Revenue leverages adoption.
- Establishing a whole consensus on fees over piecemeal implementation
From a DNO’s perspective, the argument to raise fees in order to maximise DN revenue is rational - e.g. “if putting up fees doesn’t adversely affect volume in USD and I get improved ROI, that’s cool”.
The challenge with such an argument is that it clashes directly with expansion. It’s a conditionally rational argument and the conditions of projects like Ren are set by a wider financial and economic framework. Like it or not, all free business (even DeFi) is beholden to the capitalist business growth model. That is, expansion is the root, trunk and limbs of a business/protocol, revenue/reward is the fruit.
Ren is transitioning from initial to early development. Thus it is in the adoption phase. Optimal strategy in the adoption phase, naturally, targets growth as its primary objective.
Therefore general priority, in order of precedence, for RenVM in its current state, could be considered as:
- Enable adoption - attract maximum throughput (UX and practical use cases are paramount).
- Data collection: accumulate feedback, analyse, act.
- Revenue: resolve DN fees with operators (derived from demand, competition + network effect).
Revenue ultimately leverages adoption. Weak, disappointing, or stagnant adoption leaves you with very little leverage.
Experimentation is necessary but only within the outline of a strategy that is appropriate for Ren’s development stage.
You can’t have it all at once. No pain, no gain, fRENS.
So why be a DNO?
Every DNO is speculating, whether on the future revenue of a node or the price of Ren.
Adoption increases speculative value and revenue which increases DNO/potential DNO incentive to speculate.
Adoption, speculation and revenue are reciprocal.
Thanks for reading.
N.B. Acknowledging the Ren team’s previously expressed desire to manage TVL until decentralisation using asymmetric fees. Not addressing that here, it’s their bag.