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
0voters
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
0voters
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.
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.
Just like any political election voting is important and everoneâs opinion counts. The more votes the betterâŚ
Thatâs the real power of decentralization
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 . Itâs a shame that your suggestion to reevaluate more frequently (every 2 weeks) wonât be applied IMO.
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 donât believe that this is a sustainable rate in the long run and we will have to reduce them more in the near future.
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.
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.
Until the community matures and learns to care about governance Iâd personally be all for a temporary âdictatorshipâ where you (or the team) decide the way forward for the project. Itâs a bit too early to rely on community votes for important parameters of the project IMO
If we donât 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), thatâll 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
@dao34 I donât believe we should have any dictatorship and ultimately this is even out of my control - itâs 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.
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 wonât stay the same in the mid-term and will (fingers crossed) decrease further after the next community voting
Sure, however a democracy can only be healthy when the population is educated enough. Before submitting this poll to a population mostly âuneducatedâ 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.
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 investorâs 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.
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:
Mint 1â000â000 CFG into the rewards account
Lower the Liquidity Provider rewards from 0.0042 to 0.002 CFG per $ invested per day
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.
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.
