[TIP-008] Introduce THORSwap fees for Earn (Savers Vaults)

🔗 TIP-008 🗣 Twitter X Space | Timestamp 1:05:20 for TIP-008 Discussion

THE PROPOSAL

If passed, this proposal will introduce a simple basis point fee to Earn/Savers deposits on THORSwap.

Specific fee to be determined based on the result of this proposal:

• 0 bps - No change, keep it free. Best user capture but least sustainable
• 5 bps (0.05%) - Add a minimal fee for least user impact. 2023 this would have generated ~$40K revenue
• 10 bps (0.1%) - equal to $80K based on 2023 revenue
• 15 bps (0.15%) - equal to $120K based on 2023 revenue

vTHOR Holders will also enjoy the same discount tier system as swaps.

There will be no fees charged for Earn deposits under $100 value.

Fees will be shared 75/25 between vTHOR stakers and treasury as in-line with current swap fee structure.

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Summary

Context: While THORSwap saw significant growth in volume and affiliate fee collection in 2023, the 75/25% fee-sharing structure poses a challenge for long term sustainability to support continued development and growth. Swaps have been the only product for which THORSwap charges a fee. The addition of Streaming in/out of Savers Vaults (Earn) presents maturity of the product and another potential source of significant revenue.

Motivation

Current Situation: THORSwap does not charge a fee (0 bps) for Earn https://app.thorswap.finance/earn/ (THORChain Savers Vault) Need for Change: THORSwap needs to increase revenue to achieve long term sustainability. As an initial step, this proposal recommends THORSwap begins charging for Earn services which has previously provided for free for over a year. In 2023 THORSwap accounted for ~80M in savers deposits, 60M+ in Nov/Dec after streaming implementation. Making THORSwap by far the most used THORChain Earn interface. Latest stats can be found in: https://thorcharts.org/thorchain_saver_adds_by_dex

Implementation Plan

Currently, users have to pay slip fees when entering or leaving a THORChain Savers Vault. Previously, large transactions in shallow pools will incur larger fees to deposit/withdraw. Since Streaming support was added for Earn deposit/withdrawal, slippage has been controlled at 5bps which makes for much lower base network fees for users. If this proposal is passed, an additional THORSwap service fee will be applied on inbound amount (deposit) before slippage is calculated.

Amendments to this process may be discussed/proposed in the future pending THORChain protocol updates (ie. charge fee on earnings withdrawal rather than on deposit).

Benefits

Improve THORSwap sustainability. Additional utility for $THOR/ $vTHOR holders.

Drawbacks

Potential to be undercut by other THORChain interfaces.

FAQs

• Why can't TS apply fees on earnings/withdrawal rather than deposit for better UX? It is currently not technically possible to do this on THORChain. TS contributors have requested and followed up on 5+ times for over a year now with protocol devs and it's not moving. If THORChain implements fees on withdrawals, the community should raise a new TIP to update this one, or reject this one and wait an unknown amount of time. Even with no affiliate fee, there is ~5bps liquidity fee + gas/chain fees for deposit AND withdrawal. Only adding an affiliate fee on deposits is supported right now and would only be charged once.

• Why Earn and not other features (LP, Lending)? One proposal at a time is a better way to gauge community sentiment and market feedback. Earn is also the most user-friendly feature right now with THORChain protocol looking to encourage interfaces to move to focusing on highlighting this for users only. It would be wise to observe how this progresses and create a new TIP for LP/Lending in the future.