First, thank you for posting this @0xdef1cafe if nothing else I love seeing the community so actively engaged in governance on highly important and strategic topics for the DAO and more discussions around FOX tokenomics happening, which have been needed for some time, so if nothing else I appreciate you kicking off this discussion and hope as a whole, regardless of what other ideas are proposed or voted on, that the DAO ends up in a better place via this active discussion. I think it probably will, so thank you for moving this train forward.
Second, without going too far into it I will just say as one community member I was a bit taken a back with how fees were implemented without what I saw as community consent or even being asked the question, especially given the context of the DAO’s history, SCP 128 and the fee debate prior. Having listened to some of the debate around that, I understand where some of those who believed the “monetize defi” line was enough from the recent roadmap proposal to justify the decision. I don’t personally think that was enough, but understand how other reasonable folks within the DAO believe that. I think implementing fees in that way ahead of any clear DAO vote was ultimately a strategic mistake because it will inevitably mean lost support for this and any other fee proposal that otherwise may have supported it. Regardless governance will have its say on that issue.
So currently I am in support of SCP-149 (maybe with some minor updates), but I think that issue at this point is separate and should remain separate if possible from the fee debate which is so strategically important for the DAO. Also to be clear I think it is perfectly possible to be in support of SCP-149 AND this proposal, they are by no means mutually exclusive (and I appreciate this proposal is preemptively specifically superceding SCP-128 with this proposal in order to add that clarity).
As it stands though, I am relatively neutral on the fee debate, as I was neutral when it came up during 128 as well. I think both sides have made some great arguments over time and I plan to support whomever has the best proposal based on the content of the specific proposal and nothing else given the importance of this debate and decision.
So I am not currently “for” or “against” fees, as I am for seeing the best proposals in relation to fees/no-fees and how they interact with FOX tokenomics get discussed and voted on (in such a world I think the DAO wins no matter what).
With that said, some thoughts on the fee proposal that has been presented and where I think it could materially be improved:
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Overall I like a lot of the ideas in this proposal, waiving fees for small enough trades is smart, if we are going to implement fees having decreasing fees over larger trade sizes make sense to me, and I love the idea of FOX holders getting fees waived. Dare I say its the best FOX tokenomics proposal we have seen to date (but to be fair there have been too few FOX tokenomics proposals, I would hope its something the DAO engages with far more often going forward).
One thing I don’t love is the one tier of “fees or no fees” in regards to one specific number of FOX holding. There is a beautiful simplicity to this (both technically and in how it is explained) but I think FOX holders as a whole would probably be better served if we did the work to tier the fee discount. Like most of the specific attributes the numbers could be debated but I feel like something along the lines of 250k-500k FOX get you 25% off fees, 500k-750k gets you 50% off fees, 750k-1 mil FOX gets you 75% off fees and anything over 1 mil gets you no fees entirely would be a significant improvement over the currently proposed model.
I know this would be technically more difficult, but I think the extra effort would be worth it for a plethora reasons, another cool way might be just proportionally giving you fees off for whatever amount you hold from 1-1 mil fox (and then over the top tier fees are entirely waived), but I think in many ways the 4 clear tiers has the best potential and ability for having real benefits of upping your FOX membership holdings.
The specifics here are less important than the idea, that gradated tiers and spectrums of how much utility FOX gets you should be proportional to holdings at least up to some level that gets you “everything”.
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I do worry about all sorts of exploitation that becomes possible if the logic is simply “how much FOX does this user hold”. What is to stop someone from simply buying FOX, doing a trade, and selling it right back anytime they want to trade? Or what if they send their FOX to their friends for a few minutes so they can do trades? Just a few examples, but just looking at FOX balance seems a little too easy to game, it seems like it would be better paired with some sort of staking mechanism that locks it for some X amount of time and enables the benefits for trades discounts, free trading, and more. This could be using something already built like FOXy, or a new staking contract if the community prefers, but I think it may be very important to have this in some fashion or another attached to this new tokenomics proposal. (and if I am off base on the technical/exploit challenge, would love to hear how those problems would be solved in a different way.).
- I think some sort of value accrual that benefits FOX holders (or maybe only FOX stakers if that route is chosen) where those paying fees provide benefits to those who hold/stake FOX is pretty important to include as part of this (even if its not implemented day one of such a program going into effect, I think it could make sense to be discussed now and on the roadmap for implementation relatively soon after). I am not sure exactly what that looks like, if it just takes the form of buyback and redistribute to holders/stakers (e.g. FOXy), buyback and burn, simply a buyback to the treasury, or some other mechanism. I am personally kind of partial to the FOXy mechanism (think it would work well with enough volumes), but I am less concerned with the specific mechanism vs the fact that there should be a mechanism of some sort at least discussed and preferably planned and implemented. (could be as simple at 10% of fee revenues are used for this effort and the rest go to the treasury or some other number that is changeable by governance etc, I think ThorSwap actually gives 75% of their revenues to stakers),
- There would also be an opportunity if we go this way to start moving more towards some sort of veToken like model where at minimum stakers get increased governance power for locking up their FOX and/or could even turn into the only way to get governance power (I am more partial to the former but there could be good arguments on each side for that). This would likely be best handled in a future proposal though and I wouldn’t try to conflate any potential governance power related changes with this proposal unless the community really wants that as part of this.
- Finally I think on the graduated fees themselves, if we are going to go this route I think we should raise the lower bound of the curve (maybe to something like 8 or 10 bps) That is still ultra competitive and attractive and we can always lower it down the road if we need, but I think upping it later will be more difficult than moving it down if needed.
Overall, love seeing this debate play out in real-time and look forward to seeing how this discussion continues to evolve and where this and any counter-proposal land.