You’re assuming burn fees has a big impact on renBTC users actions. My outline above argues that it won’t.
You’re correct, price correlation hasn’t directly shown either yet… but markets are rarely rational and we’d need to further increase ROI to create clear buying pressure. From a pure non-speculative point of view, one can easily get the monthly returns of a Darknode with a third of the capital elsewhere.
Open for debate. My personal suggestion would be 2.5/1.5% at this stage, to further test the asymmetrical price theory.
Personally, I think it is too early to increase the burn fee right now. We need more integrations and adoption before properly test the impact of having higher fees.
I’ve also advocated for this. I believe it is being considered for future iterations of the Ren governance.
I believe you and @maxroszko have both mentioned this kind of fee structure. To me, it seems we would be unable to enforce this kind of fee structure within the same host chain. If we had 0.1% mint fee at Curve and 0.2% mint fee at renbridge, there’s not much stopping someone from going to curve to mint and sending it elsewhere.
—- FYI, just to keep track of sentiment given the high number of comments from individuals, it appears to be an even 6 in support to 6 against for comments located above this comment. (Assuming we add 7 days between deciding and implementing fee change per @Ruzo11’s concern, which is a small adjustment to the draft)
I’m relatively new to all this, and I’m sure I’m guilty of of some super-basic, level-one thinking, so a clarification would be appreciated. It seems a lot comes down to: ‘can’t be proven until tried.’ For me, the one thing that can at least be assumed is a propensity towards risk aversion for the user. This would imply an inclination to return renBTC to BTC whenever possible. Isn’t further incentivizing this the best approach to solve the TVL imbalance and raise volume? If .3% total for mint and burn appears like it would be acceptable, especially as this cost directly secures the service, isn’t maybe a .3% mint and a 0% or a 0.05% burn fee a common sense direction to test next?
A lot of good arguments already been brought up. I just quickly want to outline my major arguments why I am in favor of raising the burn fee to 0,2%:
I think it won`t have an impact to the actual burn volume and thereby it would only drive the REN token price as more rewards are generated for darknodes operators. This would secure the network.
Now is the time to experiment as very little integrations exist. If we see some high-velocity integrations, the burn fee needs to be adjusted again for sure. This can either be done by integration specific fees or to reduce the burn fee for everyone.
0,4% overall fee is still a fair price for the product. Of course, we want growth in this early stage and if we see the fee structure has any bad impact on that, change it!
I’m against this proposal at this time for various reasons already touched upon by @MaxRoszko and @Alexander.
Additionally I’d like to stress that in my opinion we should not look at the mint or burn fee in isolation. RenVM cannot merely be a custodian, we need high(er) velocity transactions and for those kind of transactions it is the combined mint + burn fee that makes up the total fee. As such we should think of our current fee being 0.3%, also because we rather not hold on to assets too long it makes sense to charge a majority “at the door”.
I would also advocate for taking a more cautious approach with fee changes. Give more time to let the dust settle on previous changes and allow more room to experiment with one fee at a time.
I must say that I AGREE with this proposal for the following reasons:
Gives users a 1 week timeframe to remove their renASSETS at current burning fee of 0.1%. Maybe we could increase this timeframe to 2 weeks instead. My assumption is that this won’t cause any market reaction (Look at point 4)
I think is better to increase burning fees now that we only have 1 official integration and increase burning fee all the way up to the point where we see a slow down in burning volume as mentioned by DeFi Frog. We can also lower fees as more integrations are added in the future. I see this relation as follows: More integrations = Lower Fees.
Users must get used to the idea that RenVM is dynamic and the most important is keeping their funds SAFE and this is achieved through fees.
It would currently take 6 weeks without CRV rewards to recover the fees (0.20% Mint, 0.2% Burn = 0.4% ) on Curve on the renBTC pool at current AVERAGE YEARLY APY (https://www.curve.fi/ren/stats) . It would take 2-4 weeks to recover fees with CRV rewards at APY of 4.54% - 11.34%
We would still be cheaper than wBTC (0.25% Mint + 0.25% Burn) and tBTC (Higher than 0.4% when accounting for gas/bonding prices)
We are the ONLY product in the market that offers permissionless and unlimited mint/burn amounts.
