Governance Proposal: 2021-10-09 Update Tinlake Rewards Allocation & Reward Rate

After considering changes suggested by the community, this is an amended version of this previous governance proposal.

With the recent increase in CFG price which seems to have stabilized, the current CFG APR for Tinlake investors has surged to around 50-60%. We are also close to depleting the remainder of the CFG tokens reserved for Tinlake liquidity rewards. Therefore, I am proposing to mint an additional 2 million CFG tokens for Tinlake liquidity rewards and decrease LP and AO rewards by 20%.

I also propose that we enact the liquidity rewards distribution improvements as detailed here

Please vote in the polls below :slight_smile:

Mint an additional 2 million CFG tokens for Tinlake liquidity rewards and decrease LP and AO rewards by 20%
  • Yes
  • No

0 voters

Enact the Tinlake liquidity rewards distribution improvements
  • Yes
  • No

0 voters

Thank your for answer in prev topic.

Maybe we could implement lock of revision of awards every 2-4 (3-6) months in the future or could an idea for future plan.

However voted Yes, Yes.

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Could we consider a way to automate this type of thing based on the price action of CFG going forward? Obviously as the price of CFG increases, it could definitely incentivize more users to onboard into Tinlake pools, but is the goal here to try to keep it balanced? Like try to consistently find that sweetspot where we are incentivizing, but not offering excessive rewards? Might be easier to find a way to automate it, than to be regularly manually reacting to price.


Yeah i think thats definitely the goal - maintain a balance between a competitive return for Tinlake users to incentive more users while not contributing to excessive supple growth, I wonder too if this is something we could automate and if that’s something people would be interested in. The issues that I can see are that CFG rate would constantly fluctuate, which may impact one’s investment decisions, but at the same time the $ value they earn would stay consistent so it seems like something that could work. We would also have to be careful that the minted allocation of CFG isn’t depleted sooner because of a sudden drop in price.

Is the minted allocation of CFG based on some kind of dollar budget? If that’s the case, then it wouldn’t be too hard to offer CFG as rewards but pegged to a certain dollar amount that could be controlled by the contract responsible for issuance. The minted allocation of CFG for Tinlake rewards could just be budgeted out in US dollar terms, and be responsive towards increased allocation based on interest and growth over time. Not sure if that would be an issue with users though, to be effectively rewarded a fixed-USD rate worth of CFG, rather than the volatile asset. Maybe some users would actually prefer it though. What do you guys think? If that was implemented it would effectively be like a “bonus APY” for Tinlake pools. The main issue I see with that is that it might feel weird for users to see the amount of CFG they get constantly fluctuate.

A fixed-USD rate worth of CFG would help the protocol manage reward token issuance. It also would appeal to the careful investors who disfavor token price volatility and who possibly comprise the group most drawn to the Tinlake pools on Centrifuge.

Yes, I think that might be the case - that Tinlake mostly attracts investors looking for a stable yield. But i’m curious to know what the rest of the team thinks about that idea vs the idea that degen farmers looking for extreme APYs might be “farming” CFG rewards as they currently exist for the long-term. Or if maybe the price being volatile to the upside would entice more investors. It’s a tricky balance.

Perhaps have some pools with a fixed USD-rate worth of CFG for the risk averse, and other pools with a rate that can yoyo. Innovations that emerge from the Altair test bed might offer variable risk-rewards.

I voted yes here but I would caution on continous reward decreases for LPs. Getting additional liquidity om board is a major issue for us an AO and rewards certainly help make the case when speaking with new investors.

I agree with you and understand your concern. Onboarding liquidity to Tinlake and a constant growth of the total value locked (TVL) is a crucial goal for the future of the dapp. The CFG-rewards for Tinlake pools had to be reduced drastically to avoid (hyper)inflation some time ago and they should stabilize around the current rate. Although a further slight decrease of the rate is necessary to control the token supply it has to be balanced to keep investing in Tinlake attractive for investors (and asset originators)

I have closed the poll given it has run for 5 days. @Ash next time it would be good to announce just how long you plan on leaving the poll open (and we should document this in our governance docs).

We will move forward with proposing this in the council.

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