Name: Increase minting fee to 0.25%
Status: Final - Accepted - Implemented
Scope: Increase the minting fee to 0.25% and monitor impact.
This RIP proposes increasing the minting fee for all assets to 0.25% 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.
The new RIP may propose raising the minting fees to 0.3%, lowering the fee to 0.2%, or keeping the fee at 0.25%. Generally, this will be guided by the impact on revenue that is observed: no impact resulting in a raise or staying of the fee, and negative impact resulting in a lowering of the fee. 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).
After last month, the TVL within RenVM has decreased as desired, and the revenue of RenVM increased slightly (despite the decline of DeFi yields). As required by RIP-000-001 it is time to propose the next change in the minting fee to continue trying to find the right fee based on demand, but also to continue demonstrating that we can lower the TVL without necessarily impacting revenue.
The long-term goal is still 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. See RFC-000-007 for many in-depth discussions about this particular point.
Minting fees should be adjusted to meet demand, however, we must also be mindful of changes in market conditions, and the fees of other projects that also offer BTC on Ethereum (given that this is dominantly our current major source of revenue). The suggestion to raise to 0.25% is lower than 0.3% (as proposed by RIP-000-002; which was must more contentious), and is the same as the cost of minting WBTC.
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.
This RIP has no impact on future chains, which will begin with 0.1% minting and burning fees, unless another RIP proposes otherwise (and is accepted).
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.