[tokenomics] Bridge CIPs

1. #1Chris Matturri05-06-2025source ↗
   Proof Group would like to officially support this to move to a vote 

   
   

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   On Sun, Jun 1, 2025 at 8:58 PM Chris Matturri <chris@...> wrote:
   

   Thanks Eric- Proof Group is happy to endorse this to officially move to a vote.  

   
   

   On Sat, May 31, 2025 at 11:54 AM W. Eric Saraniecki <eric@...> wrote:
   

   Thanks everyone for the feedback on Friday's call - I've incorporated almost everything discussed and can find in the attached

   
   

   When reviewing the concept of annual/regular audit, I felt the language proposed by Juan leaves us this option at any time with the default CNS record. We don't need to be so specific in this one regard at this time and should keep the flexibility the language SBI proposed 

   
   

   I'm ready to sponsor this - if someone is willing to endorse and move to a vote, that would be great way to pick up momentum on this

   
   

   Thanks 

   
   

   On Fri, May 30, 2025 at 4:57 AM Fernando Vazquez <fernando.vazquez@...> wrote:
   

   [Sending on behalf of Juan who is telling me that his email did not reach the mailing list]

   
   

   Hi Eric, Chris, Prakash,
   
   Juan from SBI.
   
   Please see inline comments below 
   
   

   First to Production Incentive
   Acceptance Criteria
   * Once product is live, the first bridge to facilitate movement and use of $10m of assets to/from Canton Network by an identifiable and independent third party will receive an SV Weight bonus starting at the time of the the incentive is met.
   * The bridge will have to pass a thorough security audit conducted by the GSF to qualify for this incentive. Scope will be determined by GSF in coordination with the applicant when they are ready.
   * Every effort should be made for the volume to be earned organically.
   * ‘Wash’ like liquidity will be excluded in the calculation.
   Deadline: + 180 Days from Product Integration. Reward is subject to a passing security audit and a 90 day burn in period.
   Weight: Earned: 3.5 

   
   We propose that we change the order of the first two acceptance criteria and specify when the clock starts ticking (we want to prioritize security) as follows:
   * The bridge will have to pass a thorough security audit conducted by the GSF to qualify for this incentive. Scope will be determined by GSF in coordination with the applicant when they are ready.
   * The first bridge among those who passed the aforementioned security audit to facilitate movement and use of $10m of assets to/from Canton Network by an identifiable and independent third party will receive an SV Weight bonus starting at the time when the the incentive is met. Only the volumes generated after the security audit has been passed and a 90 day burn in period will count.
   
   

   Second to Production Incentive
   Acceptance Criteria
   * Once product is live, the second bridge to facilitate movement and use of $10m of assets to/from Canton Network by an identifiable and independent third party will receive an SV Weight bonus starting at the time of the the incentive is met.
   * The bridge will have to pass a thorough security audit conducted by the GSF to qualify for this incentive. Scope will be determined by GSF in coordination with the applicant when they are ready
   * Every effort should be made for the volume to be earned organically.
   * ‘Wash’ like liquidity will be excluded in the calculation.
   Deadline: +180 Days from Product Integration. Reward is subject to a passing security audit and a 90 day burn in period.
   Weight: Earned: 1.5

   
   We propose similar changes to the first two acceptance criteria of the Second to Production incentive:
   * The bridge will have to pass a thorough security audit conducted by the GSF to qualify for this incentive. Scope will be determined by GSF in coordination with the applicant when they are ready.
   * The second bridge among those who passed the aforementioned security audit to facilitate movement and use of $10m of assets to/from Canton Network by an identifiable and independent third party will receive an SV Weight bonus starting at the time when the the incentive is met. Only the volumes generated after the security audit has been passed and a 90 day burn in period will count.
   
   

   First to Scale Incentive
   Acceptance Criteria
   * For each distinct crypto asset (BTC, ETH, SOL, UNI, etc.) once the bridged asset is live, the first bridge to move $50m of that asset to/from Canton Network will receive the default asset CNS entry for that asset.
   Deadline: + 180 Days from Product Integration. Reward will be granted on an asset-by- asset basis.
   Weight: Earned: Default CNS Entries

   
   As mentioned in Fernando's email, I think that what is referred to as "First to Scale Incentive" is the most significant and, arguably, valuable of the rewards and, as such, should also be subject to "a passing security audit and a 90 day burn in period". In addition to that, as pointed out by Kinga, the status of a bridge as the preferred option for a particular asset should be re-evaluated periodically.
   