Security is the most important aspect of our system. Security is what will give confidence to big whales (2000 BTC and more) to use our system in the future. We must keep experimenting with this asap.
I recommend closely monitoring APY throughout the whole of DeFi in order to adjust accordingly. Maybe someone can create a website in the future to track renBTC returns and average them out to use this data for future proposals.
Looking forward to the RIP and Master Loong’s comments on this RFC.
We all have the same goal - to bring TVB/TVL balance in check, to attract more nodes, more integrations, volume, and fees.
I’ve been in the camp to do everything we can to encourage volume and adoption at this stage. The call to increase mint fee to .2% did make sense though because the opposing force to added volume and adoption is the need to attract nodes and TVB for security and a successful transition to Mainnet Zero. TVL is getting too high (although lately this arb bot and of course the harvest event have helped bring it down a bit).
I am leaning to stay where we are at right now, but welcome further analysis of consequences of this change like is already happening here in this thread. We have to do our best to imagine the impact on current and future integrations- as Max stated earlier - we are an infrastructure and should depend on volume more than % profit, so to enable the ecosystem to grow and flourish. But we can’t do this without our own sub-ecosystem also remaining healthy and secure.
So final answer - no for now, but eager to read more analysis of cause and effect that may change my mind. Vote to leave this open as long as is needed to hash out these predictions. Also keep in mind new integrations coming in the next week or so according to that last event Loong spoke in.
+1 I’m not a very technical Person. But I agree, now is the time to be experimenting . We have had mainnet live and without any problems since May, ren is trusted and the fees coordinate with the current fees in the market. Also, in any speculative market, future integrations must be calculated in the price and fees associated with said product . I think it’s better to do this now, with binance chain and other integrations nearby then to do so at that time( so we don’t have influencers like chris blec) saying that we are trying to hide good news with underlying fee raise. We are in the midst of a very successful rip bump of mint fee, and naturally rip for burn fee following is a natural progression to that! Let’s not forget we can always not move forward if rip changes seem to negatively affect volume. This is a very smart and hard working community. I support this RIP
I am in favor of raising the burn fee to 0.2% at the beginning of the next Epoch, and further if volume and income continue to rise, which I believe it will…and continue raising it to 0.3% and beyond until it doesn’t.
I am very impressed with the conversation and the points raised for and against. I think that in the future when we reach Main Net One, these concerns will be magnified and the directions we take will have much more weight than they do today, at most, we are talking about increasing revenues from an average of $200-300/epoch to $400-$500/epoch per dark node, not a lot of money either direction, which emphasizes further why we should proceed with the raise and experiment learn and adjust.
I would encourage anyone who is reading this comment to take a step back and remember how early we are in this project, and understand that collecting data through trial and error while under the protection of the Greycore is an important experimentation period that we cannot afford to squander.
Further, since fee management is under the RenVM community’s control, we have the ability to change it back if it does yield the results we are looking for. So, the cost is minimal if any while we are experimenting. If we ever want to have an automated solution we must experiment and collect data and watch to see how the market reacts.
At this moment, I do not believe we are seeing any meaningful slowdowns as a result of our experiment, the total volume is still growing and the number of use cases and integrations are still rising, therefore I believe it is too early to conclude that our prices are high or too high, when we reach that point, I believe it will be clear to everyone as the volume will dry up.
If this is “pushing it” is to be determined, we will not know this until we try it, there is no better time to try this than now. The longer we wait the more cost/income consequences it could have. I would rather let the market guide us in this decision and experiment than speculate. Data is the ultimate decision market
I agree with you that additional integrations and volume will help address the TVL/TVB issue, however, if we do not manage our fees correctly we are doing our network a disservice, as we would be establishing ourselves not as a premium product. The world of opportunity is ahead of us, and I think we must discover the price of our services, such that arbitragers are not taking advantage of our low rates, and profiting off our discounted fees.
I agree we are positioning the network to be infrastructure, but as the infrastructure, we have needs, even though our cost basis are covered by the current level of income, our security has not reached a point where it is safe for us to proceed with pure decentralization. We need to increase our fees and continue to improve on speed and integrations to deliver a quality service that is secure, if we do not have proper security we do not have a viable product.
