edit: changed from a RFC-000-009 to an RIP-000-002 after rough consensus voted in the affirmative
Name: Increase mint fee to 0.3% on November 16th (start of Epoch 6)
Status: Draft - Rejected
Scope: Motion to increase the minting fee to 0.3% and monitor impact. If passed, allow users 7 days to enter their renBTC position at the current 0.2% fee. Measure data after fee change and determine best next step at that point.
This RIP proposes increasing the minting fee for all assets to 0.3% after 12 days from (Nov. 4) submission of this RIP.
Potential outcomes/next steps after the implementation of raising mint fees:
- If raising the minting fee to 0.3% 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 0.4%. If raising the minting fee to 0.3% has had a negative impact on total income, then the new RIP will propose lowering the minting fees back to 0.2%. 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).
- Leave minting fees at 0.3%.
Setting a higher minting fee now allows us to strengthen the lever of lowering minting fees in the future
Similar to our recent mint fee increase, a change of mint fee from 0.2% to 0.3% may curtail smaller transactions and further lower value minted and make RenVm even more secure
Increasing the minting fee will increase minting revenue by 50% and will 1) subsequently, increase earning potential and 2) theoretically, increase $REN token value by incentivizing more darknode registrations
Increasing the minting fee to 0.3% will put REN more inline with Uniswap at 0.3%, and Coinlist wBTC at 0.25%
RenVM currently has more flexibility to further raise minting fees now before additional major integrations at which point, we would have to more greatly consider impact to partners
Many hypothesized that 0.1% to 0.2% mint fee would have little to no impact on volume, and as we can see from the large 1,500 BTC mints, there is indeed proof users are still using RenVM at high volumes even with the change in fee
Reasons against and counterarguments:
- Overshooting, dropping mint volume too fast vs burn volume and reducing TVL too quickly (while unlikely still a possibility)
The initial discussion on the first increase from 0.1% to 0.2% fees raised the possibility of further increases if no volume impacts were observed. Its been a few weeks and volumes have held steady
Its a good time for another increase to bring the TVL closer in line with the TVB. This increase should have the effect of raising the TVB while reducing the TVL. So it could be a win/win/win scenario: Increase TVB / Reduce TVL / Increase Fees
We have a market leading if not superior product with lower fees compared to peers. Fee generation and market share gains are not mutually exclusive.
No fees to darknodes will catastrophically impair the security of renVM, nodes will go offline if they don’t earn competitive fees. Experimenting with the price to understand the price elasticity is important.
It will give us real data and help us find the right equilibrium between fees, volume, and security.
Least we forget we need to have enough darknodes and a high enough value of $REN to fully decentralize.
- In Support