   We propose the following acceptance criteria to the "Fist Scale Incentive":
   * The bridge will have to pass a thorough security audit conducted by the GSF to qualify for this incentive. Each distinct crypto asset (BTC, ETH, SOL, UNI, etc.) may require additional security checks. Scope will be determined by GSF in coordination with the applicant when they are ready.
   * For each distinct crypto asset, the first bridge among those who passed the aforementioned security audit and checks to facilitate movement and use of $50m of that asset to/from Canton Network by an identifiable and independent third party will receive the default asset CNS entry for that asset at the time when the the incentive is met. Only the volumes generated after the security audit has been passed and a 90 day burn in period will count.
   * Default CNS entries are not granted in perpetuity and the preferred option status for a particular asset will be reassessed at least one a year with a focus on the security track record and cross chain transaction volumes. The specific criteria to renew a default CNS entry shall be determined by standard governance procedures.
   
   If we agree to this stronger criteria the deadline should be changed accordingly:
   Deadline: +180 Days from Product Integration. Reward will be granted on an asset-by- asset basis and is subject to a passing security audit and checks  and a 90 day burn in period.
   
   
   I also understand that this group discussed moving the granting of default CNS entries (i.e. the First to Scale Incentive) to its own separate CIP in the past, which I think should be given serious consideration. While milestone based rewards for speed make sense in the current stage of growth of the Canton Network in a risk-adjusted basis, the calculus is different when it comes to granting default CNS entries, because, by giving preferred status to a bridge for a particular asset class, we would be exposing Canton to significant reputational risk in the event of a security incident. If we decide that we want to leave this incentive in this CIP, we should certainly add the new criteria being proposed here, which would allow us to define and implement the rules and processes for the granting and renewal of default CNS entries.
   
   Finally, we worry that the current weight of 3.5 for the First to Production reward is high compared to the standard integration reward (1.5). While this achieves our goal of incentivizing providers to complete the integration first, it has the opposite effect once the first integration is complete for providers 2 and 3 and it might result in them not bringing their integration forward.
   
   
   Juan
   
   
   
   On Wed, 28 May 2025 at 05:26, Prakash Neelakantan via lists.sync.global <prakash.neelakantan=broadridge.com@...> wrote:
   

   Thanks Eric 
   Agree with Chris on this. It's a fair model for a key function. I am good with this 
   
   Prakash 
   
   

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   From: tokenomics@....global <tokenomics@...> on behalf of Chris Matturri <chris@...>
   Sent: Tuesday, May 27, 2025 2:52 PM
   To: eric@... <eric@...>
   Cc: Fernando Vazquez <fernando.vazquez@...>; tokenomics@... <tokenomics@...>
   Subject: Re: [tokenomics] Bridge CIPs
    
   This Message Is From an External Sender
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   Thanks for sharing the updated Eric.  Like the idea of creating a +1.5 weight to encourage a 2nd to still continue production.  
   
   Happy to support this to a vote if we are ready now 
   
   On Tue, May 27, 2025 at 11:13 AM Eric Saraniecki via lists.sync.global <eric=digitalasset.com@...> wrote:
   

   hi everyone
   
   thanks for all the feedback on Friday - here is my latest draft which, I believe, takes into account everyone's feedback 
   
   FYI that some of these parties are in the middle of H2 2025 planning so it would be good to resolve this week if we can 
   
   On Thu, May 22, 2025 at 1:33 AM Fernando Vazquez <fernando.vazquez@...> wrote:
   

   Eric, Chris, all,
   
   Regarding the Bridge SV CIPs, I agree that in this case it is warranted to offer a uniform reward for each bridge for the three reasons that Eric stated ("1. It's hard to build safe bridges 2. Because of #1, the time risk on any of these bridges delivering is very high. [...] 3. Given the time risk, I think we need a few irons in the fire but the initial investment from each bridge is very high so they will want to know there is something in it for them") and it also makes sense to put more weight on the adoption incentives.
   
   On the other hand, I think that we should do without the three speed/volume oriented incentives (first to production incentive, second to production incentive, first to scale incentive) as defined in v0.2, because, if you game theory it, one may be tempted to prioritize speed over security, especially if one thinks that the potential upside (default CNS entries, bonus weight) is bigger than the downside - this will depend on things like the market cap of the bridge's native coin, cyber security track record, etc.
   
   That said, I still think that it makes sense to have some kind volume incentive, but it should be dependent of having passed our assessment first (see "4." below).
   
   Bridging with other blockchains is one of the foundational services that we need as the Canton Network and security should be the first priority, which I think will require a more hands-on approach from us to protect the Canton Network - we certainly do not want to be associated with a hack in one of our bridges, especially one to which we may have granted asset naming preference, even if we are not directly responsible for it.
   
   What do you think about the approach below?
   

