I saw some recent proposals in regards to the QNT pool, such as providing rewards (I think which failed) and providing more BNT to increase amount of QNT to be staked (passed); but wanted to know if decreasing the fee % was discussed and what some of the more intelligent people on here think the estimated effect would be.
Volume has exploded recently and I personally anticipate it to remain high, if not further increase, but sadly I feel like for the large chunk of QNT I have tied up in the pool there has been very littler fee’s generated.
Any insight from you guys would be much appreciated!
The co-investment limit increase did not pass and it actually failed to reach quorum. Regarding your fee question, it is a balancing act between what other DEXes are charging for fees and the liquidity that we have. Uniswap V2/V3 are both at .3%
and have more depth on their QNT pairs than we do. Our fees are currently at .2% for our pool but that’s fine because most people are swapping ETH → TKN and that’s a two hop process which ultimately equates to .3% total fee.
If you are able to attract the most liquidity for a token (very little on other DEXes) then that’s usually the perfect scenario that would allow you to set fees higher as there is very little competition everywhere else.
I appreciate the insight. I am def new to how Bancor works, especially from a governing standpoint. Def pretty interesting tho and am excited to learn more and become more involved.
Maybe you could provide some more insight in regards to fees charged in a pool like the QNT/BNT.
Like if other exchanges are getting all the transactions and we are barely collecting any fees, would it potentially be worthwhile to drop the fee % some just to get more transactions routed our way?
Is this something that could potentially be voted on to be changed for only a specific time frame. For example, like change fee to 0.1% for 4 weeks, then revert back to current rate. In hopes in generating more return and idk perhaps then more BNT staking, leading to more community interest/awareness, leading to opening more TKN sided liquidity and kind of snowball from there?
Sorry, if all of those questions seem super noob, I am still trying to even learn how AMM chose pools for carrying out their swap. Is it just depth of liquidity (to facilitate the size of the order they receive) and fees the LP is charging?
Also, does opening up more TKN side of a pool put more strain on the BNT ecosystem as a whole if people aren’t staking the BNT side?
Anyways, thanks for any additional info. I have def read some articles on these topics, but sadly the information doesn’t seem to get through to me as well, compared to discussing it with someone who knows all the ins-and-outs.
A good way to check what trades are being routed through Bancor is just to simply go on different Aggregators (1Inch is the #1) and check trades at different price levels like 1,000 USD, 10,000 USD, and 100K to see how much if any is being routed through Bancor going both from TKN → ETH and ETH → TKN.
It does not put any downward pressure on BNT Price but it does give BNT more depth and by that logic makes it hard to move price up/down. People are not staking BNT side because there are more lucrative LM campaigns but V3 might bring a solution to this as this has been something we have talked about repetitively in the community.
It could help but also depends on percentage of aggregator vs direct trades. If I had to guess, I think most trades are probably coming from aggregators and if we drop it to .1% then that could help with some of the smaller trades. Although, the size of the pool also means that the price impact is typically higher for us than our competitors and usually the price impact will out weigh any savings that you get from a .1% drop in fees (e.g. a $250 trade in this pool will incur .1% in price impact and rises as the trade size becomes higher) up to a certain amount.
For aggregators, they take both into account (fees plus price impact which is a function of the depth of the pool). Some aggregators also connect to private market makers (PMM in 1 inch) which sometimes are more competitive then DEXes.
Korpi has a good article on this in his medium that’s a good read.
I appreciate you guys taking the time to give such detailed replies, definitely very helpful. Sadly, I have been too busy recently to further dive into the topic and further research the potential effect of changing the QNT fee to 0.1% enough to feel like I should propose it.
Again, this may speak to my ignorance of Bancor protocol’s pros/cons, as well as expose my current lack of understanding of Uniswap’s generated fees (not even trying to understand V3 at this point lol), but just following the fee’s collected on Uni in the V2 QNT/ETH pair for the past week or so, and estimating I could be getting ~$200-$500/day vs the 1.65 QNT I have accumulated in fees on Bancor over the past 10 days and it just got me trying to understand the topic more. Obviously, staking in that UNI V2 QNT/ETH pool would require half my QNT to be converted to ETH, or matched from another source, so I would have lost out on a lot of price appreciation on my QNT, during that time which wouldnt have made it worth it. Also, only the last couple of days has my Bancor shown a substantional change in value that is now protected by IL, so ultimately would have also been exposed to that risk in the UNI pool as well. But just curious if there are any other big benefits (although those are def enough in this particular scenario) that I am missing as I attempt to understand all of this.
