Proposal: Increase MKR-BNT Fees to 0.2% (from .1%)

This proposal is expected to appear on Snapshot for voting on 2021-11-14T12:00:00Z. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

The original thread where the fees were lowered (from .5% to .1%) is here:

this happened towards the end of June and the fee change went into effect a few weeks later. A quick look at volume and fees doesn’t suggest that much changed after the lower fees (from .5% to .1%) went into effect:

volumes seem to have actually gone down from three months prior (but this isn’t a good comparison in my opinion). Note that April was when LM went active on this pool and the month that followed (May) was a month when DeFi volume was up across the board.

We did have a few days towards the end of May and July when crypto markets took a tumble and BTC went down to $30K levels.

The weekly fees or this pool have hovered between 2K-4K after the change. Lower fees could also be due to a loss of liquidity in this pool after LM ended (I think it was double of current levels, around ~20m):


I am proposing that we raise the pool fees to .2% to see if this will affect weekly fees generated by this pool:

I don’t expect the liquidity in this pool to decrease since it has been at these levels for a few months and this should give us some useful data on whether a .2% fee will make it more profitable for LPs.

Glenn. There has been a lot of tinkering of fees on quite a few pools yet I have yet to see any clear cut effects of fee changes. While analysis of 1-inch and other comparator trades is helpful to show when we are/are not competitive, this doesn’t seem to translate to big changes in volume. Maybe this is because of the large changes in market activity? Are you able to dig out any data on percentage of total trade volume that is routed through Bancor before and after? Do you have any theories on why traders are not as sensitive to fees as a true rational actor should be? The ETH/BNT pool strikes me as one worthy of discussion. It is clearly a critical pool as one leg of a large number of major trade paths. Has the drop to 0.5% produced any obvious changes in volume? I feel that LPs in the ETH Pool are current, to some extent, subsidizing increased volume in other pools at the expense of fees to the ETH pool.

The most recent tinkering that we have seen was the change in fees in the ETH pool (dropped to .05% from .1%). @mbr who recently looked at this data found no correlation with lower fees leading to more volume. One should note that these changes coincided with large changes in volume across the entire ecosystem (most recently the metaverse/nft/gaming related tokens).

Apparently, the data is far too noisy and it is hard to learn from it and some of our best days were when the fees were higher. The fee is going to be moved back to .1% on the ETH pool (@Funky FYI)

This isn’t in the context of this proposal, but this is what I look at, essentially the daily volume routed to Bancor as compared to other exchanges:

and as a percentage compared to others:

I would love to see us hit 3% or more which we were doing earlier. The overall picture atm is that Uniswap and Sushiswap are leading the pack:

and my opinion is that our fees due to two-hop swaps kill us on any small trades. This has become more apparent as prices have gone up and until V3 is out then we are probably going to be at the same levels (onboarding new tokens and deepening our pools will also help us + being able to onboard riskier projects) as before on ethereum proper.

This does not take into account any volume that we will see from other L2s/sidechains/blockchains. I think we will have an advantage here since folks won’t have to pair providing liquidity with ETH or any native blockchain tokens. A lot of these tokens have deflationary measures and that doesn’t make them good tokens for providing liquidity with as people would rather hold on to them than potentially lose them by LPing. Anyway, $BNT given its unique design should be able to shine in these environments and it would not be surprising to me if we hit 5B or even 10B in TVL in the next year.

see charts here:

1 Like