Call for Discussion: Next Steps for INTR Tokenomics


Interlay has completed it’s expansion from BTC bridge to DeFi hub over the last few months. The end of the DeFi hub incentive program at block 3714031, corresponding to ~2023-10-07 (, marks a good time to assess the INTR tokenomics and debate improvements and next steps.

INTR Goals as per v2 whitepaper

The goals of the INTR token, as suggested in the v2 whitepaper, have so far been:

  • Transaction fees
  • Governance
  • Liquidity bootstrapping (Vaults, LPs, lenders)
  • Feature access (currently collators and more in the future)

Goals of Tokenomics Update

To successfully navigate the current market and challenges faced by our ecosystem, while making sure the network is in a position to capitalize on upcoming opportunities, the goal of a tokenomics update should be as follows:

  • Keep LPs and vaults incentivized to provide capital to the bridge and Defi hub
  • Reduce sell pressure on the INTR token
  • Improve liquidity of the INTR token

Possible Actions

We identify three possible action items, which help achieve the goals above.

  • Redirect part of the INTR rewards for vaults, LPs, and lending supply to staking so that capital providers have an increased incentive to lock INTR instead of selling it
  • Deposit INTR into HydraDX’s Omnipool to improve liquidity and stop paying out high rewards for the INTR/USDT pool
  • Remove token inflation to limit the total amount of INTR to 1bn

There are likely more approaches that can be taken here, and it would be welcome to hear ideas from the community.


With the rewards for LPs and supplier of capital to the lending market coming to an end, the we as a community must decide on whether or not to prolong incentives at the current rates, cut the incentives down, or remove them altogether. Cutting down the incentives or removing them helps reduce selling pressure but will likely lead to capital leaving the bridge and DeFi hub. This in turn would reduce the efficiency at which users can trade and borrow on the DeFi hub and further lower the minting capacity of the bridge.

On the other hand, data analysis suggests that most LPs seem to be selling their INTR rewards, which puts considerable sell pressure on the token at the expense of long-term INTR holder who have staked their tokens to retain ownership over the project and cast their votes in governance. In addition to that, the continuing price decrease of INTR makes it more difficult for the treasury to compensate vaults, LPs, and contributors for the value they add to the network.

The effect on the price, created by the selling pressure, is leveraged by the low liquidity of the token. Although the market makers on centralized exchanges, as well as the liquidity of the USDT/INTR pool on the DeFi hub helped to improve liquidity, both attempts have not achieved sufficient liquidity for the token to efficiently trade at size.

Suggested Solutions

Redirecting Rewards

If we want to maintain the DeFi hub and ensure there is sufficient liquidity for efficient trading and borrowing/lending, then we cannot completely remove LP rewards. The same holds true for the bridge, which needs to attract more capital and Vaults to grow. To still reduce the selling pressure while encouraging LPs and vaults to provide capital and services, we suggest to redirect 50% of the token emission currently distributed to vaults, LP, and lenders to INTR stakers (vINTR holder).

This would change the APRs roughly to the value in the table below

Vault USDT/iBTC Pool DOT/iBTC Pool INTR/USDT Pool* Staking (max lock-up duration)
Current APR 30% 29% 24% 53% 34%
New APR 15% 15% 12% 0% - 27% 95%

*Pool incentives for this pool could be replaced by protocol owned liquidity, see the next section.

On a first sight this seems to make it much less attractive to LP or operate a vault since the direct rewards would be 50% lower than they are now. However, receivers of the rewards can still lock their INTR in staking and receive the residual (that part of INTR that has been redirected to staking) over time. This should encourage more people, especially everyone who believes in the project's long-term success, to stake their rewards rather than selling them directly, without making economic sacrifices.

Compared to directly emitting staked rewards, this solution also allows individuals to decide if and for how long they are willing to lock up their gains. E.g. if they choose to only lock them up for half of the maximum length, they would still get 50% of the maximum staking reward (~47% APY in the above example).

At the bottom line, this proposal does not change the net INTR emissions, nor does it meaningfully impact the total APR protocol participants can receive for their services. It has the potential, however, to significantly reduce selling pressure on INTR as it creates a strong economic incentive to stake rewards rather than sell them.