   Integration incentive: 1.5 each [no change from v0.2]
   Adoption incentive: ~1.5 each (0.5 per 5 assets/applications using Canton via the bridge) [no change from v0.2]
   No direct speed/volume oriented incentives.
   For each distinct crypto asset, grant asset naming preference (default CNS Entries) to the bridge that a) passes the assessment of the Tokenomics Committee (we may need to use a third party for this) and b) facilitates the movement of $50m of that asset to/from the Canton Network. The latter is easy to measure and incentivizes bridges to bring actual volumes. The bridge being a foundational service, "a)" (the assessment) is the more critical part for us and an area where we cannot compromise, so I would suggest that we are actively involved during the integration and testing, conduct a cybersecurity assessment, look at the track record of the bridge, etc.
   

   I think that this would still leave us with a few irons in the fire and those bridges who see the Canton Network as a strategic priority for them would still be motivated to go live as soon as possible without compromising on testing and the security side of things - our incentives would be aligned after all. We could also increase the integration and/or adoption incentives so that the uniform reward for each bridge goes from 3 to, say, 4 to further incentivize the bridges, recognizing that all the bridges would be pouring a very significant amount resources into the integration work and testing.
   
   Best regards,
   Fernando
   
   
   2025年5月21日(水) 8:23 Fernando Vazquez via lists.sync.global <fernando.vazquez=sbidah.com@...>:
   

   All,
   
   Please find attached an updated version of the Chainlink CIP with all the non-bridge related parts and a reference to the Bridge SV CIP.
   
   Best regards,
   Fernando
   
   2025年5月20日(火) 22:55 Fernando Vazquez via lists.sync.global <fernando.vazquez=sbidah.com@...>:
   

   Understood, I will take care of that on my side and send an updated CIP.
   
   2025年5月20日(火) 22:54 W. Eric Saraniecki <eric@...>:
   

   Yes - I was thinking we would pull out the other Chainlink stuff into a separate CIP 
   
   On Tue, May 20, 2025 at 9:28 AM Fernando Vazquez via lists.sync.global <fernando.vazquez=sbidah.com@...> wrote:
   

   Dear Eric,
   
   One technical question:
   
   Assuming that we move ahead with this CIP, how would we treat the draft CV CIPs where the bridge is just one of the contributions? Should we remove the bridge part from the original CV CIP, reduce the weight accordingly and add a pointer to the "Bridge CIP"?
   
   Best regards,
   Fernando
   
   2025年5月20日(火) 1:31 Eric Saraniecki via lists.sync.global <eric=digitalasset.com@...>:
   

   Got some bilateral feedback about making this more outcome-oriented that sounded appropriate to me
   
   Here is v0.2 for your review 
   
   On Mon, May 19, 2025 at 12:07 PM Eric Saraniecki via lists.sync.global <eric=digitalasset.com@...> wrote:
   

   they are quite emphatic that non-EVM will take them 9-12 months, incentives aside 
   
   all pressure and supporting argumentation is, of course, welcome 
   
   On Mon, May 19, 2025 at 11:21 AM Chris Matturri <chris@...> wrote:
   

   Thanks for sharing Eric, this seems pretty fair to give each bridge the same weight + incentives for apps & first to market.  
   
   Layerzero just went live with a Hyperliquid bridge last week - so that was ~3 months from the launch of their mainnet EVM.  I bet we could get them to move at similar speed if they think there is enough demand, I can back channel with some team members there we know.  
   
   On Sat, May 17, 2025 at 12:24 PM Eric Saraniecki via lists.sync.global <eric=digitalasset.com@...> wrote:
   

   Hi everyone 
   
   There are a few SV CIPs swirling around for LayerZero, Wormhole, Chainlink and I thought it might make sense to normalize these all together into one CIP
   
   I'm not sending out to the broader CIP DIscuss because idk if this is a good approach and wanted some early feedback from those who have been in contact with some of these protocols. I don't want to get into too much of a public debate about this just yet 
   
   Normally, I would be opposed to a uniform reward for each bridge (diminishing returns) but in this case I think it is warranted for the following reasons:
   1. It's hard to build safe bridges 
   2. Because of #1, the time risk on any of these bridges delivering is very high. You'll see most are asking for 1 year to do an integration and I'm a bit skeptical a name or two in this bunch can even meet that timeline 
   3. Given the time risk, I think we need a few irons in the fire but the initial investment from each bridge is very high so they will want to know there is something in it for them
   
   I put together a draft CIP that gives all 3 the opportunity to earn the same weight and then 2 jump balls:
   1. Bonus Weight for being the first in production with some volumes
   2. Asset naming preference for being the first in production with sufficient volumes 
   
   I'm open to suggestions on how to be fair, create incentives to be fast, and try to hedge execution risk a bit. Let me know if you think I missed the mark please
   
   
   Eric
   
   
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