RFC: Improve Liquidity Rewards Distribution

When originally launching the Tinlake liquidity rewards there was a delay in making the user interface available for users to claim rewards. The functionality to link a user’s substrate address to their Tinlake investments on Ethereum was only available in the UI after the launch of the program. For that reason we designed the rewards such that they would be allocated even if a user has not specified to which address they want to receive them. Users could link their address at a later point and receive the rewards earned to date.

This however has one major drawback: if an address never creates the link they are still minted and allocated. There are different reasons why an address would not link them. A user could simply not be interested in the rewards, or it’s a smart contract such as another DeFi protocol that is simply unable to link the the address.

Given linking of addresses is now well supported in the UI I want to propose that we change the rewards to only start accruing once a user has linked their Centrifuge chain address.

As of last week (2021-09-24) a total of 54 addresses who are eligible in the current reward program to receive rewards have not performed the account link. This is a total of 405’577 CFG in rewards that would under the new scheme not be eligible. That’s a total of 4.8% of the rewards issued to date.

My proposal is to slowly transition over to the new way of allocating rewards and giving any users who have not yet linked 60 days to claim this before making the change effective at which point any of the 405k CFG that have been minted today would be freed up for new users and users would be asked to immediately link their address upon investing. The main goal of this change is not to take away tokens from users who want to receive them but to avoid minting tokens for addresses that never will receive them.

In addition to avoid users losing rewards they did intend to claim, we would prominently display a warning to users in the Dapp whenever they connect with an address that has not yet linked their address.

I would love to get feedback on this idea. Specifically also around the implementation timeline (how much time should we give users) and any concerns that you might have.

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Hi Lucas,

this is a very good proposal and I am surprised that around 400K CFG have been stucked in limbo. I assume the accounts and users are known who haven’t claimed the rewards yet and if so does the team give them a “reminder” to provide their Substrate address to be able to claim their rewards?

I personally think the timeline of 60 days is sufficient but it would be important to give users who want to claim their rewards but who simply forgot to connect their Substrate account (or any other reasons why they didn’t do it) a reminder before the 60 days timeline starts.

What happens with the funds? Will they automatically be available for users in Tinlake pools?

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Good evening Lucas.

I agree with your proposal, that minted tokens should be distributed and not lost in “somewhere”.

Every investor should remember the terms and conditions and of course it’s their fault if they don’t pick up their reward for whatever reason.

But, as Christine said, perhaps we could introduce an email notification of an uncollected reward?
If after notification the investor does not pick up his reward in, for example within 7-14 days, then in that case his reward is transferred to others, as you suggested earlier.

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Hi @lucasvo I also think it is a very good idea but I also think it is important to let people/organisations know they have CFG to claim. Considering everyone is KYC’d, it will be easy to join them by email for a reminder and ask them the reason they did not/will not claim their CFG. We need to be fair with everyone.

I have the question than @Tjure07: what happens with those 400K CFG if they are not claimed?

Thank you and have a great weekend! Considering the recent news with Altair, I’m pretty sure you will :wink:

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Hi Lucas,

It seems like a reasonable proposal and solution to require an address linked before any rewards can be paid out - it’s quite a lot of CFG that remains unclaimed.

As you mention, there can be many reasons for why people have not claimed their rewards. If they’re not interested in the rewards, then I don’t see any issue. If they have forgotten, I think it’s fair to give them some notice before the unclaimed rewards are distributed to new users.

And 60 days seems like sufficient time to get an address linked but it depends on how often people log in to Tinlake. Is there any data showing how often the average user logs in the Dapp?

If possible, in addition to the warning in the Dapp, could it be communicated to those affected in other ways (e.g. Social media, mail etc.)?

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I apologize for not including this earlier, of course we work with the AOs to notify any investors via email who haven’t claimed yet. This should be an effective way of communicating this change to everybody.

As for the question on what happens to the 400k (likely less once we implement this change as most people will probably link and claim them): rewards are minted on a continuous basis as soon as the allocation has been spent. If any rewards are voided here that would mean there would need to be less CFG minted and they could be allocated to investors that have linked rewards.

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Any chance unclaimed rewards could go to Maker? Since Maker is not currently receiving rewards? Looks like an elegant compromise if there are unclaimed rewards.

Just a thought. Not a formal position.

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Given that the technical hurdles I brought up have not been resolved this isn’t really an easy option. The other thread on how we can work more closely together has a few ways forward that I described that both Maker & Centrifuge need to work on first.

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