**Introduction**

The purpose of this funding proposal is to request 85,500 INTR tokens (~2,000 USD based on Subscan EMA7 price) in treasury funds to incentivize content creators in the Interlay and Kintsugi networks to produce and distribute high-quality and informative content. 

There’s currently a lack of accessible and accurate information about Interlay and Kintsugi online, which is hindering the growth of the networks. To address this issue, we propose to use the reward delivery system, WagMedia, to efficiently incentivize individuals to discover, develop, and distribute network-related content.

**About Wagmedia**

WagMedia is a Discord-based reward delivery system that connects those who want to share, create, and distribute the story of Dotsama with sources of funding. This system can also help Interlay and Kintsugi fulfil their purpose by efficiently incentivizing individuals in the discovery, development, and distribution of network-related content. Anyone is welcome to join the WagMedia Discord server and register with their substrate address. Actions performed on the server that meet the content objectives of participating treasuries are awarded by treasury directors who react to contributor posts with a custom value emoji. The user is then paid out by that treasury at the end of each week.

**Proposal**

The proposed strategy is to distribute treasury funds through WagMedia to content creators who meet the objectives of Interlay and Kintsugi. The funds will be used to build and maintain a marketing arm that provides accurate information to token holders. By doing so, we aim to establish a connection between token holders, the treasury, and media that works in their best interest.

The WagMedia reward delivery system will ensure that the distribution of funds is fair and transparent. This will create a positive impact on the Interlay and Kintsugi networks by increasing the availability of accurate and informative content to token holders, which will help drive network growth.

**Handling of funds**

Funding account: wd7ujFEwyRMMobncZ2Dx2keEVWWA42BATv7B3m7Vm8fmV3XsP
The funds will be deposited into an account controlled by a bot developed by Wagmedia that automatically generates reports based on the created content and tracks payable bounties to individual contributors. 

**Conclusion**

This proposal aims to use 85,500 INTR tokens of treasury funds to incentivize content creators in the Interlay and Kintsugi networks to produce and distribute high-quality and informative content. The funds will be distributed efficiently and strategically through WagMedia to ensure a fair and transparent distribution. The end goal is to provide accurate information to token holders and to drive network growth. We believe that this proposal will establish a connection between the token holders, the treasury, and media that works in their best interest.


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Using Treasury Funds to Incentivize Content Production and Distribution Through Wagmedia

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# Summary
- Bootstrap liquidity for DEX and lending market through incentives to ensure a successful launch with sufficient liquidity to attract power users
- Source enough DOT supply into lending market to enable the usage of the iBTC staking product
- Register qDOT and qUSDT as vault collateral to improve efficiency and source liquidity into lending market
- Focus on main DEX pools (iBTC/DOT, iBTC/USDT, INTR/DOT) and lending markets (iBTC, USDT, DOT)
- A total of 11.96m INTR (~$239,000) would be requested from the treasury to incentivize DEX pools and lending markets for three month. This amounts to around 4.6% of the current treasury
- Target TVLs are $3.7m for the DEX and $1.6m for the lending market

# Goal
The goal of this discussion post is to get community feedback on the plan outlined below, how to successfully launch the DeFi hub on Interlay and to attract sufficient capital to enable efficient usage of the DEX, lending market, bridge as well as the highly anticipated iBTC staking product.

In order to achieve this, two main requirements need to be put in place. First, to attract enough liquidity, it is proposed to incentivise the lending markets and liquidity pools. Secondly, to ensure sufficient supply of DOT into the lending market, which is a requirement for the iBTC staking product to work, it is proposed to register qDOT as vault collateral. 

qDOT is the token that a supplier receives for depositing DOT into the lending market. qDOT can be redeemed for DOT any time, given the market has free liquidity. Doing so, vault operators don’t have to choose between depositing into the lending market or locking DOT as vault collateral but can utilize both, thereby providing borrowing liquidity for DOT as well as minting capacity for iBTC.

# Vault collateral
As stated above, registering qDOT as vault collateral is considered one of the main pillars for a successful launch of the iBTC staking product. Apart from qDOT, it is also proposed to register qUSDT as vault collateral. Albeit not being so popular as collateral, utilizing qUSDT as vault collateral would still pose an improvement in terms of capital efficiency and should have similar effects as qDOT in terms of supply in the USDT lending market.

Based on the [analysis](https://github.com/interlay/collateralization-analysis/) the following parameters are proposed:

| Asset | Liquidation Threshold | Premium Redeem Threshold | Safe Mint Threshold |
| --- | --- | --- | --- |
| qDOT | 125% | 140% | 155% |
| qUSDT | 135% | 145% | 155% |

Since qTokens are just a claim of the underlying token deposited into the lending market, the underlying tokens served as a proxy in the analysis and hence both share the same thresholds.

# DEX

One of the main goals of the launch in order to be considered successful is to attract sufficient liquidity into the pools to ensure efficient trading, even of larger positions. This is an important requirement to attract ‘power user’ that account for the majority of the volume on a DEX and are therefore a critical user group to achieve a level of trading volume that generate sustainable trading fees for liquidity provider.

