Unclaimed Tinlake Rewards

Centrifuge Governance Governance discussion
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Good day, Community! :raised_hands:

The Governance and Coordination Group would like to gather the opinion of Centrifuge DAO and Centrifuge token holders and initiate a discussion regarding the transfer of unclaimed Tinlake rewards to the Centrifuge DAO Treasury. This discussion will be held before commencing an official governance process for the proposal.

Background

Earlier this year, CP61: Pool Rewards Parameters was approved, this proposal not only lowered the TIN/DROP rewards on Tinlake, but also established the end date for the distribution of rewards on Tinlake.

As a result of this proposal, the rewards rates were modified on November 6th to:

  • DROP 0.0 CFG/ dai
  • TIN 0.0 CFG/Dai

Tx: Ethereum Transaction Hash (Txhash) Details | Etherscan

Once the rewards rates were set to 0 CFG/DAI this meant that Tinlake investors ceased to earn CFG rewards. While the rewards were active and distributed, many investors hadn’t claimed their CFG tokens and there was always a surplus of tokens in the Tinlake rewards wallet.

To date, the Tinlake rewards wallet is still in possession of 5,409,229 CFG tokens which represent 1,04% of the Total Supply.

And what does this mean for token holders?

In our opinion, transferring unclaimed Tinlake rewards into the Centrifuge Treasury will positively impact CFG DAO and be strictly aligned with the mission of Centrifuge DAO.

  • CFG DAO benefits: Centrifuge Treasury will receive unclaimed rewards.

  • These rewards could be used, only upon centrifuge token holders approval, for example as a reward on Centrifuge Chain, Development, self-sustainability and etc.

If this discussion receives positive feedback from the community, GCG will present the proposal:

  • Transfer unclaimed Tinlake rewards to CFG DAO Treasury
  • Ensure that Tinlake investors will have enough time to claim the rewards before the transfer.

Looking forward to any feedback and any concerns that you might have, feel free to write them in the comments.

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Pretty strange so many token are unclaimed, anyway:

While simply add them into the treasury could be one way to operate, I’m sure there are plenty of options in situations like this.

  • burn all, this is more of a marketing move as most crypto natives love deflationary mechanisms.

  • burn x% , y% into treasury. 1 shot, 2 birds.

  • Re use them as future pool rewards, basically removing inflation for X amount of time (I hope it makes sense)

  • pay collators

  • launch a campaign/hackathon with the 5mil cfg as rewards

  • Use them as liquidity for potential CEX/DEX listings

Regards

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I am generally in favor of transferring unclaimed tokens from Tinlake to the treasury because this is a substantial amount which could be used in a positive way for the Centrifuge DAO.

However the accounts should have enough time to claim them (e.g end of the year) because they are entitled to get their tokens from investing.

A prior public announcement in the governance forum should be sufficient

Of course it would be interesting to find out the reasons the tokens are still unclaimed (e.g lack of knowledge, missing information, no interest in Tinlake any longer…)

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Wow, surprising to see over 5.4M CFG has been unclaimed so far. I think the rewards were earned by these investors and should remain theirs for a period of minimum of one year.

I think we would also need to do a good job to provide proper notice to all addresses who have yet to claim their rewards that they have 1 year to do so and ensure resources are present to help facilities the collection.

I think the unclaimed tokens being sent to the treasury makes a lot of sense, or they can be allotted to future rewards on the new app.

Like @Tjure07 I would also like to learn why investors may not have collected their rewards.

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Good day
@Tjure07 @sirj Thanks everyone for commenting this discussion.
I don’t expect at all that all amount of tokens will be transferred to CFG Treasury, because investors still can claim their rewards.
However this is not the first situation with unclaimed rewards that Centrifuge Protocol highlighted:

Yes, i agree that Investors should be informed about any changes and they should have enough time to claim their rewards.

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+Legal opinion on liability of future claim of funds (maybe just needing a formal process for future submission after transfer).
+Funds sitting idle if there is no further claim, does not incentivize solution to further idle funds.
+Good communication about changes being made to future claim of funds.

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I think the greatest reason for investors not claiming rewards (apart from possible forgetting) is that claiming rewards triggers income tax liability at the moment of claiming, at least in many jurisdictions. So I agree with Jay here that we’d want to give 6 months to a year of notice.

I also think it’s an option to burn these per @seppybaal’s thought. As a token with no hard cap and capability to mint for purposes like this, burning when said tokens are no longer needed should be an option as well. These tokens would be useful for the treasury, yes, but I think the 3% yearly block reward going to the treasury is ample enough at this stage of the protocol’s governance’s growth.

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Good day Devin
Thank you for commenting on this topic and adding your feedback.

Some of the possible reasons why investors haven`t claimed their rewards yet:

  • Forgetting (as you mentioned already) to claim. In case if this discussion is supported in CP the timeline for claiming should be and could be added, informed and specified in a way that everyone can claim their rewards
  • Not linking CFG wallet - this is one of the common issues
  • Avoiding to declare crypto earnings - some users just want to avoid claiming to not declare anything.

Block Rewards can`t cover the all costs of Protocol and Eco-systems expenses. I think we should wait until once Token Revenue model is published in a way to have a full and clear view.
Would be great to hear Dan Sparkle and @cassidy’s opinions too.

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I agree. One can imagine the cost and time to put out the investment. Losing the rewards will only be fair after everything has been done and the investor chose leave out their rewards…

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Sorry for the delay in my reply. I opened the window a few days ago and then totally forgot :grimacing:

That said, I know we discussed this during our last meeting a week ago, and I am in favor of returning these CFG tokens to the Centrifuge DAO treasury (provided enough of a warning / window of time is presented to those who rightfully own these tokens but have yet to claim them.

Perhaps we could even set aside a smaller portion of this allocation (10% perhaps?) to any laggards who miss the official claim window. Although this is unlikely to happen, it still might be a good idea “just in case.”

Beyond that, as noted above, totally in favor of bringing these CFG tokens back to the treasury!

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Curious to hear the thoughts of some of the pool issuers as well on this topic. Tagging a few here:

@prankstr25 @kritikos @Stu @FortunaFi @alec_caurisfinance

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I think goving notice and then moving to treasury makes most sense. Probably a period of 6 months or so after the announcement. From what I kmow some of the investors and originators either did not know how to use rewards or did not want to use them for some reason (perhaps related to legal or taxes).

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I’m strongly in favor of creating an insurance fund and move the unclaimed tokens there. Moreover, early OG supporters, who were unlucky enough to be part of defaulted pools should be compensated (at least partially) from this fund.

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