Fees have been a polarizing topic in the Bancor community since the launch of v2.1:
From some of the experiments we have run over the last 8 months, we have learned a few interesting things:
- Specific trade paths cannot be ignored. The overwhelming majority of 2-leg trades occur from the ETH pool, and so all changes to the ETH pool fee impact swaps across the protocol at a disproportionate rate.
- The pool fee has a small impact on trade volumes in general. When we dropped the pool fees across all pools to 0.1%, the volume remained relatively unchanged. Then, when we increased the fees again to 0.2%, the trade volume was similarly unchanged.
- High pool fees are easily tolerated if the slippage is low compared to the ecosystem overall. wNXM is the best case-in-point; we have the deepest source of liquidity by far, and a 1% pool fee does little to perturb traders due to the slippage more than compensating for the increased commission.
- During periods of high volatility, fees can and should be higher. A dynamic fee has been a topic of debate within our own community for a long time, but Kyber will likely be the first to implement it (see below).
To my mind, this kind of dynamic fee structure is the best course of action, not just for Kyber or Bancor, but probably for all AMMs.