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:
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.