RFC-000-034: Consolidated Fee Proposals

[Sabobi]

Name: Consolidated Fee Proposal (BurnAndMint, Burn and Mint fees)
Author: Sabobi
Contributors: Shilliam Shakespeare
Category: Fees
Status: Draft
Scope: The recent RFC31 and RFC32 discussions around changes to Ren’s fee structure ahead of the H2H UI launch together with the new BurnAndMint transaction type have been up for about 2 weeks now. This RFC is purposed to propose a final version before proceeding to RIP and voting.

Overview

Strongly suggest everyone visit the other two RFC’s ( RFC31 and RFC32 ) and catch up with the discussions. As the discussions progressed around BurnAndMint transaction type and whether or not to put a relatively low fee another discussion started over the current Mint txs type and Burn txs type.

As H2H UI launch together with the new BurnAndMint is quite a big upgrade the community felt the current txs types (Mind and Burn) should be revisited and adjusted to align better with the new BurnAndMint fee.

This RFC will propose the final version of the voting structure together with the options that will be available to the DNO when voting.

Background

The engagement from community was overwhelming and even resulted in an emergency community call with great turnaround where the three different fee proposals were discussed. To keep things clean it was agreed to proceed with three separate votes for every transaction type and go with ranked choice voting structure.

It is important that everyone feel they can get their voice heard ahead of the voting to ensure the options encompasses what community expressed. It is therefore very critical anyone with objections raise their voice in this RFC as we are unable to change anything once the RIP and Snapshots are up.

Details

Timeline: To give enough time for everyone to comment, this RFC will be up until Sunday Jan 30th, UTC 21:00. Immediately after the RIP/Snapshots will be up for DNOs to vote with deadline Sunday Feb 6th, UTC 21:00. This will give DNOs 7 full days to vote. Shortly after that implementation by Ren Labs.

Voting structure: Ranked Choice was agreed upon to allow many options without the risk of diluting voting power as well as getting a sentiment check on a vast variety of choices for future fee proposals.

Mint fee:

(To respect the risk Ren Labs take on at this early stage of the progressive decentralization it was agreed that no option lower than 0.10% should be available to avoid TVL going up too fast)

• No Change
• 0.10%
• 0.125%
• 0.15%
• 0.20%
• 0.25%
• 0.30%
• 0.35%

Burn fee:

• No Change
• 0.05%
• 0.06%
• 0.075%
• 0.08%
• 0.09%
• 0.10%
• 0.125%
• 0.15%
• 0.20%

BurnAndMint fee:

• Free (for 3 months, governance to decide how to proceed before 3 months end)
• 0.01%
• 0.02%
• 0.025%
• 0.03%
• 0.04%
• 0.05%
• 0.06%
• 0.075%
• 0.08%
• 0.09%
• 0.10%
• 0.125%
• 0.15%
• 0.20%

One thing to note in regards to BurnAndMint fees is that movement between chains will often involve interaction with platforms such as Curve/Saber to convert the renXYZ asset into the native asset on respective chains/layers. These platforms usually take a 0.04% swap fee which should be considered if one would like to have a clean marketing push (eg. if BurnAndMint fee is set at 0.06% then the total fee together with Curve fees would be 0.10%, or if BurnAndMint fee is set at 0.01% we get a total of 0.05%)

Implementation

• Community to suggest changes to proposed structure (Deadline Sunday Jan 30th, UTC 21:00)

• Once agreed on final draft proceed to RIP and Snapshot voting (Deadline for votes Sunday Feb 6th, UTC 21:00)

• Ren Labs to implement new fees

[Thomm]

Thanks for the write up and the clear time lines! I think this structure works nicely and should capture every opinion.

For completeness sake I’ll reiterate my position which I voiced in the original RFC:

• mint 20 bps: to be conservative in lieu of accommodating RenLabs (see below). 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, after that 5 bps

Ren Labs position

@MaxRoszko

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).

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Additionally, following the example set by other projects, we can add one more snapshot vote for the full proposal agreement, a simple Accept/Reject on the full proposal. This gives an explicit option for voters to reject the proposal in full, conversely, it is also an explicit vote to accept the proposal in full.

[Sabobi]

@Thomm

Additionally, following the example set by other projects, we can add one more snapshot vote for the full proposal agreement, a simple Accept/Reject on the full proposal. This gives an explicit option for voters to reject the proposal in full, conversely, it is also an explicit vote to accept the proposal in full.

Both Mint and Burn proposal has the option “No Change” and for the BurnAndMint there is nothing to reject, we need to set a fee!

So I dont think there is anything about the proposal to reject. And 3 snapshots is already too many, another one could be tiresome

[Thomm]

@Sabobi

for the BurnAndMint there is nothing to reject, we need to set a fee!

