Cross-asset swaps use Synthetix as a bridge which kickbacks a small part of the fee back to Curve, how should it be distributed?
- veCRV Holders
- LPs
- Both
- Neither
0 voters
5 Likes
It looks like the trading fee is .3% on synthetix exchange and doubled that if you are exchanging a long asset for an inverse (e.g sETH for iBTC) which Curve is not doing. Do you know what percentage Curve gets for facilitating trades through Synthetix?
My understand is that it will be around 25% of 0.3% but will confirm once I get more details.
2 Likes
think vecrv is the only answer here seeing how its a referral. LPs still get the normal swap fees too.
100% vecrv
3 Likes
It looks like LPs may be difficult (or not possible at all), I’m letting the discussion opened but if both ends up winning, no guarantee it’s actually an option.
2 Likes
I choose both because we need more liquidity for large cross-asset swaps.
2 Likes
Definitely veCRV holders. They have more skin in the game and should be rewarded for that.
2 Likes
This is just a forum poll so technically nothing can actually “win” here. will need a signal vote between 100 vecrv and 50/50 (assuming its even possible)
since the service is already live, sounds like we should just set to vecrv first and then discuss plausibility of changing it.
4 Likes
It’s actually very very hard to do veCRV + LPs or LPs here in a fair enough way. Probably fees going to veCRV, and veCRV weight-voting for the pool being bigger (to get more of those fees) is the best way of doing it.
3 Likes
So hypothetically, if all the cross asset swaps were happening from, say, ETH into Euro Stablecoins, then would the fees be split to benefit the US Stablecoins and BTC pools? Would it be more fair to make the benefits should accrue according to the assets being traded?
On a trade ETH->EURS
[ETH-sETH] LP = .02% trade fee
[EURS-sEUR] LP = .02% trade fee
veCRV = .04% trade fee + ??% (seen .075% thrown around?) kickback from Synthetix
As I see it that kind of trade need to swap in 2 different pool on curve.
And follow the assomptions that curve get 25% of the 0.3% fee, the only fair distribution model would be:
- 0.025% for the LPs of the first pool involved in the trade
- 0.025% for the LPs of the second pool involved in the trade
- 0.025% for the holders of veCRV
Let me develop a little on that.
There are 3 pools which can be directly involved on those swaps sUSD, sBTC, sETH. We can’t do it without them so that’s the ones who should receive the extra fees.
We want to execute big swaps we are talking about millions, 10M, 100M, so what do we need to execute those kind of swap? We need deep liquidity, we need deep pools.
And to get deep pools we need to incentivize LPs or we just gonna miss trading venues because our pools aren’t deep enough.
And I guess if the vote ends up to give all the fees to veCRV holders, LPs would take it as an unfair distribution because since the beginning we share all the revenues equal to equal between LPs and veCRV holders.
Moreover when you execute big swaps you will get slippage (a lot less than on uniswap but still) and you can’t deny that slippage is not good for LPs. So if they don’t get incentivized to provide liquidity in those pools why should they accept higher slippage on average.
In that case we risk to see LPs provide liquidity in the other pools of curve and we ends up with the opposite of what we want.
The main incentive for LPs is CRV yield, and that is governed by the veCRV gauge weight vote. Additional trade fees are a comparatively trivial incentive to LPs.
Slippage affects traders, it doesnt affect LPs (assuming the coins in the pool keep their peg they will be arbed back to parity). Definitely we want deeper liquidity in the more heavily utilized pools, and that comes back to the gauge weight vote assigning more CRV to those pools.
3 Likes