RIP-000-002: Increase mint fee to 0.3% on November 16th (start of Epoch 6)

[DeFiFrog]

Alright, to begin articulating my position on this RFC, I’d like to reference @loong’s RIP 1. He stated that Total Income is the measurement to monitor - not volume.

@loong

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.

With this context, please see my short and sweet data analysis below.

Based on the data I’ve pulled from @jontom’s dune analytics dashboard, it appears the 16 day period before the mint fee change from 0.1% to 0.2% had 5,296 renBTC minted while after the fee change we had 4,277 renBTC minted. This represents a ~20% decline in volume. However, because the rate of revenue doubled, our overall RenVM revenue actually increased from 5.3 BTC to 8.6 BTC from minting activities alone.

As Loong’s RIP that was accepted with overwhelming majority specified that we measure based on RenVM revenue, I am in support of this RFC and actually push that it should be changed to a RIP per the guidance in Loong’s RIP. It appears we are healthily reducing minting volume while also increasing revenue. This decrease in minting volume helps secure RenVM because we currently have too high of a TVL, and subsequently, the increase in revenue should theoretically increase Ren token value and ultimately TVB.

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For the folks that believe it is too early for a 2nd increase, please consider that this proposal would also have the same dynamics as Loong’s RIP. It would be for experimentation purposes to better identify the price elasticity of RenVM, and it can easily be voted to be reverted back to 0.2% or 0.25% if 0.3% proves to be too high of a fee. Let’s explore this price elasticity together.

Disclaimer: My opinion is in support, but if the Ren team has material, non-public information to be against this, I’m more than happy to adjust my position.