Name: Fee strategy during Greycore transition and other features
Status: Final - Accepted - Implemented
Scope: Increase minting fees and lower burning fees temporarily during feature rollouts to mitigate risk
The Greycore launch has been kicked off (https://medium.com/renproject/renvm-greycore-on-testnet-31747cc183c5), marking a monumental step in RenVM’s progress towards decentralization. This marks a very exciting time, but also new era, one where special care must be taken as new members begin to power the core parts of RenVM. At the same time, we are seeing the TVL in RenVM reach all time highs (https://mainnet.renproject.io/).
Because of these achievements, the Ren project has never been in a better place in terms of progress. But we are also seeing a worrying trend in general in the crypto space, where hacks and exploits are at an all time high as well (https://www.rekt.news/).
A core part of the RenVM security model is its ability to regulate TVL against TVB by adjusting minting and burning fees. Given the upcoming release of multiple novel features, the recent focus of hackers on interoperability solutions, and the expected increase to TVL, we believe the responsible course of action is to increase minting fees and decrease burning fees. This should be done asymmetrically such that fees increase overall. This is in accordance with the RenVM security model and is expected to have two impacts: (1) a reduction in TVL, and (b) an increase in TVB (caused by an overall increase in fees, which has downstream effects on TVB).
It is important to not only mitigate risk during a time when novel high-impact features are being rolled out, but also to demonstrate the ability of RenVM to regulate TVL and TVB as expected.
The Ren core team believes it is imperative to implement these changes now, for the duration of the Greycore transition, not only to secure long-term success by minimizing the risks and consequences of an unforeseen attack, but also not to put too much risk on the shoulders of the new Greycore members.
How would the fee changes interact with upcoming host to host capability?
With the upcoming deployment of host to host capability for RenVM, there will be a new type of transaction possible, which are
burnAndMint transactions (e.g. burn renBTC on Arbitrum and mint renBTC on Ethereum). We have the ability to freely set this fee independent of the fees for mints or burns.
burnAndMint transactions are not considered by this proposal, i.e. they can remain at 0.15%. This can be so because
burnAndMint transactions do not change RenVM’s TVL. A nice side-effect of launching host to host in parallel to the proposed fee changes, is that volume can increase without a change in TVL (at the same fee structure as before), which should have positive downstream effects on TVB.
Minting ETH/SOL/ERC-20/BEP-20 assets etc. on a new chain are mint transactions and increase TVL, and they would be subject to this proposal on the other hand, until it makes sense circling back on fee setting in the future.
We initially suggest these possible fee levels, in any combination:
In the vote itself, all 6 options will be available, and you as a DNO with voting power can distribute your voting power freely among all options, meaning you can split your vote between one minting fee option and one burning fee option, or any other combination. The final results after everyone has voted will be the weighted sum of the votes for the mint category separately, and likewise for the burn fee category. So if the voting power between mint_20 and mint_40 is equal, the results will be a minting fee of 0.3%, regardless of how the voting power for the burn category were distributed.
- Vote through this link: Snapshot
- The results will be implemented by the Ren core team