Original Thread: Commonwealth
An Osmosis Protocol Taker Fee was introduced with the passing of Prop 530, Interchain Explorer by Cosmostation and further discussion can be seen on commonwealth ( Commonwealth)
Proposal 530 had a pending item that still needed to be resolved around distribution of assets.
Proposal 530 approved the distribution of Non-OSMO collected, which distributed 67% to stakers and 33% to the Community Pool in whitelisted assets. Proposal 530 did NOT yet approve distribution of OSMO collected which was pending future proposal.
A retro-active analysis was performed noting that in the past 12 months, 3.45m OSMO ($3.36m based on prices at time of swap) and $3.77m worth non-OSMO assets would have been collected (assuming everything else equal).
See more here: https://twitter.com/NumiaData/status/1665322914005098496?s=20
All fees collected in OSMO are to be distributed to OSMO stakers on a pro-rata basis (subject to validator commission rewards).
NOT IN SCOPE
Still pending would be Future Fee Reduction Mechanisms as outlined in Prop 530. Additional discussion on these mechanism’s have begun to take place: Commonwealth
Other open topic is how we avoid increasing the overall fee charged for traders. It is too easy to leave that behind. A lot of people has voiced their concerns over it, so any proposal now going on chain for the taker fee should also have something around that as well.
Furthermore, there was already another open topic for the taker fee.
So we have to take a decision somewhere about;
- what to decide with the distribution of the taker fee
- the height of the taker fee
- the height of the swap fee and the option to change this
So there is a bit more work than just this topic. I’m a bit afraid that there is powerplay behind the scenes which we don’t see. Especially looking back on this quote:
“After having spoken with a few key stakeholders on this, will be putting this up on the chain for vote shortly.”
My gut feeling is that we are having this discussion more as a show for customer, but that decisions are already taken.
There were a number of different third parties that chimed in on the original proposal and given feedback prior to going on commonwealth. Feedback on these forums have been taken seriously too. The original proposal has changed from introducing a burn mechanism to now distributing to stakers - all based on the feedback from this forum as well as comments on Twitter/Telegram/etc. The reason for putting it up to vote is obvious - eventually you need a decision made and cant be stuck in analysis paralysis. By putting it to vote, we could see if this is something the stakers want before spending more time on the pending items.
My apologies for not seeing your post and overlooking this aspect. I can change the language in this proposal to note that more work is being done in these other areas and that this proposal is addressing the OSMO portion collected.
I think it is good to emphasize that there will be a follow-up proposal on the height of the taker fee.
Seconding RedRabbit’s questions here but also comment that a significant factor in the rejected ProtoRev proposals appeared to be the lack of data and analysis. Could you add the retroactive fee collection data to this? It probably isn’t hugely accurate with Supercharged pools coming and the changing swap fees changing volume but it would show people that analysis has been done:
There are other issues as well.
- Is there a definition for what “Osmosis’s whitelisted quote assets” are?
- Will the 33% be converted equally among ‘whitelisted quote assets’? Proportional to market cap? By a random number generator?
- The proposal fails to clearly define how the 67% will be distributed to stakers. Will it be distributed evenly? Equally? On a pro rata basis? By lottery?
I am also curious to know…
- Should the protocol really be distributing ‘dust’ to stakers? Should people start mentally preparing themselves to wake up one day and see 0.000001 CRBRUS, ROWAN, DIG, JOE, or CATMOS randomly in their wallets one day?
- If the protocol level taker fee is going to be distributed as is to stakers, should transaction fees collected in other tokens also be distributed as is to stakers rather than converted to OSMO?
Quote assets were mentioned in the recent Supercharged Rollout proposal: Interchain Explorer by Cosmostation
At launch these are OSMO, USDC and DAI.
Since these are any CL pool base we should likely have more. Probably USDT, ATOM and perhaps other Major or Stable assets.
Although there may end up being sort of two tiers here since we would likely need anything with a LST as a quote asset.
If this mechanism is in place for the 33% going to the community pool then it could be implemented. Personally, I hate the dust collection, it makes accounting a huge pain, and would like the distribution limited to a smaller set of assets.
Good point on the similarity to fees. If this conversion mechanism can be paired somehow then that would make sense to me!
Thanks Johnny for addressing. Would also note that the distribution of Non-OSMO has already passed signaling proposal and is not in scope of this proposal. The implementation will be subject to vote through a dev upgrade. I do agree that limiting dust should be something considered when developing the product though.
Added pro-rata basis for clarification.
Since the distribution of non-OSMO has already passed signaling, and not in scope of this proposal, am I safe to assume a separate proposal and discussion thread will be started to clarify that the 67% will be distributed to stakers on a pro rata basis as well, and a separate proposal and discussion thread to determine if the 33/67 split is on a total dollar value regardless of tokens, by total token amount regardless of dollar value (eg if 100 AXL, 200 STARS, and 5 ATOM, a total of 350 tokens were collected the 33% community pool share will be 115.5 but that could mean all 100 AXL, all 5 ATOM, and 10.5 STARS and stakers getting 185.5 STARS), or by dollar value per token?
