG Supply:

    • Swapping 247,500,000 AIR at a 100:1 ratio would result in ~2,475,000 of the 115M newly minted CFG tokens for strategic initiatives (CP149) being allocated for the swap, supporting the feasibility of this swap without additional minting.

Swap Mechanism

  • Eligibility:

    • All AIR token holders, excluding Treasury holdings, are eligible to participate in the swap.

    • Holders must verify ownership of AIR tokens via a Kusama-compatible wallet (e.g., Polkadot.js, Subwallet).

  • Swap Process:

    • A dedicated EVM-based smart contract will be deployed on Ethereum, similar to the CFG/WCFG migration contract (address: 0xacf3c07bebd65d5f7d86bc0bc716026a0c523069,).

    • Users connect their Kusama wallet holding AIR and an EVM-based wallet (e.g., MetaMask) to receive CFG.

    • The swap ratio is fixed at 100 AIR = 1 CFG, with no fees charged to participants.

    • The process will be atomic, ensuring instant CFG delivery upon AIR submission, with a processing time of up to 1 hour (similar to CFG migration).

  • Timeline:

    • Swap window opens upon proposal passing and when migration functionality is enabled by the Centrifuge team. Swap window closes upon Altair chain deprecation.

    • Unswapped AIR tokens will become obsolete upon Altair chain deprecation (expected Q4 2025).

  • Treasury Burn:

    • Treasury-held AIR tokens will be burned prior to the swap window to reduce circulating supply and prevent governance manipulation.

    • A transparent on-chain transaction will verify the burn.

  • Support:

Change or Improvement

  • For AIR Holders: Preserves value by converting obsolete AIR tokens into CFG, enabling participation in Centrifuge’s EVM-based governance and ecosystem.

  • For CFG Holders: Minimal dilution (0.37% of total supply) ensures existing governance power is largely unaffected.

  • For the Centrifuge Ecosystem: Strengthens community trust by addressing AIR holders’ concerns, aligns incentives with the EVM transition, and simplifies tokenomics by consolidating to a single token.

  • For Governance: Maintains decentralized control by allowing AIR holders to transition into CFG-based governance, ensuring broad participation in Centrifuge V3.

Risks and Mitigations

  • Risk: Market volatility could alter the perceived fairness of the 100:1 ratio.

    • Mitigation: The ratio is based on a 6-month average price ratio (2025 data) to smooth out short-term fluctuations. A review mechanism can be included to adjust the ratio if significant price divergence occurs before the swap window opens.

  • Risk: Low participation could leave some AIR holders with obsolete tokens.

    • Mitigation: Extensive community outreach and clear instructions will maximize participation.

  • Risk: Technical issues with the swap contract.

    • Mitigation: Leverage the proven CFG/WCFG migration contract framework, with audits and testing prior to deployment.

Community Feedback Requested

  • Is the 100:1 ratio fair, or should alternative ratios (e.g., 50:1, 150:1) be considered based on additional metrics?

  • Should the swap include a vesting period for CFG tokens to prevent immediate sell pressure?

  • Are there additional support mechanisms needed to ensure a smooth transition for AIR holders?

Alignment to the mission of Centrifuge DAO

The proposed 100 AIR to 1 CFG swap offers a fair and equitable solution for AIR holders, aligning with market valuations, token utility, and community sentiment. By implementing a transparent, EVM-based swap mechanism and burning Treasury-held AIR, Centrifuge can maintain trust, minimize dilution, and fully transition to its Ethereum-based future. This proposal invites community feedback to refine the approach before moving to an on-chain vote.

References:

This proposal aims to balance fairness, simplicity, and ecosystem alignment. Please provide feedback on the Centrifuge Governance Forum to refine this RFC before it proceeds to an on-chain vote.

The RFC will be open for a minimum of 7 days.

Looking forward to any feedback and any concerns you might have with this proposal.

Next steps

If there is support for this proposal, the next steps will be to submit it to the Proposal Repository on GitHub and create an Opensquare snapshot vote.

