The new DAI, cDAI and WBTC pools currently have a very low deposit count resulting in a very weak anonymity set. We propose to incentivize pool usage with AP reward without changing the TORN inflation schedule.
Last month, new Tornado Cash anonymity pools were added. However, they suffer from a very low deposit count making them useless. This is the current size of the anonymity set for each new pool:
- 0.1 WBTC 0 deposit
- 1 WBTC 2 deposits
- 10 WBTC 0 deposit
- 50k cDAI 0 deposit
- 500k cDAI 0 deposit
- 5m cDAI 1 deposit
- 10k DAI 2 deposits
- 100k DAI 2 deposits
As a matter of comparaison, the ETH pools currently all have more than 10k deposits each.
Bootstrapping a new Tornado Cash pool is difficult as we face a typical chicken and egg problem. A low deposit count means a weak anonymity so there is no reason to use the pool in the first place.
To address the low number of deposits, we propose to add AP rewards for these new pools. Imporant, adding AP reward does not change the TORN circulating supply schedule. The AP is swapped for TORN in the same AMM as the current ongoing ETH pool mining. It means that no additional TORN tokens are put toward mining.
The amount of AP earned per block is chosen to maximize the amount of deposits in each pool. We propose the following reward rates:
|Pool||AP per block|
The reward for stablecoins is about 1.5 times higher than the reward for ETH and BTC pools. This is to be inline with the yields that you can observe in other DeFi protocols.
Note that the reward for the 0.1 ETH pool is changed from 10 to 4 AP per block. The reward for this pool is currently disproportionally high given its current utility at such high gas fees. The AP reward for other ETH pools remains unchanged.
Only new deposits, made after the proposal is executed, will be eligible for AP rewards (Remember that a proposal is executed at the earliest 5 days after the voting period starts. Don’t deposit before if you want to mine). They will not be any retroactive reward for deposits made prior to the proposal.
Regrading the 0.1 ETH pool, AP claimed after the proposal execution will only give 4 AP per block instead of 10. This means that if you want to get 10 AP per block, you need to claim the AP before the proposal execution.
Find the proposal contract and its tests on this repo:
The proposal was deployed at the following address:
Update: The proposal is live, go vote now: https://app.tornado.cash/governance/5