-I read the argument the mints are stable going from 0.10% to 0.25%, but at the same time ratio in TVL between for example renbtc and wbtc went 1/3.5 to 1/7. For every renbtc there are today approximately 7 wbtc. Yes, volume of transactions is what matters, but the circulation begins on minting.
To make profitable for arbitrage or short term things I only see back to a lower fee. To Buy & sell renbtc on Binance costs 0.10%. An example.
Plus, integrations with Renbtc under the hood like MEW add more fees.
-Droppin from 0.25% to 0.20% won’t let us to see really how the elasticity of demand reacts. In that case I would agree stay at 0.20. There must be a significant change I think, not less than 0.10%.
I propose to lower the mint fee to 0.15%. In the worst case we will loose nothing. 100 usd on fees per node? Lowering number of nodes can be the less wanted consequence, but short term and non significant.
It’s only a test. Mints are stable going from 0.10% to 0.25% yes, but we are lowering relative TVL to all Btc on Ethereum.
Against my argument: Uniswap fees to liquidity providers are at 0.30%, synthetix daily volume is inferior to REN but has more rewards. Nothing is said. But in my opinion lets test the demand and see. One epoch.
I am against this proposal of lowering the minting fee to 0.15%.
With reference to RIP-000-003 (minting fee increase to 0.25%), we have currently x7 value of assets locked to the value of Ren bonded. The motivation for the increase in minting fee to 0.25% and maintaining the burn fee of 0.1% was to lower the TVL to Value Bonded.
If anything, I would propose raising the fee to 3.5% and decrease the burn fee to 0.5% (or keep the same). Arbitrage opportunities will present themselves regardless of the minting fee once the prices of renBTC and BTC become too different, having a lower burn fee will incentivise arbitrage through burning renBTC through RenVM.
Note: it has already been stated by Long that new assets will not have the same minting fee as the current 0.25% to promote volume . Any change of fee will only be associated with BTC, BCH & ZEC from my understanding.
But Have we seen the desired uplift of REN price by increasing mint fee? 3.5% of fee will kill the project and people will stop using REN
We cannot try to balance the impossible since the market price is just NOT a good reflection of the intrinsic value of the tokens now. The crypto market is just so immature and we need to grow first to get out of the dark forest.
Are there ways to further analyze the differences in volume through RenVM vs other defi applications over the past months like you did with wBTC? There has been analysis of how Ren has changed in volume epoch to epoch, but of course the greater movements of defi make it difficult to isolate the impact fees had on that change. If we could discover a metric of how other protocols changed epoch to epoch and measure our difference against them we may be able to get a clearer picture of how our fees affected volume.
I’ve been generally in favor of keeping fees low to encourage volume and adoption. We don’t want to miss out on a hidden flood of volume requiring a lower threshold. We want to get as many as possible using RenVM and getting used to using it. We want them talking about it and spreading the knowledge of it to others. We want applications choosing to integrate Ren so they can also profit. Volume does not cost us meaningful extra work or expense, so hypothetically having about twice the volume at half the fees is ideal as it encourages visibility. Of course having 30% less volume but 50% greater fees is ideal from a pure profit perspective, but we are risking losing access to a hidden tsunami needing a lower fee to actualize.
After learning recently we can still progress to Mainnet Zero without having the correct 1:3 ratio of TVL:TVB - I now feel stronger to keep fees low to encourage adoption and volume. This was a big concern of mine to adjust fees with that as a priority. Without that requirement to evolve I would want to re-consider our current fees. We have more time than I thought to work on that, and new integrations and the evolution of the bridge to move renBTC around without additional minting will help.
Decreasing mint fees to .15% would be a good test to see how volume is affected. I am in favor of it but cautiously and welcome counter arguments and different perspectives, as we all want the perfect fee to give Ren the most success but that sweet spot is difficult to know. It may be favorable to wait another epoch or two before changing to continue the current test and gather more data.
I am NOT in favor of bringing minting fee down to 0.15%.
I would prefer we bring it down to 0.2% while also bringing burn fee up to 0.2%.
I remain skeptical that it is the minting fee raise that caused the drop in minting nor the imbalance between mint fee and burn fee that created more burning.
The trend just coincides with overall market demand.
I liken fee rates and RenVM volume to Fed interest rates and economic activity.
In a mature market, the Feds decrease/increase rates to stimulate or slow down economic activity.
Where the analogy fails right now is I think we are just currently optimizing around the edges. Unlike the US economy with discernible impact of interest rates on borrowing/lending, this is not a mature market with tons of volume. The volume that passes through RenVM is still not significant enough with a long history and monetary policies are being made with the assumption that these little optimizations are influencing volume. I believe the RenVM volume is solely driven by demand or lack thereof for the product (RenBTC) and the fees are inconsequential at the current range of 0.1% difference. I would like to see actual data that connect profitability for arbitrageurs in the RenBTC markets and RenVM mint fees and impact to volume projections. Without this data, we are just making changes at the top, looking at the outcome and assuming it’s our changes that did it when in fact there are multiple and stronger variables at play.