If other issues I have found in the language of Proposal #530 are not germane to this proposal and discussion thread, is it safe to assume that someone will be creating separate proposals and discussion threads to address issues like:
The Osmosis lead/core/primary developers protocol in the future may will create programs that allow user accounts to reduce the trading taker (and or maker) fees cross their account. (Governance should know who will be responsible for creating a program, and whether they may or will create one.)
- There is no proposal to charge maker fees at this time, however Osmosis governance reserves the right to incorporate maker fees in the future. (This implies that a maker fee has already been developed and can be deployed at any time that governance chooses, or at least that a maker fee will be developed. If neither is the case, this should be clarified. Sample language: A protocol level maker fee will also be developed and made available as an option for governance to consider enabling no later than 120 days after the protocol level taker fee has been initiated.)
In the interest of avoiding “analysis paralysis”, I assume my analysis of the situation is sufficient. It shows that governance would have to spend hundreds of man hours to address each individual issue separately. The economic savings that can be realized from widening the scope of this discussion at least just a bit to include some clarifications like stakers would like the non-OSMO revenue to be distributed on a pro rata basis, and the 33/67 spilt done on a dollar value basis to reduce receiving dust, is substantial, with conservative estimates being in the tens of thousands of dollars.
I have no intention of re-opening resolved items from the prior proposal for language edits or clarifications. The Development team is fully capable of designing the final specs based on the guidance provided in the signaling proposal that will be in the best interest of the users/development with no extra man hours required. But just to ease your concern, it will be pro-rata basis and distributed in whitelisted assets to both community pool/stakers (so like USDC/wbtc/etc)
The developers implementation of their final specs will be voted on in governance and will be available at that time. The signaling proposal is a gauge to determine if stakers want the development team to dedicate resources to software design and engineer the items in the signaling proposal, knowing full well that implementation will include more detailed specs and need to be approved through another governance proposal.
@Johnny Wyles Sorry. I was wrong. The average staker can expect to see a little less than 0.13 CRBRUS pop up in their wallet every day. Basically, the average ‘staker’, who has ~169 OSMO staked (https://osmosis.smartstake.io/stats), would have received ~19 CRBRUS from 1/1-6/1 (Osmosis swap fees - Should a portion of swap fees be allocated to $OSMO stakers? | Kurama | Flipside). The top 5% of stakers, who have more than 10K OSMO staked, would have received at least 1120 CRBRUS each!
CRBRUS wouldn’t be the worst ‘offender’ though. In any case, as I stated in the original discussion thread, the protocol should just hold on to a lot of low liquidity, ‘ghost’, and surely any scam tokens that are collected. Such tokens could easily be defined as non-transaction fee tokens since we have working standards on tx fee tokens already. If I am not mistaken, this leaves ~70 assets to distribute amongst stakers and convert to a whitelisted quote asset. Since stakers may very well expect some compensation in return for not being burdened by the ‘dust’, since the Community Pool already holds a considerable amount of AXL and STARS, stakers could be compensated by receiving 100% of the AXL and STARS that are collected. They are the 12th and 20th most popular tokens on Osmosis (as measured by recent trading volume), so it seems like a rather decent tradeoff. That would leave ~68 tokens to deal with, which is still a bit much.
If SFS was enabled for all OSMO pools that have more OSMO than the FTM/OSMO pool (and ‘whitelisted quote assets’ defined simply as SFS assets) which has the least, amount of OSMO of all current SFS pools, and distributed only SFS paired tokens to stakers and all the OSMO that is collected, that would leave ~50 tokens which is still better than ~68. The next cutoff looks like it would be the HUAHUA/OSMO pool, which would bring the number from ~50 down to ~47, which is a little better. After HUAHUA/OSMO the next cutoff looks like BLD/OSMO, which would mean only having to deal with ~42 SFS assets and still reduce the number of tx fee tokens that would likely need to be converted every day. This could maybe save users a little since the conversion of tx fee tokens factors in pool swap fee right? The taker fee split between stakers and the community pool would likely need to be adjusted, probably from a 67/33 split to at most a 75/25 split but I imagine would be closer to 70/30, especially if stakers are going to be receiving all the OSMO. Speaking of which…
If the OSMO that is collected is just going to be distributed to stakers, I believe it becomes even harder to justify a 0.15% fee. Why do stakers need extract ~$600K per month from traders? Is $315K per month from a 0.1% fee not enough? If it isn’t, perhaps their appetites’ could be satiated with a 80/20 split with the community pool under a 0.1% fee. I never did understand why the split was 67/33 in the first place too.
Thank you for taking the lead on this Marlin!
I agree with the proposal as written and feel that this will be a gamechanger for OSMO value capture.
Let’s send this thing.