Discussion: Aligning Participants, Users, Incentives & Value

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Discussion: Aligning Participants, Users, Incentives & Value :money_with_wings:

Exploring “Plan ₿” as one possible path beyond TIP-106

Context

TIP-106 passed and is now being implemented. That’s a huge step in the right direction — it ties T more directly to tBTC usage and establishes a baseline mechanism for adoption and value accrual.

At the same time, I believe it’s healthy for us to keep discussing how to refine our long-term model. I’ve been working on an idea (“Plan ₿”) that I’d like to introduce as one possible solution — not a replacement for TIP-106, but a starting point for conversation about how to better align all participants over time.

When I shared this informally with a few Thresholders, most said a ve-style lockup model felt more compelling. I agree that’s worth exploring, but I also think it’s valuable to consider multiple approaches side by side. I am confident that alternatives will arise as part of healthy community discourse.

Option A: Plan ₿

Below is the original draft of Plan ₿ in full for the community to evaluate and critique:

📖 Full Plan ₿ Draft

TIP-106 — Plan ₿ Draft

A sustainable, institution-ready framework for tBTC growth and T demand.

Summary

Plan ₿ establishes a sustainable model for tBTC adoption and T token demand. It improves on the original TIP-106 rebate concept by:

  • Keeping minting tBTC free to maximize inflows.

  • Setting a 0.5% baseline redeem fee, split across the DAO, node operators, and T lockers.

  • Introducing 90-day T locks that grant redeem fee discounts, then graduate into revenue share positions.

  • Allowing institutions to layer new locks for continuous discounts while compounding income from old ones.

  • Offering a renewable enterprise-grade tier for large players.

  • Distributing revenue on a monthly cadence for predictability.

This ensures that every BTC bridged either generates revenue or drives demand for T — aligning incentives across the DAO, node operators, T lockers, and institutional users.

Motivation

The original TIP-106 connected T to tBTC usage, but with weaknesses:

  • DAO revenue risk — perpetual rebates could erode treasury income.

  • One-time demand shocks — institutions could lock once and never accumulate more T.

  • Gaming risk — short-term, just-in-time locks and wallet splitting undermine design intent.

  • Institutional optics — rebates framed as experiments do not project credibility.

Plan ₿ addresses these problems by creating continuous, compounding T demand, predictable institutional costs, and sustainable revenue streams.

Specifications

1. Fees

  • Mint fee: 0% (always free)

  • Redeem fee: 0.5% baseline

  • Fee split (monthly distribution):

    • 50% DAO Treasury

    • 20% Node Operators (fixed share, split evenly across all node operators)

    • 30% T Lockers (pro-rata based on T locked in revenue-share contracts)

2. T Lock Lifecycle

a) Discount Phase (0–90 days)

  • Each lock begins with a 90-day discount window.

  • Example tier schedule (per wallet, per month coverage):

    • 1M T lock → 0.4% on up to 100 BTC/month

    • 5M T lock → 0.3% on up to 500 BTC/month

    • 10M T lock → 0.2% on up to 1,000 BTC/month

  • Institutions may open new locks at any time → each has its own 90-day window.

b) Revenue Share Phase (90+ days)

  • After 90 days, the lock automatically transitions into fee-share mode.

  • Lockers earn pro-rata from the 30% revenue share pool.

  • Rewards distributed monthly in tBTC.

  • Incentive: remain locked to compound income while opening new locks for fresh discounts.

c) Enterprise Tier

  • 500M T lock → 0.05% redeem fee on up to 10,000 BTC/month.

  • Structured as a 12-month renewable license → ensures recurring demand without permanent giveaways.

  • Enterprise Tier will not earn tBTC protocol revenue.

3. Revenue Claim Mechanics

  • Epoch length: 1 month

  • At month-end, the DAO mints fees and distributes them.

  • Rewards allocated:

    • 50% DAO Treasury

    • 20% Node Operators

    • 30% Lockers

  • Alternative: The DAO funds a tBTC pool from the treasury and makes rewards claimable in near real-time.

4. Guardrails

  • Per-wallet coverage: prevents one lock from covering unlimited flow.

  • Epoch-bound (90 day locks with a 90 day cooldown): avoids continuous recycling.

  • Multiple locks allowed: institutions can ladder locks.

  • Discount floor: redeems never reach 0%; DAO, operators, and lockers always get revenue.

Rationale

  • Continuous demand flywheel:

    1. Institutions open locks for 90-day discounts.

    2. Locks age into revenue-share → ongoing yield.

    3. New locks are opened to maintain discounts.

    4. Over time, institutions accumulate both discount coverage and fee income.

  • DAO sustainability: Half of all fees flow to treasury for long-term funding.

  • Operator sustainability: 20% reserved for node operators — ensures infrastructure is stable.

  • Locker incentives: 30% for lockers creates scalable demand for new T holders and new opportunities for existing ones.

  • Institutional fit: Predictable 90-day commitments, monthly payouts, renewable enterprise tier.

:open_book: Narrative Spin:

Lock T for immediate fee savings. When your discount expires, your position graduates into revenue share — while new locks keep your discounts alive. Over time, institutions stack both fee savings and yield, making T more valuable the longer they participate.

Revenue Sharing as a Growth Loop:

By routing a share of redeem fees to node operators and T lockers, we create a direct incentive for participants to grow the network. Operators benefit from a guaranteed cut, lockers benefit from scalable fee income, and tBTC users gain stronger liquidity and peg stability. This turns every participant into a network advocate: adoption drives revenue, revenue drives rewards, and rewards drive further adoption.

