I have had problems with our “experimentation” with mint/burn fees from the beginning, as I never really saw any methodology we would be using to effectively measure impact, or how all of this relates to our long-term business strategy. The complexity of DeFi is infinite, experimenting with mint/burn fees when everything else is kept constant probably has some value. But within DeFi, what is constant, except radical change?
Here’s a thought experiment. Let’s reduce mint fees to .15% next epoch. Meanwhile, Badger Bridge goes live and we see 2x volume. In parallel, the price of BTC spikes to 75k USD. How much of that rising volume is from a reduction in mint fees? Anyone? I would love to hear your methodology now to measure this impact, so we can apply it before we make another change.
Another issue I have is understanding what our thresholds are for TVL to total REN bonded value to ensure safety of the network. Because of more research from the Ren team, my understanding is we are in a much more favorable position now, meaning we can manage a higher TVL without a degradation in network safety. Great! What is that new threshold? Do we know, yet? Isn’t this rather important input before we devise a methodology to measure changes in mint/burn fees, as it impacts how we define success?
Another issue I have is the overall strategy of Ren longer term for renBTC (and other assets). Are we going to build renBTC into a brand? Or are we going to become critical infrastructure that is white labeled by our partners? So it’s really Badger that will have BadgerBTC (eventually), which is actually renBTC in the background. But Badger users don’t know or care. If that’s the case, what are our partners’ input on pricing? I would assume Badger (and other key partners) would want some commitments on Ren’s pricing structure, correct? Can you imagine the embarrassment for a Ren partner to build a bridge and promote a new initiative (e.g. Badger Bridge) and then learn Ren will be doubling or tripling mint/burn prices for their users? Rather awkward, I would assume.
I’ve always assumed renBTC longer term would melt away, and we’d have BadgerBTC and other tokenized components that would use RenVM to facilitate their cross chain interactions. My guess is our partners would prefer that too, longer term. We help their branding, we help Badger (and others) build out their own tokenized BTC options. Ren would be happy to be the silent partner hidden in the background, helping our partners grow. Perhaps we have an agreement that Badger uses a “Powered by RenVM” or whatever somewhere, similar to Intel Inside. And hence with this strategy, mint/burn fees never really mattered too much to me in the short term, provided we had fair pricing more or less to ensure adequate traffic. The key for me has always been continued technical innovation, network safety, decentralization (!), and developing partnerships that we can leverage in the future. And those strategic partners will help guide us to an optimal pricing strategy.
Having said that, perhaps my vision is totally wrong, and the community believes we need to build renBTC into a brand, that a partner first strategy is not the long term vision. Ok, in that case, my assumptions are wrong and mint/burn pricing strategies will likely be different. But that strategy should be clear before we start to “experiment” with pricing.
