To date, there have been three updates to the CFG rewards since launch in October and the protocol has awarded close to 5M CFG in rewards to users of the protocol. The program has performed quite well and we are nearing the most recent reward period that was discussed in a previous post.
There are two significant changes since we last updated the parameters and I believe the community should have a bigger discussion around how to move forward with the reward program:
- As of now, most pools are oversubscribed and we are in a situation where the protocol does not need extra liquidity.
- The Coinlist sale last week gave a much better idea for what the price of CFG could be once the token sees liquidity and it becomes available on exchanges.
With these changes I believe it’s prudent to significantly reduce rewards and start adjusting these parameters more frequently. This post should kick off the design of this new process and we will be discussing the rewards in our community call.
We need to come up with a process for the community to follow when setting rates. I would suggest the following as an initial process that can also serve as a model for future adjustments.
- RFC Phase: weigh in until 2021-06-03 in this thread with your proposals and ideas around parameter setting
- Community Call (2021-06-03): discussing the reward parameters will be on the schedule for this week’s community call
- Proposal Voting Period: based on the RFC phase and discussion in the community we will be asking the community to vote. The voting period will begin 2021-06-04 and end on 2021-06-07.
- Council vote : based on the forum vote we will put forward an onchain vote for the council to ratify the community proposed.
With the upcoming events around token liquidity it’s in the community’s best interest to act quickly to adjust rewards based on the development of the price and any demand/supply imbalances in the protocol. We have in the past tried to allocate fix budgets to rewards which I believe is not the right way forward anymore as this is not flexible enough.
Instead I would propose we switch to adjusting rewards at least every 14 days. If a community member believes the reward rates are not appropriately set, the process to follow is to post an RFC in the forum outlining why and how they believe the rewards should be adjusted and asking community members to weigh in. If the community reaches a consensus on concrete proposal it will then be put forward for a vote by the council on chain. If the proposal passes, the rewards will be implemented.
On Coinlist $19M worth of CFG was sold for $0.55/CFG and I use this as a benchmark rate for proposing rewards. Based on this price, I would propose a reward rate of 0.30CFG/yr or 0.00075 CFG per $ per day.
What are your opinions and thoughts on how to structure the governance process and rewards?