It is worth noting that vaults can already use yield-bearing assets as collateral, such as qTokens from lending as well as vDOT, a staking derivative powered by Bifrost. This allows vaults to “re-stake” their capital and increase earnings, such that a lower subsidy with INTR tokens at around 15% is still an attractive yield pick-up (Vault rewards are paid “on top” of staking/lending).

Deposit INTR into HydraDX Omnipool as Protocol Owned Liquidity (POL)

As already stated, the low liquidity of INTR intensified the price decrease of INTR due to constant sales of INTR tokens. One option to increase liquidity, which has already been discussed by the community, is to deposit a considerable amount of INTR tokens to HydraDX’s Omnipool via treasury. Despite the potential risks involved with depositing a large amount of INTR into Omnipool, it also comes with several benefits and the discussion has generally received positive feedback.

We suggest revisiting this topic and discussing how many INTR the Interlay DAO should contribute to the Omnipool as POL. Likewise, we should discuss if it makes sense to continue incentivizing the INTR/USDT pool at the current TVL targets (even at reduced rates), considering that this pool is very expensive in terms of rewards and only a small portion of the liquidity is required for the pools main use cases:

  • Onboarding new users that do not yet have INTR
  • The “bring your own fee” feature.

In the previous discussion it was suggested that the DAO would need to deposit around 20m INTR to Omnipool in order to achieve the same level of liquidity as a $50,000 TVL Uniswap V3 pool on Stellaswap. Due to price changes of INTR, this amount would increase to around 63m INTR (25% of the treasury) by now. To put this into perspective, to achieve the same liquidity as currently in the INTR/USDT pool, the DAO would have to deposit around 14.7m INTR into the Omnipool.

While a deposit of 14.7m would not improve liquidity, it would at least remove the need for the Interlay treasury to keep paying APRs for LPs of that pool of +50% at a minimum risk for the DAO. The other extreme of depositing 63m INTR (the number mainly comes from the comparison to a former proposal for a Pulsar pool on Stellaswap) seems to expose the DAO to a lot of risk given that this would be a large part of the treasury.

Therefore, one suggestion could be to start with a deposit of 12m-15m INTR to create a substitute for the INTR/USDT pool and stop incentivizing this pool altogether. In fact, the treasury could then sell some INTR for USDT in the Omnipool and use that to LP a small amount of INTR/USDT on Interlay to ensure some minimum liquidity is available to maintain the functions mentioned above. Subsequently, more INTR can be added to the Omnipool in the future after an evaluation of the initial deposit and/or when INTR price has come back from it’s all-time low.

Remove inflation

As the third action item, we would like to bring to discussion removing the planned inflation of INTR after year 4 (counting from the token generation event), effectively limiting the INTR supply to 1 bn.

Conversations in the community seem to indicate that many (potential) holders are worried about the possible dilution in the future, with so many unknowns.

-- Philipp @ Interlay

Update 21/09/2023: Corrected the amount of INTR the DAO would need to put into the HydraDX pool in order to correspond to the current INTR/USDT liquidity (7m -> 15m)

Up 4

Nothing here addresses the core issue which is creating DEMAND for the iNTR token, you need to give people a reason to buy and hold it all this talks about and addresses is moving around emissions and incentives, the net result will be the same everytime, people will Sell unless you give them a reason not too.

Reducing vault APY is also a huge mistake imo, there is currently 0 capacity and shrinking collateral given the current APY reducing that lower will further shrink it, given the golden product of this protocol is iBTC restricting and shrinking that seems completely counterintuitive..

Up 3

In general, I quite agree with the proposal made in this exhibition. Especially with the measures to encourage the blocking of INTR tokens and reduce selling pressure a little. Thank you very much for the effort you put into developing everything.


I generally agree with the above reward adjustments and have a few suggestions:

  1. In order to increase the number of INTR token holders, especially for large or/and long-term holders, safe custody of tokens is a very important consideration. I think that hardware wallet support (like ledger) should be added as soon as possible. (Astar and Moonbeam have already implemented this) And supports direct linking to hardware wallets without unstaking. (if technically possible)

  2. Providing the possibility of multiple staking times for a token address (for example, at the same address I want to stake 10,000 INTR for 4 years, and at the same time stake another 5,000 INTR for 2 years), which can increase the flexibility and security of INTR token holders. (no need to keep multiple wallet addresses and private keys)

  3. I think two percent inflation is consistent with the economic laws of the real world (but I’m not sure if this inflation rate applies to the blockchain world), so we can discuss the possibility of canceling inflation (locked to 1 billion tokens ), or the possibility of deflation (such as token burning mechanisms like Ethereum or Astar), I remain open to this.

