# 2022-02-17 Democracy Proposal: Tinlake LP Rewards Restructuring Part II

By casting your vote on chain, you indicate your approval of restructuring the LP Rewards on Centrifuge as follows:

1. Adjust how rewards are distributed: Across all elligible participants there is a global reward rate which will be divided by points earned on the rewards. The formula for LP rewards to: Reward Rate per Point = Total Rewards / Total Reward Points
2. Set the global daily reward to 30,500 CFG
3. Set the weights of rewards as follows:
   | Type | Reward Rate per $ | |
   |---|---|---|
   |Rewards per $ in Junior |CFG 0.0040|*Reward per Point * Junior Factor*|
   |Rewards per $ in Senior|CFG 0.0027|*Reward per Point * Senior Factor*|
   |Rewards per $ in loans|CFG 0.0002|*Reward per Point * Issuer Factor*|


These values will be valid until governance proceeds with another vote.


## Proposal Details (excerpt from gov.centrifuge.io the forum)
The initial proposal was light on the implementation details and I wanted to follow up with more details on what the implementation could look like.

The essence of the proposed reward model is:

**Reward Rate = Daily Global Rewards / TVL**

This however is a bit simplified as it does not take into account that one dollar in the junior tranche count differently than one dollar in the senior tranche for example. In the most [recent proposal](https://gov.centrifuge.io/t/poll-restructuring-of-tinlake-lp-rewards/3392) token holders voted for the following different rates:

| Type | Reward |
|---|---|
|TIN Reward|CFG 0.00072|
|DROP Reward|CFG 0.00048|
|AO Reward|CFG 0.00004|

To implement the global rate the reward mechanism takes these as points and multiplies each $ invested/originated in the different categories by this factor. These are example numbers. Rewards in practice will depend on actual TVL and will be different.

|Name|Amount|Factor|Points|
|---|---|---|---|
|Junior Token Value|$1,500,000|0.72|1,080,000|
|Senior Token Value|$8,500,000|0.48|4,080,000|
|Issuer Origination Total|$8,000,000|0.04|320,000|
||Total Points||5,480,000|

This means the formula for rewards can be described as follows:

**Reward per point = Global Rewards / Total Points**

|Example: | ||
|---|---|---|
|Rewards per Day|CFG 30,500|*(set by governance)*|
|Reward per Point|CFG 0.0056|*Rewards per Day / Total Points*|

Effectively for the above example this would lead to the following reward rate:

| Type | Reward Rate per $ | |
|---|---|---|
|Rewards per $ in Junior |CFG 0.0040|*Reward per Point * Junior Factor*|
|Rewards per $ in Senior|CFG 0.0027|*Reward per Point * Senior Factor*|
|Rewards per $ in loans|CFG 0.0002|*Reward per Point * Issuer Factor*|


## References
1. [Poll] (https://gov.centrifuge.io/t/poll-lp-rewards-restructuring-part-ii/3450)
2. [Discussion] (https://gov.centrifuge.io/t/rfc-lp-rewards-restructuring-part-ii/3406)