OIP-255: SafeBox Fee Reduction & Affiliate Tier Restructuring

id	Title	Status	Author	Description	Discussions to	Created
OIP-255	SafeBox Fee Reduction & Affiliate Tier Restructuring	Vote Pending	Danijel	Reduce SafeBox fee to improve LP performance and realign affiliate incentives with protocol sustainability	https://discord.gg/thales	2026-02-02

Simple Summary

This OIP proposes reducing the SafeBox fee from 2% to 1% on Overtime, alongside a restructuring of affiliate tiers, in order to improve liquidity pool (LP) performance, attract new liquidity, and stabilize the protocol’s long-term market-making capacity.

While this represents a short-term reduction in per-bet fee intake, the protocol already captures 30% of profitable rounds, meaning improved LP performance and a higher ratio of profitable rounds can partially or fully compensate for the reduced SafeBox fee over time.

Abstract

Overtime currently applies a 2% SafeBox fee on all volume. From this fee, affiliates receive a share based on their tier:

• Regular referral: 0.25%
• Silver tier: 0.5%
• Gold tier: 1%

In addition, the protocol takes 30% of profits from profitable liquidity rounds.

Empirical data over the last year indicates that Overtime’s realized edge averages ~1–2%, which is materially lower than centralized sportsbooks. Under the current fee structure, LPs experience persistent negative returns, leading to capital flight and shrinking pools.

This OIP proposes:

• Reducing the SafeBox fee to 1%
• Restructuring affiliate rewards to:
  • Gold tier: 0.5%
  • Normal referral: 0.2%
  • Silver tier: deprecated

By improving LP profitability, the protocol expects a higher frequency of profitable rounds, which increases the protocol’s 30% profit share, partially offsetting the lower SafeBox fee and aligning incentives toward sustainable growth.

Motivation

LP sustainability is the bottleneck

Overtime’s liquidity pools are the backbone of the protocol. However:

• LPs have been net losing over an extended period
• Most external LPs have exited
• Treasury is now the primary (and in some cases sole) liquidity provider, especially for USDC pools

This situation is not sustainable. A sportsbook without competitive, healthy liquidity cannot scale volume, improve odds, or attract new users—regardless of affiliate reach.

Decentralized constraints vs centralized margins

Centralized sportsbooks operate with:

• Near-zero latency
• Complete control over risk
• Ability to limit, restrict, or close users

Overtime, by contrast:

• Operates fully on-chain
• Uses transparent odds and liquidity
• Cannot selectively restrict winning users
• Bears additional oracle, latency, and volatility risk

Given these constraints, expecting centralized-book-style margins is unrealistic. Current data shows 1–2% average edge, meaning a 2% SafeBox fee structurally extracts more value than the protocol can sustainably generate.

Fee reduction improves round-level outcomes

Reducing the SafeBox fee directly improves LP expectancy per round. This has a second-order effect:

• More rounds become profitable
• The protocol captures 30% of those profits
• Over time, increased profitable-round participation helps compensate for lower per-bet SafeBox fees

This creates a healthier equilibrium where the protocol benefits more from LP success, not LP drawdown.

Misaligned incentives

The current structure unintentionally optimizes for:

• Higher short-term fee extraction
• Affiliate upside disconnected from LP health

While affiliates are important for growth, there is no affiliate business without liquid, competitive pools. LP performance must take precedence.

Specification

Fee changes

SafeBox fee

• Before: 2%
• After: 1%

Applied uniformly to all bets.

Affiliate tiers

Tier	Current	Proposed
Gold	1%	0.5%
Silver	0.5%	Deprecated
Normal referral	0.25%	0.2%

Silver-tier affiliates are migrated to either:

• Gold (if qualifying under updated criteria), or
• Normal referral

No affiliate receives more than 50% of the SafeBox fee under the new structure.

Net effect on flows

Example: $100 bet

Before

• SafeBox: $2.00
• Gold affiliate: $1.00
• Net to protocol/LP system: $1.00

After

• SafeBox: $1.00
• Gold affiliate: $0.50
• Net to protocol/LP system: $0.50

While protocol fee intake per bet is lower, LP round profitability improves, increasing the protocol’s 30% share of profitable rounds over time.

Rationale

Why reduce fees instead of increasing risk parameters

LP underperformance is not primarily caused by conservative caps or limits—it is caused by structural negative expectancy after fees.

Increasing risk, caps, or exposure without fixing fee drag only accelerates losses.

Fee reduction directly improves LP EV without increasing systemic risk.

Why deprecate Silver tier

Silver tier creates:

• Marginal differentiation
• Incentive complexity
• Fee fragmentation without meaningful behavioral impact

A simpler structure (Gold + Normal) is:

• Easier to reason about
• Easier to communicate
• Easier to adjust in the future

Protocol revenue alignment via profitable rounds

By taking 30% of profitable rounds, the protocol already participates meaningfully in upside. Improving LP performance increases the number and size of profitable rounds, naturally shifting protocol revenue toward performance-based income rather than fixed extraction.

Affiliates benefit long-term from healthier pools

Short-term affiliate yield is less important than:

• Better odds
• Deeper liquidity
• Higher betting limits
• Increased bettor retention

All of these depend on LP profitability.

Expected Outcomes

• Improved LP performance and reduced drawdown
• Increased frequency of profitable rounds
• Higher protocol revenue share from profitable rounds
• Increased willingness of external LPs to re-enter pools
• Greater treasury efficiency as a market maker

This change optimizes for protocol survival and scalability, not short-term fee maximization.

Backwards Compatibility

This OIP does not require:

• Contract migrations
• Ticket invalidation
• User-side changes

All changes are parameter-level and can be executed via governance-controlled configuration updates.

Test Cases / Validation

1. SafeBox fee reflects updated 1% value across all markets
2. Affiliate payouts reflect new tier rates
3. Deprecated Silver tier cannot be newly assigned
4. Existing Silver affiliates are correctly migrated
5. No affiliate payout exceeds SafeBox allocation
6. Profitable rounds continue to allocate 30% to the protocol

Implementation

• Parameter update via governance
• Affiliate tier mapping update
• Frontend/UI copy updates to reflect new structure

Conclusion

Overtime cannot scale without healthy liquidity.

Reducing the SafeBox fee and realigning affiliate incentives—while retaining protocol upside via profitable rounds—is a necessary step to:

• Stop LP capital flight
• Restore confidence in pools
• Enable organic, sustainable protocol growth

This OIP prioritizes long-term protocol viability over short-term extraction.

Copyright

Copyright and related rights waived via CC0.

Are you in favor of this proposal?