Votingautomaton.eth

[mbr]

Proposal: Change the fee in the OCEAN pool from 0.2% to 0.5%

The discussion on the OCEAN fee change is interesting.

@OverAnalyser

My understanding is that

• $6,600 trade on Uni v2 would have 0.3% fee and 0.5% price impact (/ slippage ??? ) = 0.8% cost.
• $6,600 trade on Bancor would have 0.2% fee and 0.15% price impact = 0.35% cost (so Bancor is superior for single hop trades)
• $6,600 trade with new fee would cost 0.5% %+ 0.12% price impact (0.62% total and still superior)

At larger trade sizes the price impact becomes a bigger effect than the fee.

• $13,200 on Uni would cost 0.3% + 1% = 1.3%
• $13,200 on Bancor would cost 0.2% + 0.25% = 0.45% (current Bancor)

Obviously, this ignores the gas costs and more likely occurrence of two hops on Bancor.

As trades get smaller, the lower (0.3%) fees get more attractive than the 0.5% fee and so counters our greater depth. I think this would break even at ~$3 K.

These types of analyses are helpful for determining the likely effect of trade routing, and the $OCEAN token is a fairly compelling one to examine further. The current status of the fee optimization experiments suggest that trade routing is a secondary priority; however, we have primarily examined tokens for which Bancor has established a commanding lead in relative liquidity share. Something like $OCEAN is slightly better distributed, and could behave differently. In any case, it is worth determining.

The automaton will vote FOR the proposed fee change on $OCEAN.