The fee options for pools in Uni v3 are 0.05%, 0.3% and 1%. Industry standard is generally .3%.
As you all know, swapping on Bancor from TKN to TKN usually takes 2 swaps. So swapping from ETH to LINK currently costs .35%. With the proposed changes in mbr’s chart above, the cost will be .4%.
The ETH and LINK pools are currently Bancor’s 2 largest pools but trying out different size trades on 1inch, it’s pretty hard for Bancor to win these swaps right now.
A $10k swap from ETH to LINK goes through Bancor for 100% of the swap.
A $100k swap from ETH to LINK drops Bancor to 40%-80% of the swap
A $1M swap from ETH to LINK drops Bancor to 20% of the swap(!!!)
A $10M swap from ETH to LINK keeps Bancor at 20% of the swap
A $100M swap from ETH to LINK increases Bancor’s share to 40% of the swap
A $1B swap from ETH to LINK stays at 40% of the swap
A $3B swap from ETH to LINK increases and maxes out the Bancor share to 50% of the swap
This suggests that for ETH to LINK swaps, Bancor has industry leading liquidity to support large trades. However, for trades greater than $100k and less than $100 Million, the fee impacts the total cost of the swap on Bancor more than price impact of pools on other exchanges.
I believe that Bancor would be in a better position if we match the costs of our competitors instead of charging a premium that is probably costing Bancor quite a bit of volume.
My proposal is that we approach fee changes from the trader point of view and not the pool’s. I propose that we set our fee structure so that our larger token pools have their fees set to .15% and our smaller token pools to set their fee to .85%.
This would result in swaps like ETH <-> LINK to cost a total of .3%.
A swap from a large tkn to a smaller tkn like ETH <-> WOO will have a total cost of 1%.
Finally, small tkn to small tkn like WOO <-> MTA will have a total cost of 1.7%.