Proposal #5: Add AP reward for DAI, cDAI and WBTC pool

TLDR

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.

Motivation

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.

Specification

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
0.1 WBTC 15
1 WBTC 120
10 WBTC 1000
5k cDAI 2
50k cDAI 10
500k cDAI 40
5m cDAI 250
100 DAI 2
1k DAI 10
10k DAI 40
100k DAI 250
0.1 ETH 4

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:
0x36fD4Af9D881f43b33108f3F74Df25C0139Cf610

Update: The proposal is live, go vote now: https://app.tornado.cash/governance/5

7 Likes

I disagree with retroactively changing the AP/BLOCK rate for existing deposits in the 0.1 ETH pool.

We paid very high gas prices to make those deposits. Forcing everyone to withdraw them to claim the rewards will cause the deposit pool to plummet and many people may come out negative on the transaction.

Maybe a better way is new deposits going forward after the proposal will only be eligible for the updated 4 AP/BLOCK.

2 Likes

I think the rewards for cDAI should be slightly higher compared to DAI.

  1. Depositors take additional risks while the treasure earns all the $COMP
  2. 5m cDAI is roughly 106637.510887 DAI so the amount is already slightly higher then the DAI counterpart (100k DAI)

It’s not technically possible to change only future ap rate.

But you already earn additional interest on cDAI compared to DAI.

Ok, so maybe we shouldn’t change it then?

This change retroactively takes back AP that has already been earned by miners that have had their deposits locked for all this time.

Many people were planning to keep the deposits in the pool for months until gas prices are lower. Now it will force them to claim the note and the AP at high gas prices.

I worry this change as it is proposed will lose a lot of trust with the community because it will take away any guarantee of the rewards that are earned from mining.

How will we know that there won’t be another change 6 months from now to 1 AP/BLOCK?

If it’s determined that we must change it, I question if it really is “impossible” to only change the future rate.

We are talking about writing code and logically it seems possible to write code which has an if / else statement to determine the reward that is issued before or after a certain block.

Would it require additional changes? Yes. But it is not impossible.

Ultimately any proposal comes down to the community vote. But this change to the 0.1 ETH pool is being slipped in with the addition of AP mining on the other pools and the devs and core team have enough control to pass it.

So this feels sneaky. We need to make sure the principle of doing what is right and trust in the project will not be lost.

1 Like

The team has 0 unlocked torn. Not sure what you are talking about.

2 Likes

Ok, my mistake. Why are you not addressing any of the other points that are being raised?

1 Like

So the additional risks depositors take, and the treasure earning $COMP without risks are not accounted for?

I assume the gas fee would be higher as well because of the extra interaction with the Compound contract.

You can withdraw before the proposal is executed and get 10 AP per block.
I get your point if you had plan to stay longer to cover your gas expenses.
But please, understand that the goal of mining is to reward useful work. The 0.1 ETH pool is pretty useless nowadays given the gas prices.

You can never know what the future is made of :slight_smile: The rule of the game is that governance gets to decide.

1 Like

I think COMP rewards will go to the governance treasury. It can be allocated/spend with the help of another proposal.

Regarding the gas cost, cTokens transfers are slightly more expensive but that’s not excessive.

Currently, Bitcoin and Ethereum are in the process of a long-term price increase.
now, ETH at $2,000 and this proposal is reasonable and balanced, but if it rises to $4,000 or $10,000, it will distort the mining balance considerably.
(This is not an impossible situation.)

If we adopt this suggestion, I suggest that rebalance about once a month. The idea is to maintain mining efficiency on a ratio basis.

It seems the problem is that the changes in mining rewards for rebalancing are retroactively applied to all existing deposits. So you can never know how much AP you are actually earning until you withdraw it.

Good job team, great proposal.

Everyone can now vote by clicking on the link down below and locking any TORN they hold.

We have roughly 3 days to reach 25,000 TORN for this proposal to be executed.

https://app.tornado.cash/governance/5

2 Likes

It is deceiving that there is no mention on the proposal description that the 0.1 ETH pool will have AP mining rewards cut by 60% retroactively to all current deposits.

2 Likes

This project is for privacy not to make people money. You enter the pool for privacy getting AP is a bonus. Deposit 1-10 ETH if you are trying to mine

1 Like

I’ve voted yes. WBTC & other new stable pools is more valuable moving forward for actual crypto users trying to find privacy. This should insensitive people to enter the new pools. Great thinking team. Maybe a RAI pool too?
it could help with anonymous loaning & debt repaying.

1 Like

Hello, I have voted no for this proposal with 1,300 TORN.

I think that low adoption of the newer pools indicates that we have expanded pools too quickly. A pool with 0 deposits is not serving a market need. If we add AP rewards, we ought to expect that 100% of deposits are AP miners, and 0% are using the pool for anonymity. Rather than de-facto punishing existing depositors in the ETH pools by increasing AP issuance rates to multiple pools, we ought to carefully consider which pools are most useful.

For example, the cDAI and DAI pools are naturally competitive with eachother. Having both pools is a mistake, and indicates a too-quick expansion. Which of those two pools should we subsidize?

6 Likes

And how a pool with 0 deposits is supposed to serve market need? Users that want anonymity have zero motivation to deposit in such pool. Those pools have to be bootstrapped using anonymity mining, only after that there is a change that organic users will utilize this pool.

The idea is to use torn to bootstrap all good candidates and then we will see which one will have actual use.

We already have plenty of eth deposits, redirecting some of this activity to the new pools is a good thing.

2 Likes

How do you intend to distinguish between actual use and mining-only use?