RFC: Increase Transaction Fees on Centrifuge Chain by 100x and Use the Fees towards a Token Burn

Also I would like to mention Altair here. It’s 10x cheaper than Centrifuge and have 4x lower fees. From security perspective we might consider to increase fees on Altair as well

Hey thanks for the response Jeroen! :slight_smile: Yes the proposal’s intention is set transaction fees to add utility to the token, however not at the cost of interfering with Centrifuge’s growth. If at any point the fees become prohibitively high for any actors in our ecosystem then an additional proposal can be introduced to revert back to the original fees. I definitely agree we should not discourage issuers from interacting with Centrifuge chain, currently a 100x increase may not be significant enough to cause those limitations, but in the future that might not be the case. Perhaps there are immediate significant costs that certain actors may face from this proposal that I’m not aware of?

I believe the main advantages of this proposal is that it discourages spam but also that all ecosystem actors of Centrifuge chain can help contribute to CFG token utility, not just borrowers via protocol fees.

Theres an off chain poll posted here Poll: Increase Transaction Fees on Centrifuge Chain by 100x and Use the Fees towards a Token Burn

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Thanks, I have done it.

LFG! lfg lfg lfg lfg

Following on the next steps of this proposal. The team is working on the following:

  • Adding the Treasury pallet to the Centrifuge Runtime
  • Correct Split Rate: Out of the tx fee how much goes to the author and how much to the treasury?
  • Correct Treasury Burn Rate: Out of the amount that is accumulated in the treasury, how much of that we burn every session.

This parameters affect the token economics so we need to do some discussion on the correct ones to propose later.

We will provide more information around this in a timely manner.

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Hi everyone!

We have just merged this pull request with the following changes regarding this topic:

  • An increase by a factor of 33 the current fees.
  • We have added a treasury pallet. Now 80% of the fees are going to it. The remainder 20% goes to the block author.
  • The current burn rate is set to 0%. This percentage will change when the treasury contains a relevant amount of tokens.

These changes are tentative and can change in the near future.

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Hey @luis !

Great news ! Two Question regarding the Burn rate and treasury management .

  • Will the Burn rate be determinate by the community through voting or else ?

  • Will the community be able to swap some of the CFG hold in the treasury for other Token like Ausd for exemple to reduce the exposure of the Centrifuge treasury to Price variation of the CFG token ?

Have a nice day !

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We just discussed this on the governance call as well, but the short answer is: yes it would be a governance proposal to upgrade the chain to change the parameter. This can be started by anyone and would follow our regular governance process.

The recording will be posted on this thread today or tomorrow: Centrifuge & Altair Governance Call #8 2022-08-18 (18:00 CET)

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Yup, i was on it, got my answer for the first question and the confirmation here :slight_smile:

Any insight you might share about the second one ? I think it would be a good idea to not keep the entire treasury in CFG, there is many example of treasury from protocol/dao that got shrunk by the recent bear market (DyDx, Aave, Uniswap etc etc ).

So is it possible for us to vote on a proposal like this and does the Polkadot/Centrifuge Governance “Code” allow us to hold different assets in the Treasury?

Have a nice day !

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Good day Sherman
Wow. This proposal is very interesting.
:eyes:

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Polkadot/Parity is actually already discussing a multi-currency treasury: META: Moving the Treasury Off the Relay Chain · Issue #5293 · paritytech/polkadot · GitHub and it’s something I’ve advocated for within the Polkadot community arleady. I think it will take a bit of time to develop this but I do very much agree with you that this is something we should look towards integrating.

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Thanks!

Sorry I’m a bit ignorant when it comes to the Polkadot ecosystem…

I’ve only worked on creating DAOs via the OpenZepplin Governor template on some EVM chains .

But yeah @ImdioR @lucasvo I think that having the choice of swaping some CFG hold in our treasury for StableCoins (most likely Ausd in our case) is the path forward to assure the perennity of the Centrifuge Protocol/Dao !

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Hi Léo.

I like the idea of diversifying the treasury. Do you have any concrete ideas how this could look like?

Feel free to create a new forum post as a Request for Comments (RFC) to get feedback and comments on the feasability of your proposal.

I find it better to create a new post to start the discussion instead of commenting here where it might be forgotten in the thread :wink:

Good day Luis and thank you for this update.

Hey @Tjure07

So basically, as CFG Token accrue in the Centrifuge Treasury, community could choose to Swap some CFG for a StableCoin (Ausd or else). This would allow us to preserve the Treasury from the inherent volatility of the CFG Token. Doing this will/should allow us to have better visibility on how much we have and what we could fund with the Treasury (Credit Group, Analytics Tools, etc etc …).

Something that would be very nice to do with the part of the Treasury that would have been swapped would be to earn yield on it, so we don’t let the Treasury capital stay idle and we keep the Treasury growing.

For the Governance Scheme, as I stated before I’m not very knowledgeable about how Polkadot work, but basically, it would follow the current Centrifuge voting process (RFC then Onchain voting) but I can’t really tell you how it would look code wise…

As for the RFC, as Lucas stated, the Polkadot governance scheme doesn’t allow us to keep a multi-currency treasury as now, so I might wait until Parity find a way to allow that and then yeah for sure I will find the time to do it !

I still got some more general question about this fee bump…

First - I see that you guys are still doing some testing on the fee bump on GitHub, So as now the feed bump is not activated and we are still waiting on few things on your end correct ?

Second - What about Tinlake? Will there be ever fee taken from operation that are done on Tinlake ? Because as the Centrifuge Partnership with Maker is getting deeper (Sup BlockTower :wink: ) and deeper I don’t really see Maker using a bridge.

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And invest in Cent Pools ? :wink:

Once Pools will be launched on Cent Chain all trx will be done on Cent chain and as a result more trx → more fee

Btw thank you for deep comment :wink:

If legally possible sure it’s an option !

Pretty sure MakerDao won’t want to use a bridge to connect to Centrifuge RWA (on the CentChain) and actual pool will need to be transferred to the CentChain and this will take time…

Maybe you have more information about Centrifuge and Maker than me, but, to me, it seem unlikely to see Tinlake dying on the medium term, if not ever, hence my question on Tinlake fee.

Salut Léo.

The team is currently working on a proposal to increase the utility of CFG to a) turn on protocol fees (e.g from locking NFTs and b) staking in pools (use your CFG to vote on upcoming pools)

The burning increase must be implemented both in CFG and in ALTAIR