If adopted, this proposal would enable the DAO to experiment with implementing fees on top of all Thorchain based swaps executed through the Shapeshift application.
Starting Jan 15th, all Thorchain based trades would be charged a fee of 10 bps, increasing 5 bps every 30 days until fees reach a maximum of 25 bps.
Since inception, the DAO has pursued a singular vision and business model with respect to revenue generation. To date, there has been little to no data based evidence suggesting the sustainability of this approach given measured user growth and revenue per user. Therefore it is imperative that the DAO continue to experiment with alternate revenue models in an effort to find a path towards self sufficiency.
Over the next 12-18 months the DAO needs to iterate rapidly towards finding a sustainable business model. Assuming a customer value of .25$/month, and 250k/month of expenses, we require roughly 1,000,000 monthly active users to break even. Based on the most recent data from Pendo, we have approximately 17,000 monthly active users and are losing >%15 of users per month since our peak MAU of 21,000 monthly active users (11/13). We have two paths to pursue aggressively; increasing MAUs and increasing revenue per user. All reasonable experiments that align with either of these paths are worth the DAOs consideration.
The proposed experiment is meant to determine if users value our platform enough to pay marginally more for it than a completely free option when swapping assets via thorchain
Thorchain Swap Fee schedule:
Jan 15 - Feb 15 - 10 bps
Feb 15 - March 15 - 15 bps
March 15 - April 15 - 20 bps
April 15 - TBD - 25 bps
An additional proposal and governance vote would kick off around May 15th that would examine data collected during this experiment and determine fees beyond May 15th.
Current trade volumes for thorswap are approximately 5M USD / month, this would translate into the following revenues for the DAO
Jan 15 - Feb 15 - $5,000
Feb 15 - March 15 - $7,500
March 15 - April 15 - $10,000
April 15 - TBD - $12,5000
While these monthly amounts may seem small, across all of our business models the Shapeshift DAO is betting on very large (> 15% MOM) user growth in all of its projections. Additionally, even the $5,000 number realized with the lowest fee increment would be our largest source of current monthly revenue.
Implementing fees in a single product allows us to gather important data from our users in a lower risk setting than implementing fees across the entire product line.
There is the potential that our users are price sensitive and these additional fees cause us to lose existing users or fail to gain additional users. We can not run a true A/B test in this scenario and teasing apart effects of this treatment compared with broad market sentiment, product evolution and other user trends may be difficult, leading to inconclusive data.
As with most open source software, there is the potential for someone to fork the Shapeshift codebase and bypass the fees for personal or public use.
Marketing and PR campaigns would need to be modified to ensure users are not being misguided by the original message of “no added fees”. There would be a small engineering effort needed to augment the existing swapper UI to display the added fees and add the transaction memo when interacting with thorswap. Additionally, the DAO would need a RUNE address that is capable of receiving the fees denominated in RUNE.
Should we implement a regressive fee? Larger trades could be charged a lower % fee than. This is technically feasible and could make fees more equitable for larger traders. Many CEXes have similar volume based fee tiers which work on aggregated volumes