Update 11/06/2025:

Please cast your vote.

1 Like
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Good day there!

Thank you for posting this proposal.

As a simple CFG token holder, I have a couple of questions that I hope you can answer:

  1. What is the alignment and benefit that CFG token holders and Centrifuge DAO are gaining with this proposal?

From what I can read, it’s all about the AIR token holder benefit, but a significant portion of CFG should be given to AIR token holders.

  1. What exactly will Centrifuge CFG Token holders receive by providing 2,500,000 CFG tokens? What is the KPI?

By CP149, the migration deadline was set by 30th November 2025.

Based on the indicated timeline of 6 months from now and an additional 30 days, the deadline for the migration will be set to ~ 1st week of March 2026?

Here i see another deadline that is 3 months earlier….

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Hey @ImdioR…

Here are my thoughts on your questions:

  1. Centrifuge is a community. One that is comprised of individuals who have participated and supported all aspects of the community, including Centrifuge chain/services and Altair chain/services.

    Migrating Centrifuge services and thus the token to EVM made a lot of sense for a variety of reasons. It’s a good thing. But deprecating the Altair chain without a fair and equitable plan for those who have supported and participated in it is, in my opinion, a disservice to those individuals and the community as a whole.

  2. There isn’t a specific benefit to CFG token holders that comes from this proposal, but there is most definitely a benefit to the Centrifuge community. This plan presents harmony and cohesion among the entire community (those who have participated in Centrifuge, Altair, and/or both) without disregarding anyone as the aspects of it shift and change.

  3. You’re correct on this contradictory elements of the proposal. Unswapped AIR tokens will become obsolete upon the completion of the swap window, not upon deprecation of the Altair chain.

3 Likes
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Could you please specify the actual deadline for the token swap if this proposal passes? It is unclear.

  1. The Centrifuge Migration deadline is set by the 30th of November 2025, and the Altair migration deadline will be in 1st week of March 2026. As well, how will that work?

  2. Who will maintain the Altair chain? If the chain is halted, how will the migration work?

Right now, on the Centrifuge chain the migration process looks like:

  1. User connects the wallets (substrate +evm)
  2. Sign the transactions (both wallets)
  3. Tokens from substrate\wcfg are transferring into the modlcfg/lock
  4. User paid CFG (50 CFG) tokens for the migration that covers the costs and gas fee
  5. New minted tokens are transferred into the EVM wallet.
  • If the chain is halted, how will the migration process work?
5

Good questions @ImdioR.

Until you brought this up, I was thinking that the Altair chain didn’t need to be running for the swap as despite the chain no longer being operational, the AIR tokens would still be in our wallets. But without the chain, there is no way to send/migrate the tokens.

So yes, the swap would need to occur BEFORE the deprecation of the Altair chain.

As such, we would need an exact date for deprecation of the Altair chain from @jeroen in order to set the last day for AIR to CFG token swaps.

1 Like
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The proposal CP163:AIR to CFG Token Swap Pre-Altair Chain Deprecation was uploaded on GitHub - cps/cps/CP163.md at main · centrifuge/cps · GitHub

Next step Author (@TheMarcus )of the proposal will initiate the offchain voting via Opensquare with the duration 7 days.

1 Like
7

The OpenSquare snapshot vote for CP163 has been created and will last for exactly 7 days.
The proposal Start date Aug 12 2025 15:00

Please cast your vote.

2 Likes
8

Good day there.
The proposal hasn`t reached the quorum. As a result, the proposal was rejected.

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9

An unfortunate result, but the DAO has spoken (or in this case, not spoken).

As such, Good KarMa has unbonded and concluded our Altair collator services.

2 Likes
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Thank you for your efforts, @TheMarcus
Hope that your decision to leave Altair Collators (which I fully understand) will not affect your Centrifuge Collator

1 Like
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Definitely not. Our Centrifuge collator will remain operational until the completion of the migration and longer if needed.

1 Like