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SIP Title Author Status Track Created
0051
Adjustment of the AMM fee-split
Sacro21
Approved
Parameter
2022-10-26

SIP-0051: Adjustment of the AMM fee-split

Description

Currently, AMM swaps have a fee of 0.3% which is distributed as follows: 0.25% for AMM liquidity providers and 0.05% for the protocol (stakers). This SIP proposes to adjust the fee-split towards: 0.25% for AMM liquidity providers (unchanged), 0.1% for the protocol(stakers). This would result in a fee increase from 0.3% to 0.35%. AMM liquidity providers are unaffected, protocol revenue from AMM swaps would double.

Motivation

The related analysis, discussion and arguments can be found here: https://forum.sovryn.app/t/circle-of-tokens-regarding-protocol-revenue/2701

In Summary:

When we look at protocol incentives (SOV-rewards) versus protocol revenue, there's a significant deficit. With the proposed parameter change, we aim to reduce this deficit.

The objectives of this parameter change are: -Increased fundamental value of the SOV token through increased protocol revenue. This would make staking of SOV more attractive. -Increased $ value of weekly SOV rewards for liquidity provider. -Increased liquidity in AMM pools OR same liquidity with a lowered amount of SOV-rewards.

Proposed change

Existing parameter(s): AMM swap fee for stakers : 0.05%
Proposed change: AMM swap fee for stakers : 0.1% Change analysis: https://forum.sovryn.app/t/circle-of-tokens-regarding-protocol-revenue/2701

License

Copyright and related rights waived via CC0.