Interlay Sunset: Final Governance Proposal — Minting 1.8 iBTC & Distributing All Protocol Assets to vINTR Voters
Referendum launch planned for Monday. Community feedback requested urgently.
Background
Interlay's Polkadot core time is expiring this year and will most likely not be renewed. The protocol will sunset inevitably. Unless governance acts now, all assets held inside the protocol — in the liquidation vault and across the money market — will become permanently inaccessible. This proposal aims to distribute this value to the INTR holders who supported the protocol.
This is not a proposal to save Interlay. It is a proposal to wind it down responsibly, honour its obligations as best as possible, and return remaining value to the community before the window closes.
The Liquidation Vault — A Community Claim
The liquidation vault account (wd9yNSwR5jsJWJrtHcnS8Wf6D5zF2dbQhxwRuvAzg9jefbhuM) currently holds approximately 79,000 vDOT seized from undercollateralized positions during liquidations. This vDOT should theoretically be redeemable against 2.2 iBTC of outstanding obligations. In practice, that redemption is impossible today.
| Location | iBTC |
Total on Hydration (267 holders) ~0.3
Interlay MM supplied 0.06 iBTC
There is nowhere close to the 2.2 iBTC needed to redeem the liquidation vault vDOT at face value. The redemption mechanism is functionally broken.
Importantly, INTR holders have a legitimate economic claim to this vDOT. The vault that was liquidated was maintained and incentivised for years through INTR token rewards paid by the protocol and its community. The community effectively subsidised the operation of these vaults with years of emissions. The 79,000 vDOT now sitting stranded in the liquidation account was generated by a system the INTR community funded. It belongs in community hands — not frozen in an inaccessible pallet forever.
Protocol-Held Money Market Reserves
The Interlay money market holds the following protocol-owned reserves. These are not user deposits — they are not owed to any borrower or lender. They will be lost forever if no action is taken:
| Asset | Reserves |
|---|---|
| USDT | 12,083.87 USDT |
| USDC | 1,444.28 USDC |
| DOT | 1,275.71 DOT |
| vDOT | 324.63 vDOT |
| BNC | 3,805.81 BNC |
| HDX | 36,208.22 HDX |
The Proposal
This referendum covers two actions before the chain goes dark.
Action 1 — Mint 1.8 iBTC into the Liquidation Vault
Governance authorises minting 1.8 iBTC directly into the system vault liquidation account (wd9yNSwR5jsJWJrtHcnS8Wf6D5zF2dbQhxwRuvAzg9jefbhuM). Combined with the ~0.318 iBTC already confirmed in existence, this brings the total close enough to the 2.2 iBTC obligation to allow the vault's 79,000 vDOT to be properly accounted for and redeemed as part of the wind-down.
This is a one-time exceptional issuance, justified entirely by the wind-down context. The alternative is that 79,000 vDOT is abandoned in an inaccessible account forever — value that the community earned through years of INTR rewards funding those vaults.
Action 2 — Distribute the 1.8 iBTC + All MM Reserves to vINTR Voters
All assets — the minted 1.8 iBTC and all money market reserves listed above — shall be distributed to everyone who votes on this referendum, proportionally by vINTR cast. Both aye and nay votes count equally. Every vINTR is a claim.
The distribution formula:
Individual share = (vINTR cast by voter ÷ total vINTR voted in this referendum) × total asset pool
This applies to each asset separately. A voter with 1% of total vINTR cast receives 1% of the 1.8 iBTC, 1% of the USDT, 1% of the DOT, and so on across all assets. It is fully on-chain verifiable and rewards active governance participation in this final act of the protocol.
Note on MM loan obligations: Before MM reserves are distributed, any user with an active borrow position must be given a reasonable deadline to repay and withdraw their collateral. Only reserves remaining after all loan obligations are settled enter the distribution pool.
Compensation for Community Service — Jose.Crypto Discord User ID 615234206754144267
Through the long and difficult wind-down period, community member jose.crypto has provided continuous support, coordination, and governance participation at a time when most had already moved on. This kind of unglamorous, sustained effort during the dark days of a sunsetting protocol has real value and deserves recognition.
This proposal includes a provision to allocate 250,000 vINTR to jose.crypto as compensation, counted toward the distribution as if they had voted with that weight. To be included in the distribution, jose.crypto should post their Interlay account address in the Interlay governance discussion channel on Discord:
👉 https://discord.com/channels/745259537707040778/1034074450582315148
This allocation will be factored into the final distribution calculation alongside all on-chain votes.
Execution — Two Paths
Path A — Batch Call Referendums (Trustless Fallback)
The iBTC is minted into the liquidation vault and distributions are executed via a series of follow-up referendums, each containing 5 batch transfer calls, ordered from largest share to smallest (highest vINTR voters first). This continues referendum by referendum until all allocations across all assets are fully distributed. Slower, but entirely trustless — no intermediary required.
Path B — Team Execution via Dominik's TC Account (Preferred)
If the core team agrees to perform this final service, the 1.8 iBTC is minted directly into the team's TC account controlled by Dominik:
wdB3GDoj1FcUPVzs32NWwgYiV9qwJnKd4pKQjeMXZX7eypZnb
The team calculates each voter's proportional share based on vINTR cast at referendum close — including the 250,000 vINTR allocated to jose.crypto — then executes batch transfers for both the iBTC and all MM reserves directly. Significantly more efficient than Path A, and the team has the full technical capability to execute this correctly and transparently.
Path B requires the team to publicly confirm their agreement on this forum thread before the referendum is submitted on Monday. If they confirm, Path B is the clear recommendation. If they cannot commit, the referendum proceeds with Path A.
Timeline
| Date | Action |
|---|---|
| Now → Sunday | Community discussion; team confirms Path A or B; jose.crypto posts their address in the Discord governance channel |
| Monday | Referendum submitted on-chain |
| Referendum period | vINTR voting — every vote counts toward your distribution share |
| Upon passing | Minting of 1.8 iBTC executed; distribution begins |
| After some time | MM reserve distribution once loan repayment deadline passes |
Why This Must Happen Now
INTR holders took real risk backing this protocol for years. They funded the vault incentives through INTR emissions that generated the very vDOT now sitting stranded in the liquidation account. When core time expires, the chain stops — no referendum can pass, no transfer can execute, no asset can move. Everything frozen in the money market and liquidation vault becomes permanently inaccessible.
This is governance doing exactly what it exists to do: making a collective decision under time pressure to protect the interests of those who showed up and believed. .
Please comment below with your support, questions, or concerns. If you are the team or Dominik — your confirmation on Path B this week makes this significantly smoother for everyone. Jose.Crypto — please post your address in the Discord governance channel linked above so you can be included in the distribution.