Based on the experience from the Kintsugi launch, it is proposed to launch with three essential pools, with a focus on the iBTC/USDT pool, which attracted the most volume and TVL on Kintsugi (kBTC/USDT), despite lower APY compared to the kBTC/KSM pool. The proposed incentives would run for 3 month to allow enough time for trading activity to gain traction while simultaneously avoid draining too many funds from the treasury.

### Pool Overview

| Pair | Target TVL in USD | APR at target TVL | DOT deployed at target TVL | iBTC deployed at target TVL | INTR | INTR in USDT |
| --- | --- | --- | --- | --- | --- | --- |
| iBTC/DOT | 1,200,000 | 26.7% | 113,422 | 22 | 4,000,000 | $80,000 |
| iBTC/USDT | 2,000,000 | 15.2% | — | 37 | 3,800,000 | $76,000 |
| DOT/INTR | 500,000 | 56.0% | 47,259 | — | 3,500,000 | $70,000 |
| Total | 3,700,000 |  | 160,681 | 60 | 11,300,000 | $226,000 |

# Lending

Similar to the DEX, it is suggested to focus on the most important markets to bootstrap enough liquidity for borrowing and lending activities, with a special focus on the DOT market due it’s importance for the iBTC staking product.

## Market Overview

### Interest Rates Parameter

The interest rate parameters were calibrated to provide a competitive supply and borrow APY at the optimal utilization ratio compared to other lending protocols on Polkadot. The jump rate for DOT was calibrated in a way to still provide excess return for the iBTC staking product at optimal utilization. Note that the optimal utilization for DOT is suggest to be at 80% to create more liquidity to withdraw qDOT to DOT if vaults that use qDOT as collateral get liquidated.

| Market | Base Rate | Jump Rate | Full Rate | Optimal Utilization |
| --- | --- | --- | --- | --- |
| iBTC | 0.0% | 5.0% | 50.0% | 90.0% |
| DOT | 5.0% | 20.0% | 50.0% | 80.0% |
| USDT | 0.0% | 10.0% | 50.0% | 90.0% |

### Security Parameters

Based on the [analysis](https://github.com/interlay/collateralization-analysis/) the following parameters are proposed:

| Market | Max LTV | Liquidation LTV | Reserve Factor | Close Factor | Liquidate Incentive | Liquidate Incentive Reserved Factor | Supply Cap (# tokens) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| iBTC | 0.63 | 0.67 | 10.0% | 50.0% | 110.0% | 0.0% | 30 |
| DOT | 0.67 | 0.77 | 10.0% | 50.0% | 110.0% | 0.0% | 1,000,000 |
| USDT | 0.67 | 0.74 | 15.0% | 50.0% | 110.0% | 0.0% | 600,000 |

Details about the parameters can be found in the (github repo)[https://github.com/interlay/interbtc/blob/f0a0144a0cd7e512bf9b2c55e57b12e4b3b5e9c4/crates/loans/src/types.rs#L89].

### Incentive Estimates

First and foremost it’s worth noticing that no incentives for the supply of iBTC are suggested. This is because the iBTC staking product relies on users supplying iBTC and locking it as collateral in order to receive staking rewards. Hence. the target TVL for iBTC is equal to the `target TVL of DOT * DOT assumed utilization / iBTC max LTV`.

The incentives for the other markets are suggested to run for three months and are merely a means to bootstrap the initial liquidity. After attracting sufficient liquidity, it is assumed that users will borrow funds to use them in DeFi application, even if it’s just to do yield arbitrage between Interlay and other lending protocols.

| Market | Target TVL (USD) | Supplied Tokens | Incentive APY | Supply APY | Total APY | Rewards (INTR) | Rewards (USD) | Assumed Utilization |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| iBTC | 595,000 | 22 | 0.00% | 1.11% | 1.11% | 0 | 0 | 20% |
| DOT | 500,000 | 94,518 | 7.20% | 19.06% | 26.26% | 450,000 | $9,000 | 75% |
| USDT | 300,000 | 300,000 | 5.60% | 8.89% | 14.49% | 210,000 | $4,200 | 80% |
| Total | 1,395,000 |  |  |  |  | 660,000 | $13,200 |  |

**Note:** All calculations assume an INTR price of $0.02. The actual APR and TVL might change due to price changes of INTR and the other tokens used in these calculations.

Interlay DeFi Hub Launch Discussion Post

**INTR to Omnipool**


I have seen that recently various incentives have been made for iBTC pairs in different Dexs paid in INTR

So I would like to propose the following initiative:

**Provide INTR as liquidity in the Omnipool** (by design it allows LPing a single token) in order to access a large number of assets that will expand over time, which by providing liquidity, is as if we were opening a pair with each Omnipool asset, without the need to be incentivizing separate pools,

and in turn the Interlay community, will be able to **manage the fees generated** through governance, opening up different possibilities

It should also be noted that the HydraDX community owns and already provides **10 iBTC as liquidity**, which currently makes Omnipool the best option in terms of slippage, you can review it for yourselves

Also INTR could be used as an incentive in the Omnipool **(this can be separated in another discussion and is not the main point of the proposal)** once Liquidity Mining is active and create a broader liquidity base (with the difference that the LM of the Omnipool rewards long-term LPs, since the more last the position in the Omnipool, more rewards will be generated, these positions can also be transferred)

For now I would like to propose and discuss the above ideas, so as a community we can decide what the terms would be.