The above is just my personal point of view as a token holder, and I hope it can provide some inspiration and discussion.

Up 2

Hey everyone ! I'm very excited about the new changes that will bring benefits to long-term holders. I have 2 comments:

  1. Why not make the token deflationary at all, what's the point of leaving a strictly limited supply? We must play meta to attract new holders, when the token gains significant “strength”, we will again be able to discuss the terms of inflation among a larger number of holders. Commissions are already worth nothing, so why not raise them and use some of them for burning?
  2. In addition to economic improvements, I also expect an increase in use cases for INTR, and BOB with its rollup is simply ideal for this. Alexey and Dom, we are waiting for INTR as a governance token? You're not going to cheat us with 3rd token, are you? It seems to me that we need to discuss tokenomics, taking into account the fact that INTR will have to be distributed as an airdrop for users of the new rollup. Or how else can we attract people! Either we play meta or we are doomed to fail.
  1. For the vault operators, there is no way to escape: no IBTC capacity to cancel the vault, they can only be forced to stay on the ship and face halved rewards. However, the operating costs remain unchanged.
  2. IBTC/USDT and DOT/iBTC have no liquidity and no demand in the current market, so the reduction in rewards is reasonable.
  3. Limiting the supply is supported.
  4. We really need more use cases for INTR!! not just liquidity pool!!!!
Up 1

My 2 cents:
Put the incentive for liquidity where it should be -> fuly supportive to put a lot in HydraDX
Keep it to the bridge as the main value for Interlay and focus on finding real use cases that will generate flow in and out of the bridge (like the idea you shared of decentralized on/off ramp of wBTC)
Once this is done what we'll need is sufficient capacity for the bridge to support these use cases, which can only be achieved through incentivizing the vault operators, for which the current risk-reward ratio is very questionable, considering the bugs, operating costs, risk of premiums and liquidation.
Saying that you achieve your APY as vault operator by staking your vault rewards really sucks as it does not really help with the risk reward ratio (as your full reward is in in 2 to 4 years which adds up new risks without improving the reward)


1. I agree with the proposal to redirect 50% of the token emission currently distributed to vaults, LPs, and lenders to INTR stakers (vINTR holders). This approach can help reduce selling pressure while incentivizing LPs and vaults to provide capital and services, ultimately promoting a healthier ecosystem for the token.
I think adding vDOT to the possible collateral assets is a great feature for vaults operators.

2. I am in favor of adding 10m INTR to the Omnipool to eliminate the high APR rewards on the USDT/INTR pool, providing liquidity at the same time.

3. I am in favor of the idea of removing the planned inflation of INTR to effectively limit the INTR supply to 1 billion.

4. I don't agree with the suggestion to utilize the treasury to sell INTR and use those funds to LP a small amount of INTR/USDT on Interlay to maintain minimum liquidity.
Question: Isn't there any protocol-owned liquidity that can be used for that?

Question: 5. Isn't there also any protocol-owned liquidity that can be used to provide a minimum on functionality to the brigde, i.e. that can be used as collateral to issue and redeem iBTC?

Appeal: The team should actively address the concerns and uncertainties (FUD) surrounding BOB and provide INTR holders with clear assurances that any future developments or changes will prioritize the interests of INTR holders.


I'd tend to agree with the first comment in this thread: until there's something in the protocol that requires users to consume the token it will continue to inflate and drop in price

Redirecting yields to staking is just kicking the can down the road - if the inflation rate stays the same, you're just buying some time. Not saying you shouldn't do it, just that it will only be a short-term remedy for the price action

Omnipool staking - sure, whatever. At the current rate of inflation you will have to top it up pretty soon

Removing token inflation is tough if there's no burn mechanisms for the token. You need to incentivise the vaults to hold BTC - you do that with new token emissions. If the total supply is locked (and reached) where would the incentive emissions come from?

