AIP 79: Update Protocol Fee Allocations

[agriimony]

Summary

• AIP 46 allocated 14% of protocol fees to contributors
• This AIP proposes to update this allocation to 30% of mainnet protocol fees to be distributed as monthly Contributor rewards
• Treasury AST will only be used to top up Contributor rewards if lower than the base amount defined in AIP 71
• Fees on other chains will operate as normal (i.e. no split)
• The AIP will take effect once our Paraswap integration is live

Specification

Updated flow for swap fees

• Swap fees on mainnet to be aggregated into a Splitter contract using 0xSplits
• 0xSplits is a trustless protocol for splitting onchain income
• The Splitter contract will be defined as follows:
  • 70%: Pool contract (for Voting rewards)
  • 30%: airswap.eth (Ops multisig for Contributor distributions)
• Members can help to split incoming fees and be rewarded for it
• The reward will initially be set to 1% of the amount split and is configurable
• A simple user guide to using 0xSplits will be published if this AIP is accepted

Updated rewards for contributors

• 30% of fees are collected each month in ops.airswap.eth (See Updated flow for swap fees from 0xSplits above)
• Fees collected in WETH and Stablecoins will be distributed to Contributors
• AST from the Treasury will be used to top up if fees fall below the base levels (as per AIP 71: Dynamic contributors rewards #72)
  • Between 15-20 contributors : $30K
  • Between 21-25 contributors : $35K
  • Between 26-30 contributors : $40K
• Non WETH/Stablecoin balances will remain in ops.airswap.eth as a reserve. Usage of these tokens will require a vote.

Timeline

• Allocation of protocol fees to Contributors will take place in two phases
• The allocation will initially be set to 86:14 as per AIP 46: Protocol Fee Allocations #46
• The allocation will be updated to 70:30 when our Paraswap integration goes live
• $AST from the Treasury will only be requested to top up to base levels as per AIP 71: Dynamic contributors rewards #72

Other notes

• Ops.airswap.eth will hold $40K worth of $AST in reserve to top up Contributor rewards in a timely manner
• Ops.airswap.eth will request $AST from the Treasury to maintain this amount each month as necessary
• This AIP will override the bonus allocation defined in AIP 46: Protocol Fee Allocations #46

Rationale

• AirSwap has been running at a deficit since all protocol revenue is currently distributed to Voters
• Development costs are currently being covered by the AirSwap Treasury
• This is not sustainable in the long run. For example, Sushiswap has recently moved to allocating 100% of protocol fees to their Treasury to shore up their reserves.
• By allocating a portion of protocol fees to cover Contributor activities we hope to
  • Reduce (and eventually remove) inflationary $AST token emissions
  • Incentivize and align Contributors to increase the protocol volume
  • Increase treasury runway
  • Open the treasury to be spent on other growth opportunities (e.g. KPI incentives for timely delivery of products and services)
  • Make AirSwap DAO financially self-sustainable for the long term
• Redirecting 30% of swap fees will allow AirSwap to fully self-sustain 20-25 Contributors with $150M monthly volume
• Currently, AirSwap sees $100-150M in monthly volume. We aim to maintain $150M+ monthly volume once the Paraswap integration goes live.

Copyright

All proposals are public domain via CC0

[Koploseus]

I'm suggesting that we need to reach a certain level of daily volume to activate this up.
5M minimum of daily volume (around 109k of protocol fees monthly).

[agriimony]

updated with a timeline

Timeline
Allocation of protocol fees to Contributors will take place in two phases

• The allocation will initially be set to 14:86 as per AIP 46: Protocol Fee Allocations #46
• The allocation will be updated to 30:70 upon reaching $150M monthly swap volume across all chains

[melseb0]

The 30% of the fees deducted are automatically returned to the contributor, or the number of contributors and tasks carried out changes the amount of the rewards?
In the event of an explosion in volumes, is there a limit to the increase in rewards?

[Koploseus]

En anglais @melseb0 :D , la c'est pour passé de 14% à 30% qui seront ensuite split à chacun des contributeurs .

Pas de limite pour le moment, mais si il y a 100M$ qui rentrent pour les contributeurs on peut avoir un vote qui font forward une grosse partie pour la trezo

[melseb0]

Ok sorry for the language.
We will then see if there is a need to propose a vote.

[agriimony]

number of contributors only change the minimum amount that they can receive but not the maximum.

no limit at the moment, if the volumes explode then i would say...

1. the contributors have done a great job and well deserve it.
2. theres much more for everyone :)
3. more people can also contribute and take a cut of that 30% ;)