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Update protocol fee multiplier to zero (0) #91

Open SHA-2048 opened 2 years ago

SHA-2048 commented 2 years ago

Summary

This ZEIP proposes to decrease the protocol fee multiplier from the current value (70,000) to zero (0). The goal is to conduct an experiment that measures the impact on volume in a zero-fee environment and derives insights related to that impact to inform decision-making.

Type

PARAMETERS

Motivation

A number of factors have converged over the past nine months that have significantly impacted protocol fee revenue:

  1. Sharp increase in Q1 and Q2 due to high gas prices and increased volume of open orderbook (limit order) trades
  2. Sharp decrease in Q3 due to lower gas prices (in particular, the explosion of Flashbots and other MEV schemes) and increased competition for open orderbook liquidity

Going forward as L2s start to gain traction and in the absence of some compelling event, the downward trend is likely to continue. This experiment will help inform a tokenomics redesign, which is top-of-mind for protocol stakeholders.

Specification

  1. V3 protocol fee update and timelocks are described here, timelock is 7 days
  2. V4 protocol fee update requires redeploying the NativeOrders smart contract, timelock should be 2 days

Rationale

The fee multiplier parameter was designed to be updatable to meet evolving environmental conditions. As per the snapshot poll referenced in Notes, the community supports this adjustment.

Implementation

Designated team

0xLabs

Notes

  1. previous fee update: https://github.com/0xProject/ZEIPs/issues/79
  2. snapshot poll: https://snapshot.org/#/0xgov.eth/proposal/QmUYZwMkDue5RhZGpdGLomsRbKTknmjmjMecz5uz635NFz
  3. forum discussion: https://gov.0x.org/t/temperature-check-protocol-fee-experiment/983
littleboy0k commented 2 years ago

When will this end?

winzig commented 2 years ago

Where can we learn the status of this and when it will end? The website just has the update from 9/18 linking to this issue. It's weird that there isn't more information about this?

ghost commented 1 year ago

Summary

This ZEIP proposes to decrease the protocol fee multiplier from the current value (70,000) to zero (0). The goal is to conduct an experiment that measures the impact on volume in a zero-fee environment and derives insights related to that impact to inform decision-making.

Type

PARAMETERS

Motivation

A number of factors have converged over the past nine months that have significantly impacted protocol fee revenue:

  1. Sharp increase in Q1 and Q2 due to high gas prices and increased volume of open orderbook (limit order) trades
  2. Sharp decrease in Q3 due to lower gas prices (in particular, the explosion of Flashbots and other MEV schemes) and increased competition for open orderbook liquidity

Going forward as L2s start to gain traction and in the absence of some compelling event, the downward trend is likely to continue. This experiment will help inform a tokenomics redesign, which is top-of-mind for protocol stakeholders.

Specification

  1. V3 protocol fee update and timelocks are described here, timelock is 7 days
  2. V4 protocol fee update requires redeploying the NativeOrders smart contract, timelock should be 2 days

Rationale

The fee multiplier parameter was designed to be updatable to meet evolving environmental conditions. As per the snapshot poll referenced in Notes, the community supports this adjustment.

Implementation

  • For 0x v3 it will be updated via transaction from Governor.
  • For 0x v4 it'll be necessary to redeploy the NativeOrder features

Designated team

0xLabs

Notes

  1. previous fee update: Update protocol fee multiplier to 70,000 #79
  2. snapshot poll: https://snapshot.org/#/0xgov.eth/proposal/QmUYZwMkDue5RhZGpdGLomsRbKTknmjmjMecz5uz635NFz
  3. forum discussion: https://gov.0x.org/t/temperature-check-protocol-fee-experiment/983