Narrative strength: “Every BTC bridged funds node operators, the DAO, and T holders — not a custodian.”

Scalability & Tokenomics

  • Top-ups and new locks: Each lock = fresh 90-day window. No extensions; institutions simply add new locks as needed.

  • No inflation = stronger T economics: With no new issuance, every T demand driver is tied to real adoption. As BTC volume grows:

    1. More fees → more rewards.

    2. More locks → reduced circulating supply.

    3. Scarcity + demand growth → upward pressure on T price.

This makes T a deflationary-aligned asset: the more Bitcoin moves through Threshold, the more valuable and scarce T becomes.

Conclusion

Plan ₿ fulfills the intent of TIP-106 while optimizing for stronger tBTC growth and greater T value accrual:

  • Mints stay free to maximize tBTC inflows.

  • Redeems fund the DAO, node operators, and lockers sustainably.

  • Locks drive continuous T demand via discounts and fee-share.

  • Institutions get predictability with renewable 90-day discounts and an enterprise tier.

  • Holders get scarcity and yield in a non-inflationary system.

This is a sustainable, credible, and institution-ready model for scaling tBTC and creating long-term demand for T.

tBTC is already the superior decentralized alternative to WBTC and cbBTC. Plan ₿ strengthens that advantage by giving more users — from individuals to institutions — clear economic reasons to choose decentralization. Every new lock, every fee saved, and every reward earned reinforces Threshold’s position as the most sustainable and aligned bridge for Bitcoin in DeFi.

Open Questions

I don’t want this to be a prescriptive proposal just yet. Instead, here are some questions to guide discussion:

  • Do we need a stronger lock-and-reward model to sustain institutional demand?
  • Do we need to commit to a long-term fee schedule to help drive institutional adoption?
  • What’s the right balance between predictable costs for institutions and sustainable value for T holders?
  • Would a renewable enterprise-grade license tier improve institutional optics?
  • How does a ve-style model compare to Plan ₿ in terms of simplicity, marketability and tokenomics?

Next Steps

I’d love to hear the community’s perspective:

  • Does this direction feel worth refining into a future TIP?
  • Should we let TIP-106 run its full course before experimenting with variations?
  • Which elements (if any) of Plan ₿ are strongest candidates to carry forward?

By presenting Plan ₿ as Option A and inviting alternatives (like a ve model), my goal is to spark a constructive conversation now — while fully respecting that TIP-106 is already being implemented.

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I prefer letting TIP-106 run its course here. This suggestion adds complexity and treat capital different.

In particular I am not a fan of active management such as renewing a lock every 90 days. It’s honestly more a hassle than anything and will increase risk (every transaction does). Would prefer something super simple that lets users lock and forget.

I don’t like the sound of enterprise tier “license”, indicating a different treatment of certain users or capital. Not only can that be bypassed by locking smaller amounts, but it shouldn’t be necessary to split accounts to operate, that’s just hassle for no benefit. Whoever locks the most T can get the most benefits / best tier rates, but not a special plan.

If predictability is important for enterprise I’d rather have that hardcoded as some kind of lock-in rate. Similar to variable / stable interest rate. E.g lock in your current rate for 12 months (or longer), but it would be optional, and the mint / redemption rate can change up and down if you have not locked it. If you lock in a stable rate you have to pay slightly more than current rate. E.g if rate is 0.2% maybe locking in for 6 months is 0.21%, and locking for 12 months is 0.22%, but whenever you lock in you get to keep that rate for however long you lock it. That way it’s predictable for those who need it, and they pay a small “insurance cost” for the protection.

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I agree with Agoristen.

I also feel like this manner of thinking looks terrible. As a silent observer for several years, this DAO is extremely greedy.

If I were a company, and read what was proposed here, I wouldn’t touch this project. I understand the desire to align T with tBTC, but it comes to a point, like now, where it reads as if this DAO exists solely to extract maximum value out of those who use the product.

tLabs wasn’t created for no reason, this leech like line of thinking is counter intuitive the tBTC, and by extension T’s adoption.

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I’m curious what exactly you’re referring to. Several years and millions of dollars of development went into both v1 and v2 before Threshold existed, the DAO has spent millions since then and tBTC still costs more to operate than it generates in revenue (thus the ongoing efforts to fix this by increasing volume, developing new revenue streams and reducing expenses).

Except for a brief period at the beginning of v2, mints have had a fee holiday making them zero. Redemptions have been 20 bps.

So users in aggregate are subsidized by the DAO, and those who mint only use the product completely free.

Now TIP-106 will allow those who lock T to reduce or even eliminate the redemption fee (and a future mint fee, if there is one in the future), increasing the number who pay nothing.

How is this extractive?

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I’m not convinced by the argument that rebates should decay or require buying additional T over time. And requiring constant active management of a staked position introduces a significant amount of complexity. Why is it a problem that users who buy, hold, and stake maintain their rebate capacity? They are required to hold the tokens and maintain exposure to the network.

I’m skeptical there’s sufficient motivation to share fees with signers - is there evidence they would be effective at BD to drive growth in TVL? IMO the current flat payment model for signers works well.

I do support the idea of stakers earning a portion of fees generated by the network. An interesting approach could be to give stakers the option to choose between bridge rebates or fee sharing (a la Yield Basis LPs choosing between trading fees or token emissions).

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