This proposal is expected to appear on Snapshot for voting on 2022-02-13T00:00:00Z. 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.
- This proposal seeks to increase the pool fees on the SNX pool from 0.2% to 1%.
- The SNX 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.
- Increased APYs in the pool along with Impermanent Loss Protection will help gather interest from the Synthetix community to stake on Bancor and fill the remaining space in the pool.
Deepest SNX pools on Ethereum are:
The SNX/WETH 50%/50% 0.27% (dynamic fee) Balancer pool with $7,206,468 liquidity and 24hr APR of 24.80% .
The SNX 0.2% Bancor pool with $5,474,111 liquidity and 24hr APR of 12.01% .
The SNX/WETH 0.3% Sushiswap pool with $1,598,360.21 liquidity and 24hr APR of 52.28% .
The SNX/ETH 0.3% Uniswap v2 pool with $1,086,696 liquidity and 24hr APR of 44.80% .
The SNX/ETH 0.3% Uniswap v3 pool with $836.78k liquidity and 24hr APR of 20.64% .
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.
The TRAC experiment finished and resulting data can be found in the data analysis governance post, and showed that a 1-4% fee resulted in more fees accrued compared to 0.2% and 0.5%.
Increasing the pool fee will help siphon more profits from arbitrageurs to the protocol, most likely not affect volume and therefore increase APYs for the LPs in the pool and protocol-earned fees.
Furthermore, an increase in the SNX pool APY might attract more liquidity to the pool. If the pool gets full, a proposal to increase the trading liquidity limit can be proposed, as the Bancor SNX pool is not the deepest on Ethereum.
These reasons justify an increase of the pool fee, and the pool performance will be closely observed if the proposal passes to understand if a consequent decrease in the pool fee is justified.
- Increase the pool fee in the SNX pool from 0.2% to 1%.
- Keep the pool fee in the SNX pool at 0.2%.