RFC-000-032: Temporarily Decrease Minting & Burning Fee In Time For H2H

I’m heavily against a single snapshot vote (if that’s what 1 RIP implies) as that would offer a lot of different options to vote for and only increase the chances that a winning option will be won by small margin (because votes will be more dilluted) and the will of DNO will be less defined. Not to mention that this gives a lot more power to DNOs with big number of DNs.

Ideally, when creating a vote, we want to have as little options as possible and those options should be clearly distinguishable (no close options like 0.10%, 0.11%, 0.12%).

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I was more reffering to a single RIP than a single vote. I see your point about keeping few options into a single vote and I agree with it.

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@BlockchainBard one thing I haven’t seen discussed here (maybe I missed it) was the duration of the temporary decrease. Should we assume it will be the same duration as the initial H2H fee? I think that would make the most sense, so we can reassess all fees again when the promo period ends.

Also just want to voice my support for @Arviee 's point about making each fee a separate vote, and no close options in each vote. Intervals that result in no more than 5 choices seems appropriate.

I believe this is currently not an easy thing to track as you need to monitor each individual token’ mint/burn contract on all the host chains. Happy to be wrong though, would be great if we can just monitor RenVM txs to gather this data which would greatly simplify the collection of such metrics. Can someone from the team chime in if that is possible @MaxRoszko?


The fee actually went in to effect on October 5th. Also, it is better to look at the TVL in BTC as looking at the USD value depends on the Bitcoin price.

This means TVL went down by about 2168 BTC after the fee change went in effect, which at today’s prices is ~90M in USD. However, note the sharp increase in TVL right before the fee went in to effect, putting a stop to this might be even more significant given the goal of the original fee increase.

Having said that, I do support lowering the fees temporarily to help bootstrap liquidity. As you say, it does not make sense to try and bootstrap liquidity while at the same time dis-incentivize “too much” liquidity generation. To quote @Maggie it is like rowing in two opposite directions :wink:


This was not me by the way but does make sense.

If we want to bootstrap liquidity this by definition means we are accepting that the TVL will need to increase. Once we establish that we should also establish that we should not row in opposite directions and do what we can to make liquidity generation more efficient (i.e. lower fee barrier).

At the same time though we can also establish that there is a level of sufficient liquidity, and a goal to keep TVL in check, which implies that it is OK to put high fees back once TVL reaches a certain threshold.

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Thanks for the clarifications Thomm much appreciated :+1: I’m glad you agree with the general sentiment of the proposal.

Given we only have 13 days left in the month, I want to try and elevate this RFC to RIP as soon as possible (especially if H2H is coming this month).

My main concern now is getting the vote passed in time, otherwise it will be too late. Timing is absolutely crucial if we want to use reduced fees as an incentive to compliment the launch.

Speaking just as a community member, I think we need to consider whether free fees would work, just the same way as yield farmers jump between the best farms and don’t have any real loyalty to protocols. Would those who come to us because it’s free keep using us when fees are bumped up later (because it’s definitely not sustainable to have 0 fees indefinitely, eventually it has to change)? Something to consider at least.


Need some clarification here, what do you mean by H2H transactions? We have the mint fee, the burnAndMint fee, and the burn fee, minting renETH has the same fee as minting renBTC currently, they are not different in that regard. I’m not sure if the feature to set unique fees per asset is live yet, just want to flag that this is potentially something that would need a little time before it would be hard-forked into mainnet (even if it’s not a challenging update, we still have strict development pipelines to make sure no bugs or exploits are introduced from a change).

Everything is on-chain so it’s possible to track unique addresses using Ren, not necessarily RenBridge though because there are other third-parties minting through Ren. But assuming we are talking about H2H assets here, in the short-term only RenBridge will support that so yeah you could easily track it.

Just want to point out that the TVL increase here corresponds with BTC running up in price. Even if the minting fee was 100% the TVL would likely have increased in USD because of the BTC price going up, not because more actual BTC got minted, so it’s more fair to check it against BTC:


I don’t have any official statement from Ren Labs at the moment, but it would be something along the lines of a moderate position, although it’s up to the community. We’re open to the minting and burning fee being changed, but advise against extreme changes as ultimately Ren Labs bears the most risk from too high TVL at the moment. Ren Labs would not be comfortable if for instance the mint fee was set to 0%, and possibly not 0.1% either. But it could certainly be below 0.3%, but posting any real numbers would be arbitrary because there is nothing magical about any specific value in this case (that we know of at least).

We are certainly also trying to speed up Greycore deployment now that most of the technical blockers are resolved.

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I agree that “no fees” doesn’t seem to be a valid proposition - although our main competitor did just that for a while.

Since all our analysis concerning fees still amounts to spit-balling, I’ll just do that and say 0.1% flat seems a fair medium. I don’t think with the changed landscape and the multitude of competitors our TVL would shoot right back up.

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I have made myself this question too and that’s the reason I believe H2H transaction should not be 0 but significantly low 0.05 or 0.07. This way we ensure some earning for Darknode owners is received during this period.

