Before I address the arguments, I want to create some baseline for my reasoning.
Curve.fi is the largest integration for RenVM at the moment. Curve.fi works by having a tight trading curve, that assumes assets are tightly bound around the 1:1 spot price.
Since the trading curve of Curve.fi is a bit more complex than the average one, we just need a general understanding of it.
In simple terms, Curve.fi weights certain prices and provides liquidity according to the weights at those prices. The higher the A, the more liquidity is pushed towards the 1:1 spot price.
That means a deviations from the 1:1 spot price increase the slippage paid when the assets move away from the 1:1 spot price, essentially reducing the efficiency of the market maker.
Looking at the current balances (and historical balances) of the pool, it is obvious that there is a greater renBTC to wBTC pressure than in the reverse direction.
Yield farming can easily explain the pressure to acquire wBTC.
And the price point, 1 wBTC to 1.0025-1.0035 renBTC, which is exactly 0,1% RenVM burn fee, + 0,2% (Coinlist fee) + 0,05% (Arbitrager profit).
Even after the Harvest finance hack with some of the largest burns, this is still generally true.
What does a change in burn fee mean for this?
The price point would be pushed by 0,1% more, so the spot price would be 1 wBTC to 1.0035-1.0045 renBTC.
But because of the Curve.fi market making curve, this would increase the slippage for more transactions.
This increases the cost of minting wBTC, which should generally decrease the usage of Curve.fi by more than increasing the mint fee by the same amount.
With this in mind, we can address why the reason for are not valid.
This depends on the integrations of RenVM. And those are uncertain at the moment and would be wrong to use as the base of an assumption.
The current target use case by far for renAsset is Curve, and apart from big users withdrawing, the majority of the burn volume is arbitrage.
This is obvious when you look at exchange rate between wBTC and renBTC that is around 1 wBTC to 1.0025-1.0035 renBTC.
So the argument doesn’t hold well.
Reverse argumentation. This is what you want to argue, so you can’t use it to show that it is true.
If we assume that any transaction generally has a mint and burn, the total fee is about 0,1% + 0,2% = 0,3%. Increasing the burn fee to 0,2% would not double the fees, but only increase it by 1/3. Only looking at one side of the equation creates the bias.
And if use the assumption I created initially, we would decrease the minting volume, which is probably hurting the adoption of renAssets long term.
With this in mind, it is probably wiser to increase the mint fee.
RenVM is infrastructure, not a project that needs to get enough funds to pay investors.
All of the mentioned projects except from Coinlist have a real cost associated with them. Uniswap have impermanent loss, Curve has depeg risk. Especially with DAI pools, where you can pay around 0,2% entrance fee. That fee has to be paid by traders.
Coinlist is difference as it is a centralised project. And they generally charge around 0,3% to 0,2%, which Coinlist is right in the middle of.
No. Argumentation from the first part.
While I agree on adjusting the fees now, I don’t think it should be done without any real argumentation. That is why I support adjusting the minting fee, as that has less consequences for our main integration where burn fee has a larger consequence.
This is mainly related to the mint fee and can be summarised in my initial argumentation. The burn fee would be more expensive to the users of RenVM compared to a mint fee.
With this in mind, I hope better arguments for increasing the burn fee is raised, since the main one I can see is why not?, which I simply don’t agree with.