At the end of the day, improving the protocol utility and hoping that that increases the market cap is the only way rn. Wish I could think of a good token burn mechanic but I've got nothing atm


A bit off topic, but got inspired by the discussion.

Vault capacity is lacking:

  • Make it super easy to spin up a vault (f.ex. with Tansssi)
  • Allow vDot and other liquid staked assets to be used as collateral

$INTR token value is tanking:

  • Create a tiered structure for vaults, where locked $INTR will provide greater benefits (see Nexo)
  • Same as above, but for collateral lenders
Up 1

here are my 10 cents.

Point 1 : Agree but not by a 50% for all LP pool.
I would however suggest to adjust APY of DOT related pools to match DOT staking APY otherwhile all DOT liquidity will go back to staking.
I would also suggest to reduce maximum lockage duration for staking to 2 years max instead of 4 with same APY to reduce token locking risk. for the following reason :
Even if i'm a Degen, I'm a very reluctant to lock my liquidity for longer than 1 years since crazy regulators, central banks and corrupted politicians can generate laws/regulations/exclusions as they see fit almost overnight without any possibility for us holder and the BC industry to say a word. This creat a huge risk for any long term locked liquidity. While I trust that the team will do their best for the project and it's holder, i also trust the politicans, cental banks and regulators to do their best for there own personal interest/agenda (very sadely). This risk must thus be lowered by reducing locking period while keeping it attractive none the less (can even consider no lock period with lower APR for instance)

Point 2 : I Agree.
Would suggest to use a portion to all fee rewards to buy back & burn INTR.

Point 3 : I Agree
Make it deflationist by buy back INTR token with a portion of protocole revenu

Point 4 : Increase borrowing interest to at rate higher than lending rewards (at least equal to) to stop people to borrow and lend back the liqudity. this is dangerous for the users and expansive for the protocole as you are basically paying people to borrow money

Point 5 : Increase INTR holding utility
One option can be by creating APR boost for vault, LP, lending/borrowing, based on amount of INTR staked

Up 1
  1. i agree that it is better to use HydraDX to avoid excessive issuance of tokens to LPs

I would recommend starting with an amount equivalent to 100k $, which at current prices would be around 12.7M INTR, to achieve a minimum slippage, where a $1000 trade would result in 1% slippage

2)regarding the limit supplyy seems ok for me

3)and I do not agree with burning the little fees that the network produces, since it will not make any significant change, for now, this most surely change on the future

4)What I think is important is that we need to founds ways to increase Mint's capacity, perhaps make a joint proposal with several parachains, to obtain a loan, like Bifrost did? put the loan on vDOT and use that for do several vaults, and all give back the staking rewards with the vault rewards? After of 1year.

Up 2

I would also recommend, instead of giving an apr boost, to those who stake rather give a boost to those who participate in Governance (for this you need to stake, but not necessarily all stakers vote)

benefits of this: increase the turnout of the Referedums, generate more active members in the community, and be less target of a governance attack,

an example of this until now recently applied by HydraDX, which has raised its turnout in the latest referedums from <1% to around 4-5% of turnout and from 50 addresses (possible unique accounts, not exact) to around 300 addresses


Compared to our situation, it is somewhat worrying because although we have a good turnout (around 5%), at most 20 addresses vote, which means that a single vote effectively controls the governance.



Although the exact same strategy as them cannot be applied, it would be something to evaluate and do something similar adjusted to our reality.

Up 2

I really like the debat here, the community have a lot of good points.

  • Decreasing the incentive is a good point keeping in mind that we should have an APR higher than the Dot staking.
    For the vaults, they will more and more turn to yield bearing assets and so will compensate the reward decrease. Having a wBTC/IBTC pool will also increase the volume in my opinion and the vault revenue.

  • We should stop incentivize INTR pool and deposit on Hydra. I like this idea as it will drastically increase the liquidity for INTR and maybe bring some abitrage volume.
    Moreover moving to uni-V3 pool style could also be a good idea regarding the liquidity efficency.

  • To stop the sell pressure we need more INTR utility.
    I think decreasing the max lock from 4 to 2 years is a good idea and also having the possibility to multiple time lock is interesting too. Moreover I like the idea of on APR boost for people staking INTR.

  • I like the loan proposition in order to increase the mint capacity. We will need it to compete with wBTC.

Up 2