Maker became aware in mid-June that due to the fact that we trust Centrifuge to custody the DROP used to collateralize our loans, we were not automatically accusing liquidity rewards.
We understand this is likely an oversight in implementation. While we have no immediate plans for rewards Maker would have accrued automatically, Maker is at the point where several members of our DAO have suggested we reach out to the Centrifuge community to affirm that Maker should be able to collect these rewards at some future, unspecified point in time.
Based on our involvement with the New Silver pool, we estimate that Maker as a liquidity provider should have accrued (as of Aug. 4, 2021) 526,025.452 CFG/wCFG. I can provide the spreadsheet DAO members put together, and we understand this is an estimate because we didn’t know how quickly after an approval that changes in reward rates went into effect. When in doubt, we utilized the lower rate.
Maker is by far the largest provider of liquidity to the Tinlake platform, and that looks like it will only grow. We do understand, however, that there may be some operational/technical hurdles to delivering any rewards Maker has accrued. So at this time we are simply seeking a commitment to track Maker’s CFG rewards, and we can figure out how to deliver them to Maker’s custody at a later date.
Reasons to support Maker receiving rewards from past and future liquidity provision:
Maker is a liquidity provider (the largest one!)
Maker and Centrifuge have a close business relationship, and one built upon mutual trust rather than legal agreements with “gotcha” clauses
There was no indication in past liquidity parameter changes that Maker was not a liquidity provider
This gives Maker the opportunity to become involved in Centrifuge governance, and give our two protocols a shared, long-term future
There is no obvious reason why Maker would be the only party on Tinlake to be excluded from sharing in rewards
Demonstrate through action that the Centrifuge community values all DAI invested on Tinlake equally
Please feel free to comment below. Thank you, and have a wonderful day!
I have mentioned this in your previous post already. MakerDAO was never included in rewards because there was never a way for Maker to claim these rewards. These rewards were never part of the conversation with Maker and not included in any communication and there is simply technically no way to give Maker these rewards retroactively. The rewards thus were thus never calculated to include Maker as a recipient and the budget does not allow for just adding them.
There is another issue with your post. You are writing here on the forum as if this was some official capacity in which you are writing here on behalf of all MKR holders and that is simply not true. The majority of MKR holders and community members I have talked are not in favor of seeking liquidity rewards. Thus I don’t think this poll has any legitimacy in itself. I would ask you to rephrase your poll and refrain from giving the impression that you are speaking in any official capacity on behalf of MakerDAO.
There are a few reasons why I believe CFG rewards are not the right strategy for Maker.
These rewards are there to incentivize individual investors to get excited about RWAs funded in DeFi. This is a net positive for Maker as Maker wants to grow adoption of Dai in DeFi and we are helping them hugely with it. Asking for Maker to start taking a significant portion of these rewards would result in slower development of RWAs in DeFi overall which is not in Maker’s interest either.
Maker has an inherently different incentive for bringing on RWAs (their goal is to diversify and remove correlation of their mostly crypto backed assets and remove the reliance on USDC as a collateral type).
A significant number of projects have not awarded other smart contracts with rewards (most notably Uniswap with their airdrop).
To date Centrifuge has spent millions of dollars in legal & development cost for integrating our assets into Maker but has not received any compensation from either Asset Originators nor Maker to do this work. Asking for CFG rewards on top is an unacceptable burden on Centrifuge.
However I very much welcome a greater alignment and the inclusion of Maker in Centrifuge governance and I would be open to a conversation and working on a proposal together with Maker governance that as you say “gives Maker the opportunity to become involved in Centrifuge governance, and give our two protocols a shared, long-term future”. But we have to acknowledge the work that the Centrifuge team has been doing here as well. For this I think there are better ways to proceed though:
Maker could find a framework around which Centrifuge gets compensated for the spells we write, the work we do with the community and the AOs and allow Centrifuge to build an MKR position itself
Maker could make a strategic investment in Centrifuge and ensure it doesn’t just have a say in the protocol itself but can ensure that Centrifuge has the funds to continue developing the Mkaer integration
We could agree on a treasury swap: trade $1M worth of CFG for $1M worth of MKR (values for illustration purposes only)
As @Ritskes mentioned, these rewards are there to counter some of the early adopter challenges of low risk/low yield assets that are to date very rare in DeFi and as a way to reward users of our protocol. Maker is in a very different position: it urgently needs uncorrelated low risk collateral and that’s why these rewards never were a discussion and the focus was always on how to grow and scale this in the long run.
