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[PROPOSAL] Raise the minimum Saber LP fee from 0.001% (0.1bp) to 0.01% (1bp) across all pools #19

Open benlvb opened 1 year ago

benlvb commented 1 year ago

Summary

The Meteora team would like to propose the raise of the minimum Saber LP Fee from 0.001% (0.1bp) to 0.01% (1bp) across all pools.

Motivation

Currently, the minimum fees for pools are set at a very low 0.001% fee which is almost close to no fees, in a bid to facilitate volume. However, this is not a long-term model as it delivers almost no value to both Saber and liquidity providers of pools that have 0.001% fees.

In order to build a sustainable protocol, liquidity providers need to earn a sustainable yield to be incentivized to continue to provide liquidity and facilitate TVL and volume on Saber.

Here is a comparison of 0.001% fees vs 0.01% fees: At 0.001% fees (based on current TVL and 24h volume), APY of USDT-USDC (1,939,171 TVL and 2,015,885 24H volume): 0.379%

At 0.01% fees (assuming volume remains consistent after fee raise), APY of USDT-USDC: 3.79% With the new APY numbers, it is much more attractive and sustainable for LPs to deposit their liquidity in these pools instead of elsewhere.

A minimum swap fee of 0.01% is still very competitive compared to the average swap fees of other DEXes and CEXes.

Actions

Raising the minimum swap fees to 0.01% across all pools will definitely boost the value to users providing liquidity and Saber. By charging sustainable fees, we can help kick-start a healthier Solana ecosystem where protocols can support themselves and focus their efforts on building technology.

aperire commented 1 year ago

This is a reasonable proposal however the LPs mostly depend on ve rewards rather than swap fees.

Also, what would be the motivation for Meteora to create a proposal on Saber?

macalinao commented 1 year ago

This is a reasonable proposal however the LPs mostly depend on ve rewards rather than swap fees.

Also, what would be the motivation for Meteora to create a proposal on Saber?

There is an argument that having all AMMs share the same price would end up boosting each AMM's profits-- this would be a good idea if everyone else does it.

c2yptic commented 1 year ago

The vote passed - https://tribeca.so/gov/sbr/proposals/46