Now the reasons why I am in favor of keeping rates at 0.2% for both mint and burns are:
At 0.2%, RenVM is still the cheapest most convenient way to move BTC to Ethereum
By bringing the rates down to 0.1%, we are conditioning the market to accept that this is the standard which will piss off our user base later when we increase the fees. Better do it now and gradually lower the fees as we get more volume versus low fees now and increase fees with more volume.
Lowering the fees make REN less attractive as an investment and risks deregistration of darknodes. We want to show steady increases in RenVM fees month to month to keep growing the network.
Everyone has their own opinions. I think we just need Loong to make a decision here.
Discussions won’t lead us anywhere since we have so little data and really nothing to analyze with.
i.e. You have raised good speculations / analogy but without any true arguments or data backup. It is simply because we have very few data available at this stage. So that one can always argue otherwise.
The only way to gather data is to be patient, 1 month is nothing, need a quarter or more to have anything tangible to work on.
@McDot, you say yourself “we have so little data and really nothing to analyze with” and yet want to rush things after just 1 month. In a few months we will have more data and will be easier for community to come to agreement.
Too little data: REN project has come online only for less than a year. We have too little data to get to the right minting fee rate / burn rate
Change back to 0.15%: for each level of mint rate, say 0.25%, 1 month is more than enough. If you want to try all the combination (0.1%, 0.15%, 0.2%, 0.25%, 0.3%) = C52 = 20 combinations. If you wanna try 2 months for each then we shall waste 40 months (3 years) to gather the data you wish.
I am merely asking how long can be defined patient? Why 2 months are enough in your opinion not 3 months, 4 months or 1 year?
If we change back to 0.15% do we have less data to analyze with? NO. We still have more data at 0.15%, at which we currently don’t have any data to analyze with. So 1 month data for 0.25%, 0 month data for 0.15%. Why do you favor 0.25% in the first place then if the argument is only data availbility?
My point is that. Going to 0.15% is adding data.
-Do the arbitrage come back?
-Do the demand remains inelastic to the change?
-Do we have a possitive feedback? ( mints goes up - burns goes up - price goes up - nodes goes up).
As the renVM is still not descentraliced, I think this is the time to do some tests that could damage in the future, in terms of security.
Said that, I’ve not oppened properly a RIP because the next proposal as I read must be going to 0.30% or going back to 0.20%. I don’t see the last one would show much but I’d vote if it’s not possible 0.15.
Binance took over the Crypto world in 6 months by offering lower fees than everyone else. Likewise, our volume was at its highest when we had our lowest fees.
The TVL : TVB ratio is currently not important since we are not decentralised - only adoption is important, and protocols don’t currently want to add us over wbtc because we don’t have anywhere near as much TVL and liquidity. We need to increase these metrics to be at least on par with wBtc before we can think about increasing our fees. Currently we are killing this project with these fee increases.
All those that say we need time and data to justify reducing fees didn’t hold such a high standard when increasing them in the first place from 0.15% in the space of an epoch, despite the epoch suffering a reduction in volume and the arb bot turning off…
We need to be competitive with Binance. We need other projects to be able to integrate us and charge their own fees. We need arbitrageurs to come back and drive in-out volume. What we don’t need at this stage, is an extra $100 a month at the sake of halving the transactional volume.
The difference between wBTC and renBTC has nothing to do with fee price they have higher fees than us and always have, wBTC mint and burn volume is greater than ours, this is a fact that has MORE to do with their existing integrations than their fee structure. They have been around a lot longer, and this advantage of first to market, and time on market is something that we as a network can catch up, but it is not an overnight process.
Look here, the wBTC network has faced a very similar volume pattern as renBTC in terms of volume inflows and outflows. This has nothing to do with fees, and everything to do with the DEFI yield incentives in the marketplace.
As a business, who in a boardroom would advocate to lower revenue, and increase costs. We have proven with data provided in RFC-000-013: Raising the Mint Fees to 0.3%, that we are seeing increased volume with higher fees this epoch, and given the bullishness of DEFI and the increased attention to space, do you see this trend reversing?
By lowering the fees, we will be telling all new node operators the yield they sought out is going to be half of what they were expecting. This is a bad message, does not help our network growth, and further hurts all existing operators on forgone income opportunities.
The loss we will face as a network, under this proposal is around 7BTC, or $231,000 USD, given the current volume and at least consistent future volume, if the volume is higher than we stand to lose even more as a network. This represents just over 10% of our total income earned to date.
As the proposer of this, you want to sacrifice 10% of our income, with no data to justify this decision, other than a very basic notion of supply/demand theory? THIS IS A MISTAKE.
I implore you, look at the current data, our revenue is on a great trajectory, we have more integrations coming online in the next two epochs, more volume is coming because DEFI is back in season, why toss income that is there for the taking. wBTC is charging more than us and has higher volume, this is coming from their existing integration and first-mover advantage…We will catch up, be patient in the meanwhile, we should aim to match our fees to theirs. So our REN team has the resources and income to compete.