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Vault rewards can be activated
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- AI Summary
Summary
Vault block rewards are ready to be activated, according to the Kintsugi tokenomics: 30% of 4 year supply (i.e., 3 million KINT), emitted as follows:
- 40% in the first year (1.2 million KINT)
- 30% in the second year (900k KINT)
- 20% in the third year (600k KINT)
- 10% in the fourth year (300k KINT)
Proposal
Why do Vaults receive block rewards?
Vaults are the heart of the Kintsugi network. Vaults are network participants who ensure BTC remains locked on Bitcoin while kBTC exists - that is, they enforce the 1:1 peg to locked BTC. To prevent misbehavior, Vaults lock collateral (at launch in KSM) with the parachain such that the collateral value always exceeds the value of the secured BTC. If a Vault misbehaves, their collateral is slashed and users reimbursed. Vaults take up liquidation risk as well: if the price of the collateral assets decreases significantly compared to BTC, Vaults may be liquidated and lose their collateral. Vaults hence receive KINT as reimbursement for their risk - and to ensure they can protect themselves against hostile governance takeovers. Anyone can become a Vault, anytime.
Reminder: Vault only earn block rewards if they have BTC locked. Rewards are distributed based on each Vault’s share of the total BTC locked.
Why activate now?
With the latest runtime upgrade, the parachain is ready to start kBTC minting. The next, and final step before kBTC launch, is hence to activate Vault rewards via an on-chain governance proposal.
Fellow Kintsugi innovators - as always, we appreciate your time reviewing this proposal and welcome comments and feedback.
Resources
- Interlay/Kuntsugi 101: https://docs.interlay.io/#/getting-started/interlay-101
- Kintsugi token economy: https://github.com/interlay/whitepapers
- Vault docs: https://docs.interlay.io/#/vault/overview
- Kintsugi is a network that uses Vaults to ensure BTC remains locked on Bitcoin while kBTC exists.
- Vaults lock collateral to prevent misbehavior and take up liquidation risk.
- Vaults receive KINT as reimbursement for their risk and to protect themselves against hostile governance takeovers.
- The parachain is ready to start kBTC minting, and the next step is to activate Vault rewards via an on-chain governance proposal.
- Anyone can become a Vault, and rewards are distributed based on each Vault's share of the total BTC locked.
ok, where do we vote?