Poll: June 2021 Tinlake Liquidity Rewards Parameters Update

Following the discussion about adjusting our AO rewards I want to put forward a formal poll to determine the governance proposal that the council and later on all token holders will vote on. For background on the conversation, read this thread: RFC: Updating CFG Liquidity Provider & AO Rewards. It was also discussed in the community call (video).

Voting process

The forum vote scheduled to end Tuesday will determine what will be proposed to the council to vote on. The council will then vote on it Wednesday at which point it will go into a democracy vote for all token holders to vote on.

Proposal parameters

Reward Rate Target

The current reward rate is 0.0042 CFG per day per $ invested. This proposal is to lower the rate given the current value of CFG following the Coinlist sale.

What should the reward rate be for Liquidity Providers?
  • 52% reduction - 0.0020 CFG per $ per day
  • 64% reduction - 0.0015 CFG per $ per day
  • 76% reduction - 0.0010 CFG per $ per day
  • 83% reduction - 0.0007 CFG per $ per day

0 voters

The current reward rate is 0.0017 CFG per day per $ invested.

What should the reward rate be for Asset Originators?
  • 41% reduction - 0.0010 CFG per $ per day
  • 58% reduction - 0.0007 CFG per $ per day
  • 70% reduction - 0.0005 CFG per $ per day
  • 82% reduction - 0.0003 CFG per $ per day

0 voters

Reward Rate Review Process

Along with the new reward program, the community has been discussing how often to review and adjust the rewards going forward. Instead of allocating a fixed amount of CFG at a given rate the rewards will be reviewed on a regular basis. We need to decide on a frequency at which we can update these rewards.

Adjust rewards at most
  • Weekly
  • Every two weeks
  • Monthly

0 voters

8 Likes

Hi Community,

no matter for which reward rate you vote, please think about the consequences for your investment in short and long-term.

Best, Supermario

6 Likes

Yep agreed. I am sure the community will vote considering all aspect of future growth prospects along with project sustainability.

Regards
Pats

4 Likes

As mentioned above think careful about the future value of the project & CFG token, looks like many short sighted people have voted so far the reward needs to drastically come down or face dumping on a daily basis. Of course can change in future proposals, lets see how the democracy vote plays out.

3 Likes

Just like any political election voting is important and everone’s opinion counts. The more votes the better…
That’s the real power of decentralization

2 Likes

I feel like the newcomers attracted by the coinlist sale have not had enough time to familarize themselves with the projet and reflect on what this vote entails, and many are just rushing to vote on the first answers in the list just to complete mission 5… This poll is important and I believe it would have been better had this important decision been left to an actual on-chain vote. @lucasvo . It’s a shame that your suggestion to reevaluate more frequently (every 2 weeks) won’t be applied IMO.

1 Like

I very much agree here. The reality though is that anyone can put forward a proposal via democracy on chain and as long as it gets enough support it can then be voted on. If we realize that these parameters are not sustainable we can propose changes and go through an on chain vote at any time.

Unfortunately I think we are already at that place. Doing the math based on the current proposals:
0.001 CFG AO rewards + 0.002 CFG LP reward comes out to 10.3% inflation per year at 40M TVL (which we are hitting soon). I don’t believe that this is a sustainable rate in the long run and we will have to reduce them more in the near future.

3 Likes

What would be the value of the CFG token according to you? This may also give other people an idea and convince it is now best to decrease the rate to avoid too much inflation.

Thank you.

This is only speculation but they were priced at $0.55 on Coinlist two weeks ago. The sale was massively oversubscribed (600k registrants with room for only 30k). So I think valuing CFG at $0.55 is extremely conservative. This would put the APY at 40% for LPs with rewards of 0.002 CFG/$/day.

This is significantly above yield farming that you can do in established, audited and stable lending protocols in DeFi today.

1 Like

Until the community matures and learns to care about governance I’d personally be all for a temporary “dictatorship” where you (or the team) decide the way forward for the project. It’s a bit too early to rely on community votes for important parameters of the project IMO

1 Like

If we don’t enter crypto winter the CFG will probably be multiples of the Coinlist price. If we assume a 10x (pretty standard for a coinlist token ROI), that’ll be a 400% APY!! This type of APY is not uncommon for bootstrapping liquidity on new Defi pools but only for a short period of time (and to mitigate impermanent loss which is not an issue here)… It feels Centrifuge should be past that phase already

1 Like

@dao34 I don’t believe we should have any dictatorship and ultimately this is even out of my control - it’s up to governance and thus the majority of the token holders to decide to mint the rewards necessary to fund this program and ultimately the on chain vote will decide.

We will move ahead with proposing a reduction to the current leading votes going into effect in the coming days and discuss reward rates again shortly after we see the impacts of the first round of adjustments.

3 Likes

The estimated inflation rate of 10.3% per year at 40M TVL is too high for a healthy and sustainable growth of the ecosystem. I am confident it won’t stay the same in the mid-term and will (fingers crossed) decrease further after the next community voting

1 Like

Sure, however a democracy can only be healthy when the population is educated enough. Before submitting this poll to a population mostly ‘uneducated’ on the matter, it would have been beneficial to have something like a medium article regarding the tokenomics of CFG and the potential consequence of each option.

3 Likes

While publishing of medium article should a step in right direction, I believe creating awareness and making community taking informed decision over the future proposals shall be a continuous efforts since it would take effort to have this paradigm shift in investor’s perception. Available communication platforms can be exploited to maximize these and hence the community has that sense of responsibility and accountability, thereby project sustainability in long run.

1 Like

Update: On-Chain Vote Now Live

The Tinlake Liquidity Rewards Parameters Update is now live for a Council vote on Centrifuge Chain.

You can find the vote here in the Centrifuge Chain Portal.

This vote includes 2 calls:

  1. Mint 1M CFG to the Tinlake Liquidity Rewards wallet
  2. Remark on-chain the hash of the above updated Parameters on IPFS
    QmSyvbH3seZg5eyAHq4xasenQZLVHfYJpc8rvNFAwzfhfz

Text:

2021-06-10 Centrifuge Tinlake Rewards Update
By casting your vote on chain, you indicate your approval of changing the Tinlake Rewards on Centrifuge as follows:

  1. Mint 1’000’000 CFG into the rewards account
  2. Lower the Liquidity Provider rewards from 0.0042 to 0.002 CFG per $ invested per day
  3. Lower the Asset Originator rewards from 0.0017 to 0.001 CFG per $ invested per day

These values will be valid until governance proceeds with another vote.

References

  1. Poll
  2. RFC

If approved by the Council, this proposal will be fast-tracked. This will give token holders 3 hours from the time of the fast-track to vote on this proposal.

We will post an update here when the vote is live on Centrifuge Chain.

Hey, the current liquidity provider rewards should be 0.0042 rather than 0.042 CFG per USD, right?

Hi Anna. Yes, indeed this is a typo. :wink:

Thanks for checking

Update: Vote now live in Democracy

The Tinlake Liquidity Rewards Parameters Update is now live for a vote in Democracy on Centrifuge Chain.

Please vote here: Polkadot/Substrate Portal

1 Like