There has been lots of chatter around the 0.2% FastBTC fee and whether we should incent incoming funds by eliminating it or not.
I’ve had a personal epiphany on the subject…It’s all about grabbing market share right now.
TLDR: I recommend a feeless on-ramp thru FastBTC (subject to a minimum transaction of, say, $1000). Experiment for 3 months and evaluate the effectiveness.
- There are actual costs that Sovryn must incur, and these fees are needed to offset the costs.
- Sovryn does not have any funds set aside to absorb these expenses.
- Defi users are used to paying fees for conversion
- If the fees are not really a deterent and the user will convert anyway, then Sovryn is leaving money on the table. (Unknown, would have to test to determine).
- In the absence of fees, users may use FastBTC as the low cost provider to convert BTC->rBTC in their wallet and then use other RSK products (Sovryn effectively subsidizes the whole RSK infastructure).
- Conversions may significantly increase.
- Users don’t convert to rBTC to just hold, they convert to rBTC to do something with their bitcoin - Sovryn has a great shot at getting the business since they’re already using the platform.
- Reduced friction - in any new technology, adoption is higher when these barriers are removed.
- It is a small cost for the potential to grab market share, solidify first mover advantage and be the first to build $xxx TVL.
- $100MM of conversions would forgo $200K in fees. Pulling $100MM (or insert number) into the ecosystem would have a bigger impact than the similar amounts that are being spent on the Yield Farming Loot Drops.
We should be doing everything possible to ensure that DeFi runs through Sovryn. There will be many competitors and we need to get the biggest head start we can.
History shows that the most successful companies, whether it be public corporations, internet startups, or cryptocurrencies are the ones that sacrifice near term profitability to grab market share. Amazon, Facebook, BTC.
(It doesn’t mean everyone who does that is successful, but most who are successful have done that.)
After the moat is built, the community is established, and the network effect has done it’s thing, then the fees can be re-considered. Similar to Uniswap’s approach, where they’ve allowed for the possibility in the future, but not turned it on.
As always, just my two sats.