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I’ve been speaking with a lot of defi folks to get the sentiment regarding fees and even managed to learn some stats from other major competitor… In short, the conclusion I’ve came up with was that small fees can work even from the start. So on the 17th I had written this idea in our discord:

I was thinking more about fees and what do you think about having 0% mint fee (for non $renBTC assets! and for a short while!) and smth like 0.1% fee for H2H burn&mint? This way interested 3rd parties might solve a lot of our (potential) liquidity problems, because they’ll see value and a chance to earn with this offer, and DNs will still pocket nice fees with H2H. And in case we want to add an extra cross-community marketing touch - we can remove all fees for a certain asset, ex. $MIM. Thoughts? At first glance sounds like a decent compromise between what different community groups want. (edited)

Downsides:

  1. TVL might explode and it’s unclear yet what implications this might have
  2. Some of our transfers will be more expensive than what (bridging) competition offers. But there are other competitors, who also charge fees for same assets and have decent volume…
  3. Arguably less marketing potential than just “FREE”
    3.1 Arguably weaker user acquisition (= weaker ability to reach more people)

Upsides:

  1. Easier liquidity bootstrapping, hopefully.
  2. DNs get H2H fees
  3. We maintain minting fees for $renBTC
  4. We still have an opportunity to completely remove fees for certain asset, forming a special-bond with the community that represents that asset. This might offset point “3.” in downsides.
  5. Even with 0.1% we’ll be A LOT cheaper for guys with smaller bankrolls (due to no min. cap) and by default there’s a lot more of smaller guys than :whale: , so we can market from this “robin-hood” angle + have word of mouth effect.

As of now this is my favorite option. But the minting fees for non renBTC assets totally depends on how confident we’re that we can get liquidity on our own or with our friends. And if we think this will be a problem, than 0% for a short while, like couple of weeks max, can make sense. Otherwise, if we’re sure liquidity is not going to be an issue, 0.1% everywhere can work as well.

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Arviee, Iam very aligned with your way of thinking and seeing things, but I think that 0.1 for everything (M, B and B&M) would be the best. .

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I can totally see how this is the case. 0.1% across the board is, actually, my preferred long-term fee structure :slight_smile:

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For the record, I’m not a fan of implementing ‘free’ fees at all. I simply put free as a potential option to cater to all opinions of the community - it should still be an option to vote for even if there’s not much support for it. I don’t think the community would even vote to implement ‘free’ transactions, but I still want them to have the widest choice possible when voting.

My preferred choice would be 0.1% for all TXs (even if Arvie points out we lose the benefits of the ‘free’ label).

The voting options could look something like this:


:moneybag: MINTING


  • NO CHANGE
  • FREE (no fee)
  • 0.01%
  • 0.02%
  • 0.03%
  • 0.04%
  • 0.05%
  • 0.06%
  • 0.07%
  • 0.08%
  • 0.1%
  • 0.15%
  • 0.2%
  • 0.25%
  • 0.3%

:chains: H2H (mintAndburn):

(To be decided separately in this RFC )


:fire: BURNING


  • NO CHANGE
  • FREE (no fee)
  • 0.01%
  • 0.02%
  • 0.03%
  • 0.04%
  • 0.05%
  • 0.06%
  • 0.07%
  • 0.08%
  • 0.1%
  • 0.15%
  • 0.2%
  • 0.25%
  • 0.3%

Followed by a second vote to decide the duration of the implementation, and what conditions relating to TVL perhaps?

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Community has previously expressed their desire to always have a “no change” option, which is currently lacking from your list.

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Thanks (updated). :+1:

Seems like 0.1% (my preference too) is getting some traction. Another thing I’d like to add:

a flat fee across all operations is easy to understand for users and a better sell from a marketing perspective. We want people to to keep coming back for a seamless service and not force them to look up and calculate in which direction they need to use which service for a “better deal”.

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Yes. I like the idea of having a degree of uniformity in regards to fees. Much simpler for the user too if they know they’re paying the same fee regardless of whether it’s a mint, burn, or mintAndBurn TX etc.

@BlockchainBard On the fee schedules, should it be 0.05% instead of 0.005%? The others are in increments of 0.05 so looks like it might be a typo.

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What do you think of adding both an upper and a lower TVL limit as signal to adjust fees?

And what do you think of wrapping this all up into a single RIP, that will be linked to several votes?
(We are talking about the other RFC in here and vice versa, I really think this will get confusing when we get to RIPs)


Can we add some options between 0.005% and 0.1%? I felt like fees in the 0.03-0.07% range were also considered in all the debates.

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I see where you’re coming from. Having a high mint fee on $BTC, our most liquid asset, and a promotional low/free minting fee on other assets serves both goals to keep BTC TVL in check while incentivizing liquidity provision for our new and illiquid assets.

However, I would not like to see this at this point in time. It is already complicated enough for us to govern these dials, creating even more dials for ourselves would make it even more unwieldy. Also for our users and integrators. Also I think it was mentioned that technically this could be implemented, but per asset fees are not there right now so would not help yet with the issue at hand.

Long term bespoke asset fees might be a must though, since liquidity provision requirements can always be at odds between different ren assets, preferably I’d like to see this in an algorithmic way which brings it back to a single dial.


That being said I’m coming down towards

  • mint 15 - 20 bps: to stay a bit conservative in lieu of accommodating RenLabs. We can re-evaluate after 1 month to lower it more if liquidity provision is lacking
  • burn 5 bps: low burn to help with TVL
  • burnAndMint 0 bps: free for promotional period of 3+3 moths, after that 5 bps
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+1 Updated thanks.

Also added additional fee options as requested by @Woodgast