CP170: Withdrawal of Centrifuge DAO’s CFG Liquidity from Hydration

Centrifuge Governance Proposals
, ,
1 
cp: 170
authors: Frederik
contributors: ImdioR
uses-component: cp4
technical-proposal: yes
requires-onchain: yes
impacts/modifies: CP53, CP102
status: rfc
date-proposed: 2025-10-02
date-ended:

Short Summary

This RFC proposes withdrawing the Centrifuge DAO’s 1,276,162 CFG liquidity from Hydration’s Omnipool.

High level objective

This proposal aims to recover the 1,276,162 CFG locked in Hydration’s Omnipool, protecting Centrifuge DAO’s assets and transferring them to Centrifuge DAO Treasury.

Background

Centrifuge has supported cross-chain liquidity to enhance the accessibility and utility of its governance token, CFG, within the Polkadot ecosystem. To this end, the Centrifuge DAO provided significant liquidity to the Hydration Protocol (formerly HydraDX) through two governance proposals:

  • CP53: Deposited 540,000 CFG into the Hydration Omnipool to boost on-chain liquidity for CFG ( link )
  • CP102: Added 710,000 CFG, totaling 1,250,000 CFG ($595,000 at the time), to further enhance liquidity, with the DAO retaining control over the tokens ( link )

The goal was to increase CFG’s liquidity, enabling token holders to buy and sell CFG easily while earning trading fees for the DAO.

Over 2 years and 2 months, the Centrifuge DAO’s liquidity position grew to 1,276,162 CFG ( from intial allocation of 1,250,000 CFG), earning only 26,162 CFG in trading fees, which significantly underperformed the declared performance in CP53 and CP102.

On July 2nd, Hydration’s Technical Council unilaterally suspended CFG trading, as was post facto announced on X and voted on via Subsquare, without prior communication with the Centrifuge DAO.

Description of Activity

This RFC proposes the immediate withdrawal of the Centrifuge DAO’s 1,276,162 CFG from Hydration’s Omnipool and the reallocation of these assets to the Centrifuge DAO Treasury wallet 4dpEcgqJRyJK3J8Es6v8ZfVntV7c64Ysgcjd4hYwyGoFPWbg.

Actions:

  • Execute the technical process to withdraw the CFG liquidity, ensuring the DAO regains control of the full 1,276,162 CFG.

Change or improvement

  • Recover DAO Assets: Return 1,276,162 CFG to the Centrifuge DAO Treasury

Alignment to the mission of Centrifuge DAO

Centrifuge’s mission is to connect real-world assets to DeFi through a transparent and accessible protocol. The initial liquidity provided by the CFG DAO to Omnipool was meant to kickstart trading and ensure deep liquidity. Now that trading has been discontinued, withdrawing 1,276,162 CFG from Omnipool where CFG trading was suspended is a way to protects Centrifuge DAO’s assets.

1 Like