Shade Protocol Revenue Share Proposal with Fee Abstraction Module Modification

Proposal Discussion
1

Authors

Shade Protocol Team, Secret Network Foundation, and the Osmosis Grants Program

Summary

Secret Network Foundation and Shade Protocol jointly propose to utilize the Osmosis Fee Abstraction Module, which is licensed under a Business Source License (BSL) that can be modified by Osmosis governance. In exchange for this usage, Secret Network Foundation and SCRT Labs will be granted an Additional Use grant under the BSL by Osmosis DAO. Additionally, Shade Protocol commits to paying a 0.2% swap fee on transactions utilizing the module that are routed through Shadeswap to OSMO stakers. The Secret Network Foundation and SCRT Labs teams also seek permission to modify the module to include specific routing logic for transaction fees based on asset support.

Motivation

Secret Network Foundation aims to enhance its platform’s functionality and security by integrating and modifying the Osmosis Fee Abstraction Module. This collaboration seeks to create a mutually beneficial relationship between Secret Network, Shade Protocol and Osmosis, promoting growth and innovation in both ecosystems.

Implementation

  1. Utilization and Modification of Osmosis Fee Abstraction Module:

SCRT Labs will integrate the Osmosis Fee Abstraction Module into Secret Network. This integration will offer advanced account management features, improving user experience and security. GitHub Repository

  1. Modifications to the Module

  • Native DEX Support (Shadeswap): For assets supported by Shade Protocol’s native DEX, Shadeswap, fees paid in those assets on the Secret Network will be swapped for SCRT on Shadeswap and used to pay fees. Shade Protocol Swap

  • Non-supported Assets: For assets not supported by Shadeswap, these fees will be IBC transferred to Osmosis to be swapped for SCRT, be returned to the Secret Network via IBC, and used to pay fees.

  • Fee on Shadeswap Swaps: Osmosis will take a 0.2% fee on all swaps that route through Shadeswap using the fee abstraction module.

  1. Licensing Agreement:

Osmosis DAO will grant Shade Protocol an Additional Use license under the BSL, allowing the legal utilization and modification of the Osmosis Fee Abstraction Module within the Shade Protocol ecosystem.

  1. Revenue Sharing Model:

Shade Protocol will pay a 0.2% swap fee on transactions utilizing the Osmosis Fee Abstraction Module that are routed through Shadeswap to OSMO stakers.

Benefits

For Secret Network:

  • Access to advanced fee abstraction features, enhancing platform functionality and security.
  • Flexibility to optimize fee swaps using their native DEX, Shadeswap.
  • Promotion of innovation and the ability to offer unique solutions to users.

For Shade Protocol:

  • Additional trading volume generated by fee abstraction
  • Improved user experience as users can pay gas in different coins

For Osmosis:

  • Generation of a steady revenue stream through the 0.2% swap fee on Shadeswap routed swaps, supporting further development and community initiatives.
  • Expansion of the Osmosis ecosystem’s reach and influence, attracting more projects and users.

Conclusion

This proposal outlines a strategic partnership between Secret Network, Shade Protocol and Osmosis. Through the integration and modification of the Osmosis Fee Abstraction Module and a revenue-sharing model, this collaboration will contribute to the success and growth of both ecosystems.

Additional Use Grant Text

“Secret Labs and Secret Network Foundation are hereby granted an Additional Use license under the Business Source License (BSL) by Osmosis DAO. This grant permits Secret Labs and Secret Network Foundation to utilize and modify the Osmosis Fee Abstraction Module to support asset-specific routing logic. Specifically, for assets supported by Shade Protocol’s native DEX (Shadeswap), fees paid in those assets on the Secret Network will be swapped on Shadeswap. For assets not supported by Shadeswap, fees will continue to be swapped on Osmosis as normal. In exchange for this grant, Shade Protocol will pay a 0.2% fee on all swaps that route through Shadeswap using the fee abstraction module to OSMO stakers.”

Voting Options

Yes: Approve the utilization and modification of the Osmosis Fee Abstraction Module by Secret Network, the granting of an Additional Use license, and the 0.2% swap fee to be paid to OSMO stakers for swaps routed through Shadeswap.

No: Reject the proposal.

Contact Information:

4 Likes
2

Will swaps itself also be routed through Osmosis?

Or will the swaps still be executed on Shadeswap and only the Abstraction Module used to be able to support more assets?

3

For any fee assets that are supported by Shadeswap, those swaps will route through Shadeswap. This will include a lot of SNIP-20s that Osmosis currently doesn’t support (this is a huge part of the motivation behind modifying the module in the first place).

For assets that are not supported by Shadeswap, the swaps will route through Osmosis as normal.

4

Doesn’t this effectively mean that Shadeswap becomes an alternative front-end for Osmosis-supported assets while having the ability to list own assets like SNIP-20s?

5

Not really. There’s no front-end involved here. This only takes place with respect to assets that are used as transaction fees and paid to validators.

The module allows for transaction fees to be paid in any asset, and on the backend this is abstracted away via a swap into SCRT on either Shade Protocol or Osmosis (depending on where the respective asset is supported).

1 Like
6

Since Shadeswap is on Secret Network, ie. executing private swaps, how can we verify and enforce that they are paying the right amount of fees?!

7

Swaps aren’t done manually. It’ll be handled in-protocol. The underlying chain logic for the fee abstraction module will go live as part of an upcoming Secret Network chain upgrade that will include the code and be visible / verifiable by anyone.

The swaps themselves will of course be obfuscated, but the code that enables the swaps will be easy to verify.