Upgrade SquadSwap Fee Structure

DAO Proposal: Upgrade SquadSwap Fee Structure.

Overview: This proposal outlines a strategic upgrade to SquadSwap’s fee structure, designed to significantly enhance our competitive position in the decentralized exchange (DEX) market while aligning with the values of community governance and empowerment. The proposed structure reallocates swap fees to increase rewards for Liquidity Providers, positioning SquadSwap as a top choice for market makers and LPs compared to competitors.

Current Fee Structure: 0.2% Swap Fee Distribution:

• 20% Squad Treasury
• 20% NFT Holders
• 20% Development Fund
• 20% LP Providers
• 20% Traders

Proposed Fee Structure:

• 90% of fees allocated to LP Providers
• 10% allocated to Squad Treasury for community-driven initiatives (decided through future DAO votes).

Rationale for the Upgrade: 🔸1. Increased Competitiveness:

• PCS allocates 60% of fees to LPs, while this proposal raises SquadSwap's allocation to 90%, making SquadSwap a highly attractive platform for LPs and market makers.
• Encourages deeper liquidity pools and more efficient trading, resulting in reduced slippage for traders. 🔸2. Community Empowerment:
• The 10% allocated to the Squad Treasury allows SquadNFT holders to have greater control over fund allocation through DAO decisions, maintaining the ethos of decentralization. 🔸3. Market Share Growth:
• Combined with upcoming SS v3 tools and strategies, this structure is designed to capture a larger share of trading volume by appealing to both LPs and traders. 🔸4. Innovation with Fee Tier Structure:
• Introduction of new fee tiers (specifics to be shared post-implementation) tailored for v2 and v3 LPs, providing additional flexibility and competitiveness.

Discussion Timeline:

• Community Discussion Period: 72 hours for open discussion, feedback, and proposal refinement.

DAO Vote Options:

• Yes: Implement the 90/10 fee split and the fee tier structure for v2 and v3 LPs.
• No: Deployment paused for further discussion.

Implementation Timeline: If approved, the protocol upgrade will be deployed within 1-2 weeks.

Pros: ▪️1. Stronger Liquidity Incentives:

• By offering 90% of fees to LPs, SquadSwap becomes a more lucrative platform for liquidity providers, encouraging greater participation.

▪️2. Community-Controlled Treasury:

• The 10% treasury allocation ensures sustainable growth and flexibility for community-driven initiatives.

▪️3. Improved Market Position:

• Outshines competition in terms of LP incentives, driving market share growth.

▪️4. Alignment with SS v3 Upgrade:

• Positions SquadSwap for broader adoption and advanced functionality.

Cons:

▪️1. Reduced Immediate Treasury Revenue:

• Direct treasury funds are decreased from 20% to 10%, which may limit short-term project budgets.

▪️2. Potential Impact on Current Stakeholders:

• Redistribution reduces the direct share to NFT holders, dev funds, and traders.

Conclusion: ▪️1. Outpacing Competitors:

• A 90% LP allocation leapfrogs PCS (60%) and UNI, creating unmatched value for liquidity providers.

▪️2. Community Ownership:

• A 10% treasury split keeps funds within the community's control for future use, decided democratically through DAO votes.

▪️3. Market Expansion Potential:

• With deeper liquidity pools and innovative fee tiers, SquadSwap is primed to attract higher trading volumes and become a leader in the DEX space.