Proposal to Introduce Borrowing Fees for Buyback & Burn $EXTRA

Background

The impressive performance of APYs in our farming pools, coupled with the addition of new assets, has led to a supply shortage on the lending side. To address this imbalance and generate additional value for veEXTRA/EXTRA holders, we propose implementing a borrowing fee mechanism.

Rationale

• Supply-Demand Balancing: Variable borrowing fees, tailored to specific pools, are introduced to more effectively balance supply and demand. These fees are set based on the supply of assets in the lending side, ensuring optimal benefits for both lenders and borrowers.
• Value Capture for veEXTRA Holders: The introduction of borrowing fees will generate additional revenue that can be used to buyback $EXTRA and redistribute, thereby enhancing value capture for veEXTRA holders.

Implementation

• How the Borrowing Fee Works:
  • The Borrowing Fee, a fixed portion of the amount borrowed, will be charged when the position is closed.
• Fee Structure:
  • Charges will range from 0% to 0.3%, with the possibility of increasing to 1% in extreme situations.
  • A standard rate of 0.1% will apply under normal conditions, with any increase beyond 0.3% requiring community approval.
  • Borrowing fees will be individually set for different assets across various farming pools.
• Fee Allocation (EXTRA buy backed):

  • For veEXTRA holders:

    Weekly distribute to veEXTRA holders as staking rewards.

    Please note that the community fund will NOT additionally match 30% of the borrowing fees buyback portion.

  • For EXTRA holders:

    A portion of collected EXTRA will be burned

    Implemented quarterly.

  • For lenders:

    Incentivize lending pools with high demand.

    Lending incentives bought back in the current epoch will be distributed in subsequent epochs.

Voting Options

• Option 1:
  • 40% for veEXTRA staking rewards.
  • 30% for weekly lending emission.
  • 30% to burn.
• Option 2:
  • 30% for veEXTRA staking rewards.
  • 40% for weekly lending emission.
  • 30% to burn.
• Option 3:
  • 40% for veEXTRA staking rewards.
  • 40% for weekly lending emission.
  • 20% to burn.