[MakerDAO] How best for Maker to collect liquidity rewards?

Unfortunately it’s not very straightforward but could be done somehow if the Maker Protocol Engineering Core Unit implemented a way for these rewards to be claimed. I’ll share a bit more in detail what would have to happen for this to be feasible. The rewards are implemented completely on chain and a manual distribution of CFG or wCFG is not possible.

The rewards roughly work as follows: any external Ethereum Account (contract or private key) that holds TIN/DROP tokens is eligible to accrue rewards on Centrifuge Chain. These rewards are paid out on Centrifuge chain and can not be paid out as an ERC20 token as they are minted on Cent Chain for this purpose. The owner of the Ethereum account must submit a special transaction on Ethereum that instructs what Centrifuge address the CFG should be paid out to. From that point on rewards can be claimed by that Centrifuge address on a daily basis by triggering a Centrifuge Chain transaction.

Here’s where the complexity comes when trying to allow Maker to claim these rewards:

  1. The current owner of the DROP ERC20 tokens is the Manager contract which does not have a way to announce which Centrifuge Chain address it wants to get tokens paid out to, so it can’t do the first step necessary to claim any rewards.

  2. The DROP tokens are currently held in a Tinlake internal contract and these do not accrue rewards (e.g. the Operator, Tranche & for Maker specifically the Manager all do not earn rewards). Maker Protocol Engineering would need to work together with us to modify & redeploy the collateral adapters (MIP21/MIP22) to take proper control of the DROP tokens.

  3. If we addressed the first two issues, then there’s the challenge of who would hold the rewards on Centrifuge Chain: There is no way for any wallet on Centrifuge Chain to be controlled purely by Maker governance. Someone else (a single owner or a group of people in a multisig) would have to control the wallet that CFG is paid into. So Maker Governance needs to agree on who should control that wallet and decide that and then trigger the transaction on Ethereum to declare where it would want it to get paid it out to. If that wallet is owned by several people these people would of course have to clarify their personal tax & legal liabilities of receiving these CFG tokens and then holding them for Maker (or bridging them to wCFG to send it into the Maker governance contract).

Point 1 & 2 would likely mean reworking a lot of the MIP21/MIP22 process and it probably makes sense after MKR holders have come to a conclusion that they want to prioritize this work and how they want to deal with the Centrifuge Chain based rewards.

Because the current Manager contract is considered an internal contract and does not have a method to to claim there are no rewards that can be claimed in the current setup. I hope this helps with your questions!

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