We are either the cheapest or were the only way to convert the renBTC taken back to regular BTC. Either way, I think that raising our Burn fees should be explored to see how and if it has an impact on the market.
Growth will occur from adding additional integrators, to claim that customers are motivated by 0.1% when they make that in one day in DEFI, I think is a difficult argument to defend. Our customers come to us as they are supporting decentralization, speed, and ease of transaction. Our fee has seemingly not been a party to the conversation based on the data collected so far, when it does I think we will all know and can then make these types of claims.
Welcome to the conversation! I believe if we want to get to a place where we are able to utilize a continuous fee, we should actually have a higher Burn fee and a lower Mint fee. Thus inviting customers into DEFI with a low rate, and charging them more to leave. As in the future, I believe many BTC holders will never leave, and will instead hop from DEFI opportunity to DEFI opportunity chasing yield.
That said, where these levels are set is to be determined, maybe it’s 0.2% mint, 0.4% burn, but at this early stage, I agree we must experiment and discover where the price is too high and customers are no longer participating. Since there are other ways to acquire renBTC through the exchange instead of minting through our network I think the balanced approach is to have a fee on both ends.
In Conclusion, let’s move fast, let’s experiment, let’s push things to the limits, it is all part of experimenting, and most importantly these healthy conversations emphasis the need for more control of our fees.
I would encourage community members to weigh into and support RFC-000-002. From this conversation, it inspired an additional point that I will add to RFC-000-002 Multivariable Fee Control, that being various integrations could have their own fees if certain integrators are consistently delivering us volume, as a way of appreciating them we can lock in rates, set up terms that if they don’t meet a certain level of volume the fees reset to “standard” this type of control should be explored and embraced. The more flexibility we have in fee control the better, as a network we will be able to compete, differentiate, and secure our network! We cannot afford to wait until after we are fully decentralized to establish fee multivariable fee control systems.
Personally against it.
I do think that the value of a minting and of a burning transaction are different.
Minting is usally done by people that are looking for yelds in DEFI and willing to pay to do so, Burn is done by people flying back to safety and I think it is a different service in a way.
Moreover burning should be incentivezed since we don’t want renbtc to stay on ethereum.
I would actually be more courious to see the effect of raising the mint to 0.3 and leaving the burn to 0.1
Thanks for adding your critical thinking and rationale in support!
FYI part of your text misquoted something Max said as something I said.
Strong statement here - I agree. We aim for the next stages of decentralization, and many say that this is the immediate goal, but we need to work towards it together.
This statement and the diagram also emphasizes the value of our product and how we’re so clearly underpriced.
I’d advocate in strongest terms against lowering burn fees.
To address TVL imbalance, we need to increase Darknode rewards, not try to suppress renBTC usage.
Voiced this before, but again: DeFi users won’t exit renBTC because it’s cheap or “on offer”. Their actions are based on yield considerations. Our fees have little influence on this. A typical farmer spends a lot more in Ethereum mining fees and other transaction costs than for RenVM.
By offering our service (practically) free, we would become a prime target to ‘cash out’ for all sorts of schemes, arbitrage and possible hacks. This has also been shown by the Harvest exploit last night.
This needs to be emphasised. Increasing the cost of Darknodes has nothing to with ‘greed’, but is an essential security goal.
Generally, I can read a lot of fear based arguments against raising fees. We’d “loose volume”, “TVL out of control”, users would go elsewhere?
…where to?
We have a great product, @loong and his team do a great job and we’ve become an essential hub for DeFi as a whole. There was no single hiccup, no “friendly liquidations” and RenVM has shown to be able to handle large volumes fast and in a secure manner.
Let’s have some self-confidence, some trust and and some positive thinking - and price our valuable service accordingly.
I am against this proposal. I agree with the points made by @Maggie (and others!). Lets wait and see how things go with the recent increase in Mint Fees before pushing for further fee changes.
Maybe we should have a formal fee review every quarter (3 epochs) - that gives us time to review the impact of any fee changes made since the last review.
I am also not convinced that the TVL can be manipulated with fees and that pushing them to the point where they do have an impact - could alienate our users resulting in lost trust and adoption. Things that would permanently damage renVM.
Increasing the cost of Darknodes has nothing to with ‘greed’, but is an essential security goal.