i just created a draft SIP related to the latest Circle of Tokens post.
You can read it here:
Please note that this is my first SIP, so i apologize if the form is not 100% correct.
This may become the first community-powered SIP that’s put up for a vote! For that to happen, i would ask supportive Sovryns for the delegation of Voting Power. More details will follow soon.
When we look at protocol incentives (SOV-rewards) versus protocol revenue, there’s a significant deficit. With the proposed parameter change, we aim to reduce this deficit.
The objectives of this parameter change are:
-Increased fundamental value of the SOV token through increased protocol revenue. This would make staking of SOV more attractive.
-Increased $ value of weekly SOV rewards for liquidity provider.
-Increased liquidity in AMM pools OR same liquidity with a lowered amount of SOV-rewards.
Hi, i like the idea of this as a max staker i would love rewards to be given to stakers above all. How does tbe extra .05% fee compare to other protocols? Would be be more expensive than your average defi with this incrase?
Uniswap charges 0.3%, same as Sovryn does right now. So with a 0.05% increase we’d be slightly more expensive. There are various other dexes within the range of 0.0% and 0.5% fees. Most DEX’s seem to run different sorts of incentives so it’s a bit tricky to compare.
With 0.35%, we’d be part of the more expensive dexes though, that’s an important point to consider.
However, we’d somewhat double the weekly rbtc payouts to stakers.
The token price gets so low that i believe it is harmful for the success of Sovryn and something has to be done. I’d consider this change a very effective way to do so.
I’ve been using Sovryn since it launched in April 2021. While the AMM rewards were very lucrative for a while, I was warning against excessive issuance of SOV tokens because it would hurt the price of the token. We know that people will respond to incentives. As long as the incentive is to sell SOV, people will continue to sell vs hodling or staking.
Without a killer app, Sovryn will continue to struggle. In my opinion, Sovryn would be better off by letting go of many of its trading/margin features and focus instead on nailing one killer app and making it as user friendly as possible. To me, that killer app is Zero.
As a platform focused on Bitcoiners, we don’t need features to swap into shitcoins. What we need is a simple way to leverage our BTC in a quick and seamless way. Imagine the Zero app on your iPhone, compatible with the lightening network. I would love to see the Sovryn developers focusing on making the process of borrowing against BTC to send money somewhere via sats or a stablecoin become much simpler. That’s something many Bitcoiners would use, as evidenced by the traction in the current beta.
If the developers have fewer competing priorities, they can focus their efforts on the UX, design and distribution of Zero across platforms such as iPhone, Android etc. They would be the only platform offering this, and the revenue gained could become meaningful. Without much history and only being open to a select few, Zero has already generated revenue that competes with AMM. This is the future, and this is what I think would create value for the protocol and token holders.
The SOV margin trading rebates are very rewarding. So I don’t think traders would be disincentivized with regard to margin trading.
Binance and other big Cex’es already offer 0% fee spot trading. Sovryn cannot compete with regard to fees right now and this SIP would not change anything about it. I do think that a 0.05% increase is barely noticable when compared to other Dex’es. Nevertheless, i am and will be monitoring AMM swaps. If we can see a significant decline in AMM swaps if this SIP is accepted, i will report it. Right now, i have no reason to believe that it would happen.
I would not pick specific AMM pools, what’s your argument for providing different fee structrues on different AMM’s? That does not seem to be a good user experience.
I would add that this change may have a positive impact on the SOV price and with it, making more people look at and become interested in the Sovryn Ecosystem, potentially leading to more AMM swaps due to increased interest. An ever declining token price does not help with adoption. And with the Zero release, it’s adoption that we should focus on.
100%. Focus should be on Bitcoin, Stables and Zero. Shitcoins should be the first go, just hurting the brand IMO. Trading is a nice feature but there are also many competitors like LN Markets and Kollider.
I agree with you and @Dcrypt but please help me understand how this would be related to this SIP?
Sovryn basically already let go of most AMM pools as rewards have been cut. There is no trading volume in those pools. The focus is on Bitcoin and Zero. But we need a BTC/stablecoin pool for Zero as a lot of people use it as a leverage tool to buy more btc.
Sovryn runs on a HUGE deficit when just accounting for AMM pool incentives. Zero uses no incentives, but the AMM pool needs incentives. This SIP aims to make the Sovryn ecosystem more sustainable and should not be misused for off-topic shitcoin bashing.