Indeed, fair enough!

[Maggie]

Thanks for the write up. I believe it caters for all options.

To reiterate my position

• Mint fee: 0.15-0.20
• Burn&Mint fee: 0.03-0.05
• Burn: no change

Thank you and good luck to all of us!

[preston]

Great RFC, with a new feature on the horizon and safety as a priority we should test the markets and compare income streams from the new feature, I believe a modest discount will incentivize users to check out our new feature and evaluate cross-chain opportunities. I do not agree with setting the BurnandMint fees to 0%, it is per Ren Labs’ advice that we do not go below 0.10%, security is a priority and so is keeping DNO competitive in the defi landscape to attract more operators and prepare for decentralization later this year.

I would propose and support the following rate changes.

• mint .30%: a 20% reduction in MINT fee, to help incentivize and raise awareness of the new feature, giving it space for users to MINT stables and other tokens while protecting DNO income by maintaining fee, but not lowering the fee beyond what volume growth we might see.

• burn .05%: a 50% reduction. To see if we can lower TVL further and additionally incentivize burning I suggest further lowering the BURN fee, if we do not see respective drops in BTC TVL, we can suggest that raising these fees would be a benefit to operators.

• BurnAndMint .10%: we need to realize the value that this feature can create and perhaps will be able to raise the fee from here. REN started MINT and BURN at 10bps, this is a new exciting feature that we should charge for, this early adoption is the catalyst for protocol income, and could add a lot more TVL, this is an opportunity we do not want to miss out on giving away for free. We can always lower the fee if we see slower than the desired adoption. If we start at 0%, we can only lower our MINT and BURN fees to incentivize leaving DNO with less income and less flexibility on a great new feature.

If the technical work required to change MINT and BURN fees requires too much developer time, then I would also agree to No Change, and to set Burn&Mint Fee to .10%, the team should remain focused on Greycore and march towards our next phase.

[Thomm]

@preston

I do not agree with setting the BurnandMint fees to 0%, it is per Ren Labs’ advice that we do not go below 0.10%

Just to clarify (unless I misunderstand what you are saying), but the Ren Labs position as voiced by Max was specifically about the mint fee, and not the burnAndMint fee. The latter can be anything we desire as it does not directly impact TVL.

[Liberty]

Looks ready for RIP to me. One thing I would add to the final RIP is a clear statement of current fees, for the sake of completeness.

[Sabobi]

good idea, will do

[preston]

@Thomm

Just to clarify (unless I misunderstand what you are saying), but the Ren Labs position as voiced by Max was specifically about the mint fee, and not the burnAndMint fee. The latter can be anything we desire as it does not directly impact TVL.

Ah a misunderstanding about the team stance, I still stand by setting the Burn&Mint fee to 0.1% for all the other reasons stated

[BlockchainBard]

Many thanks Sabobi

My sentiments regarding the fee changes are pretty much well documented already, so I don’t need to add too much here (you can check out my original RFC if you want to learn more).

---

As of now I think I’m leaning more towards:

• 0.15% Minting fee
• 0.1% burnAndMint fee
• 0.05% Burning fee.

I still feel the minting fee is deserving of the most significant deduction, as it’s the first ‘gateway’ fee our users are exposed to when using the RenBridge - and could make the difference between them deciding to use H2H/Burning transactions or not (if not financially viable). For this reason I think the first minting fee needs to be as attractive and incentivising as possible.

As always though I will respect the wishes of the community, regardless of the outcome.

Thanks to everyone who got involved and helped make these votes possible before the launch of H2H. May it achieve the roaring success that it no doubt deserves!

Onwards and upwards to the RIP!

[Renindy]

HI guys, I would not be supportive of offering a free fee for Mint&Burn. Whilst I appreciate the ‘promotional’ reasoning behind the option, H2H is an obvious game changer in the space and will attract users regardless. Offering a free trial period appears ‘gimmicky’ (at face value) and doesn’t inspire confidence in the product IMO.

[martign0]

Hello, I am as well not very supportive of setting burnandmint fees to 0. I do understand the needs attack users but I do have a concern, which I am not sure if it si valid. Is there any attack vector setting burnandmint fees to 0?

My votes will go to: reduce mint fee to 0.15 (we need to reduce the barrier for mints to get liquidity), set burn fee to 0.05%, set burnandmint fee to 0.05%.

100MM per day of burnandmint at 0.05% is 25$/node @ 2000nodes, which would be a nice return, and I think should be totally doable if there is the right liquidity. This fee should attract users as well

[Amaguq623]

thanks Sabobi, this gives us a clear and fair overview.