Proposal: Change the fee in the PSP pool from 0.2% to 0.5%

[tfns]

## This proposal is expected to appear on Snapshot for voting on 2022-01-02T00:00:00Z. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

For this proposal to pass, it requires a 20% quorum and 66.7% supermajority.

TLDR

• This proposal seeks to increase the pool fees on the PSP/BNT pool from 0.2% to 0.5%.
• The PSP pool on Bancor has the second deepest liquidity in a DEX.
• An increased pool fee will help siphon more profits from arbitrageurs to the protocol and most likely not affect volume therefore increasing APYs for the LPs in the pool.

Abstract

Deepest PSP pools on Ethereum are:

The PSP/BNT 0.2% Bancor pool with $1,276,378 liquidity [1].

The PSP/ETH 0.3% Uniswap v2 pool with $2,576,067.46 liquidity [2].

The PSP/ETH 1% Uniswap v3 pool with $1.19m liquidity [3].

Motivation

An analysis on the effect of the pool fees on pool volume conducted on the USDT/BNT pool showed that there is not enough evidence to support a linear relationship between them (Figure 1).

Figure 1 - USDT pool fee changes with market share before and after the Fee change. The 1000 and 2000 x axis values represent a 0.1% and 0.2% fee, respectively.

Mark’s comment on the TRAC pool fee experiment sheds some light into the topic.

Proposal: TRAC-BNT fee change schedule and performance analysis

It’s not a bad idea. Analysis of fee changes the DAO has made up to the present suggest we are still in the noise - in general, fee changes make zero difference to trade volumes, and understandably so. To a wide variety of users, the difference between a 0.2% and a 0.5% swap fee is essentially zero. More importantly, lower fees to drive higher volume is not commensurate with increased returns; Uniswap v3 has attained some truly remarkable volumes, but is currently running at a $20M loss. This i…

Increasing the pool fee will help siphon more profits from arbitrageur to the protocol, most likely not affect volume and therefore increase APYs for the LPs in the pool and protocol-earned fees.

For

1. Increase the pool fee in the PSP pool from 0.2% to 0.5%.

Against

1. Keep the pool fee in the PSP pool at 0.2%.

[1] Bancor: Converter 705 | Address 0xe950137942F446a93C8309B3a7c1407ef1975856 | Etherscan

[2] Uniswap Info

[3] https://analytics.sushi.com/pairs/0x458ae80894a0924ac763c034977e330c565f1687

[eldude]

YES, raise the fees!!!

[glenn]

I don’t think we will see many benefits here given that we don’t have the most liquidity. Glad to experiment though, knowing that we can flip the fees back if it impacts us negatively for this trading pair. Is there an interval of time for how long we are looking to evaluate the changes in this pool?