Yes they would be. There are tons of competitors (DEXs) who offer trading/swaps, etc. Sovryn isn’t offering a unique experience in that arena. Zero IS unique. It’s a killer app. Its something most Bitcoiners would use. And there’s no competition. No one offers zero interest loans against their BTC. Could be huge. But it probably wont be if its just one of 10 features the protocol is promoting. Sovryn is burying the lead on this one, so to speak.
This is a Bitcoin focused protocol. It should build apps that Bitcoiners will want to use. If you’re trying to build trading features, you’re supporting people swapping out of their BTC and into altcoins. We know how that goes. Bitcoiners, especially maxis like me, don’t have any need to exit BTC.
First of all, thanks for the SIP. I think you’re on the right track. My post wasn’t meant to distract from it. It was my way of suggesting that Sovryn increase protocol revenue, as you suggest is needed in your SIP. Like you just said, there’s no trading volume in the pools. So why have them front and center on the site? Why dedicate so many developer resources to them? Why waste issuance incentivizing people to use it? Meanwhile Zero is buried under a “Lab” tab, the 4th option on the pulldown menu. That’s hardly “focus”.
If they eliminated trading/AMM, they wouldn’t need any more incentives. They’d have a killer app that’s already generating revenue and growing quickly. That’s called Product Market Fit. This is lightening in a bottle. Very hard to do. When you have a killer app, you need to focus on it and not be distracted by all of the other stuff that’s just not working that well anyway.
This would MAJORLY reduce the cost of incentives, AND grow revenue at the same time. Under this scenario, staking SOV might make sense. I believe balancing revenue and cost was indeed the point of your SIP.
Good points. But hear me out. Let’s just put most AMM pools aside and simply focus on the Bitcoin/stablecoin AMM pools. That’s where the value is.
Zero needs a BTC/Stablecoin pool. Why? People may want to mint new stables with Zero and buy more bitcoin with it. It’s one of the main usecase. #Superhodl and other buy-the-dip strategies need such an AMM feature.
It is not an option to simply bridge-out and rely on centralized third parties to do it. We need a decentralized, censorship-resistant BTC/Stable AMM pool. Sovryn has that. This pool runs on a huge deficit. This SIP tries to change that. Even if there are other decentralized AND censorship resistant options for a btc/stable swap available, the bridging cost will make it much more expensive than the Sovryn AMM pool. We can afford to be a bit more expensive, say 0.05%.
I agree with you. Let me rephrase. Trading into alts isn’t very useful on Sovryn. Being able to swap ZUSD or RBTC for stables is useful for the reasons you’ve outlined. I use this swap myself. But Spot Trading, Margin Trading, Earn, and Lend, all features with major prominence on Sovryn, just don’t seem very useful.
Thanks for the conversation. I think we are on the same boat for the most part. I can see Spot and margin trading for btc/stables be useful on Sovryn.
Spot+limit orders for Zero, Margin for hedging positions and stuff.
I agree that trading alts is not very useful and may even distract from Zero. In the past, when there still were incentives for alt AMM’s, the AMM incentives have cost Sovryn so much more than the AMM revenue. It still hurts thinking about those numbers. This was cut long ago on behalf of the CoT.
There are no incentives for altcoins with the exception of the SOV AMM pool (which has decent volume). There are no incentives for lending and borrowing. Most of the features that you consider not very useful, do not get any incentives. But still, Sovryn runs on a deficit. This is very dangerous.
Sounds like a good idea to me, what us the current one time fee for zero? It seems to be the real success story here so far, is there potential for upping that 1 time fee? I think its our big product but i dont think it really earns anything? I could be off there just guessing. Have you spoke to the team about your concerns on token price getting so low its harmful? Considering we are down 99% or whatever at what point do you consider it harmful? I believe there stance is they dont care about the price?
0.5% of the amount of stablecoins minted. So i don’t really see it as 1 time-fee medium-long term. If btc value increases and users credit ratio increases, they can mint more ZUSD for their collateral and then they would pay another fee. There’s also redemption fees and there may be strategies that involve more frequent minting/redeeming of ZUSD. It can be a 1-time fee, but it can be much more.
Zero is great. It’s the best chance Sovryn has. It can outcompete the market. I’m very hesistant of a fee increase there. I think the better way would be the proposed increase in AMM swap fees.
The AMM plays an important role for Zero - providing a source of natural demand for the minted stablecoins. I am much more concerned with growing liquidity than maximizing revenue extraction at this time.