Name: Increase minting fee to 0.2%
Status: Final - Accepted - Implemented
Scope: Increase the minting fee to 0.2% and monitor impact. Continue raising with future RIPs if there is no impact, otherwise lower back to 0.1% with future RIP.
This RIP proposes increasing the minting fee for all assets to 0.2% at the end of the current epoch (4 days from now). After at minimum one week, and at maximum four weeks, a new RIP will be proposed.
If raising the minting fee to 0.2% has had no impact on total income (or somehow it has had a positive impact), then the new RIP will propose raising the minting fees to 0.3%. If raising the minting fee to 0.2% has had a negative impact on total income, then the new RIP will propose lowering the minting fees back to 0.1%. The new RIP will be the point at which everyone can voice their opinion about the impact (whether it has been positive or negative for income).
The understanding is that this process will continue until we find the point at which the total income of RenVM is maximised (based on volume vs fees). This RIP asserts that income (e.g. fees earned), not volume, is the metric to measure. For example, it could be the case that volume decreases to 80%, but because the fees have doubled, then the overall income has increased. The
After 6 months, this epoch is the first epoch in which overall fees earned by RenVM have not increased. The hype around yield farming has also died down a little. Now that we are a reasonable way in to the life of RenVM, and volume is not being driven by crazy unsustainable yields, it is the right time to begin gathering data about supply vs. demand for renBTC.
The long-term goal is to implement algorithmic self-adjusting fees that do not require active governance by nodes/community members. But, before we can design such an algorithm with any kind of confidence, we need data about how volume reacts to different minting and burning fees. It is important to isolate impact as much as possible, so this RIP only proposes modifying minting fees, and strongly recommends that burning fees not be changed until experimentation is complete.
Minting fees should slowly be raised (through several RIPs) until we see overall income for RenVM drop materially. At that point, we begin lowering minting fees again until we see overall income for RenVM increase again. At this point, we can keep the minting fees steady, and move on to experimenting with burn fees.
The expectation is that after one week (and before four weeks) a new RIP will be opened that proposes a further increase, or a decrease. This is an opportunity for the community to come to an agreement about whether there has been a material impact or not.
EDIT: This RIP has no impact on future chains, which will begin with 0.1% minting and burning fees until some level of stability in adoption has been achieved.
Nothing is needed to implement this change. RenVM governance (currently controlled by the Ren team as per https://github.com/renproject/ren/wiki/Phases) can set the minting fee with a call to the
renBTC (and other) smart contracts.