Your protocol has no way to create new tokens? I see a proposal right now to mint more tokens. Also note that we are not seeking a technical solution at this time.
We are a DAO. I am, however, here on behalf of some very large MKR holders (more than enough to pass an executive) who feel Maker is being treated unfairly. I think a commitment to the principle of Maker being treated equally with all other DROP investors would smooth a lot of increasingly ruffled feathers.
Maker has an inherently higher risk in providing the most liquidity to Centrifuge. Also, our liquidity is structured that we cannot quickly exit, and our involvement ensures that other DROP investors can quickly redeem. Maker is bearing more risk than a typical DROP investor.
I suppose the main question that is increasingly being asked is why Maker would be literally the only party on Tinlake to be excluded? That seems like a very poor way to treat your most important business partner, and why it’s a bit confusing to see so much pushback on what we assumed as simply an oversight.
Regardless of whether or not this is the case - which is very difficult for anyone to independently verify - @lucasvo is correct, you are not speaking on behalf of MakerDAO. You can speak for yourself as a community member, you can claim to have the backing of several large MKR Holders, but you can’t claim to speak for the DAO.
You are welcome to reach out to other protocols and discuss Maker, start polls about the goings on between Maker and other projects, but using ‘we’ in the manner you’ve done here is problematic because it presents a single view of what is still being discussed - something on which no vote has taken place.
You can make factual statements regarding discussions at MakerDAO: ‘I’ve been discussing Centrifuge rewards at Maker and some thought that…’
You can’t make statements on behalf of other community members or the DAO: ‘We discussed Centrifuge rewards and we think that…’
Good luck, be aware that once you figured out how to get rewards, there might be a vote here to remove CFG reward all together, since they are already a point of debate within Centrifuge.
Kinda surprised by the response here. I’d completely understand if Maker would need to make a side deal that involves significantly less rate of rewards than retail users, and maybe some sort of lockup commitment. Also understand if retroactive rewards can’t be arranged due to the complication of previously agreed budgets. But hearing just a flat out NO stings a bit.
You’re doing this for the benefit of Centrifuge, rather than as a courtesy to MakerDAO, so I don’t think this framing makes sense. Maker also bears considerable expenses (and financial risk) from the integration.
There is a win-win situation for both parties which suffice their specific requirements. Lets accept this in first place. Secondly, it has been iterated by @lucasvo regarding CFG rewards, the rationale behind CFG rewards. Again to re-iterate, Centrifuge does regards MakerDao as most valuable partner.
That was not my intention at all. My vote was on Paper’s ask to get rewards retroactively on something that is impossible to give as the reward mechanism just doesn’t allow for the Maker integration to claim rewards - which is a prerequisite.
I do believe though that there are better ways bring Centrifuge & Maker closer together and I posted them in an earlier post:
Of course a fourth option would be to work together with MakerDAO on figuring out how it could participate in rewards - but again for technical reasons this is going to require significant work by the Maker PE team and modifications of previously audited code which I believe is unlikely to happen anytime soon.
In short, Maker is hugely valued by Centrifuge and the community, currently Maker is responsible for ~22% of the loans outstanding in our system and that is amazing. We are of course hoping to scale this much more and have been building a lot of our technology specifically to fit the needs of MakerDAO.
I think this is a good starting point for this discussion and overall I would be very excited to have Maker be involved in Centrifuge’s governance and own a part of the network.
I wanted to address this as well though:
With any other collateral type that the community voted to include the protocol engineering team did the technical work. Liquidations 2.0 was built to better liquidate liquid tokens - MIP22 was built by us to liquidate DROP tokens. There is no reason why this couldn’t have been built by the PE team like Liq2.0 was. MKR holders clearly supported prioritizing RWAs over other collateral types.
I’ve been in countless conversations with PE team members and formerly Maker foundation employees where they flat out asked us to do this work because they were too busy or because they couldn’t for legal reasons. I don’t want to deny that there is a benefit for Centrifuge if these assets are accepted as collateral by Maker but that benefit also goes to Maker.
But in a closing statement, I think as @hardik said, what we are doing I believe is great for Maker, Centrifuge and DeFi as a whole and I believe we can find a solution that will make everyone feel valued here. I will bring this up with Maker governance in a future GNR call and see how we should proceed here.
Claiming over 500 000 USD of rewards in retrospect from a project which tokens are just trading, with low trading volume, low market cap and seriously in need of a generous reward program to bootstrap individual investors on the protocol.
All while the dev teams have been working closely together for a very long time, also stings a bit
