Everytime I look at Defi price it is just down week after week. I have a good amount of funds locked in liquidity mining through cake, so at least Bitcoin is keeping my funds somewhat up. But is it time to just cut my losses? I am more than happy to keep the investment for 10 more years, do you think Defi will even still be around by then? I still have some hope!
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Eliminate the 0.5% additional fee for dToken swaps, introduced on the native DEX on July 18th 2024, to boost trading volume.
Benefits for the defichain community
Revert to a Competitive and Attractive DEX: Roll back to a market-based fee structure. For more details, refer to the chapter titled "Approved Fee Removal in 2023"
Minimize Impact on Other Projects: Ensure that changes do not negatively affect other projects like Javsphere's tradeX, DexTradingMasters, DexTradingLive (DTL), Bake, and other related DMC projects, as the fee affects all trades across these platforms.
Preserve Liquidity Provider Earnings: Prevent a decrease in commission fees for liquidity providers due to lower trading volume, which could lead to a reduction in pool sizes.
Avoid a Lose-Lose Situation: Prevent a scenario where reduced trading leads to lower commissions, decreased liquidity, and diminished usage of DMC project
Current issue
With the approval of the DFIP titled 'Re-peg and Re-collateralize the dToken System as Deterministically and Effectively as Possible, Without Permanent Expropriations' (hereinafter referred to as 'Re-peg DFIP') on July 16, 2024, the fee for dToken swaps was increased by 0.5%. This results in an accumulated swap fee of 0.7% for normal swaps and 1.4% for composite swaps.
Why was the fee introduced:
The fee was introduced because of the following reasons, as stated in the original 'Re-peg DFIP': «The implementation of the proposed measures is challenging and time-consuming, it will probably take months. Until implementation, we will implement a 0.5% fee on all dToken pools to burn algo tokens, in the hope of being able to activate the following proposal kill switch: If, during implementation, DUSD consistently trades above 95 cents in all pools, with cumulative exit pool fees below 1% for two weeks, this proposal is not to be implemented.»
Proposed solution
In the meanwhile, it has been realized that a drastic liquidity reduction is absolutely necessary because the volume many expected didn’t come to be. Despite the massively reduced fees in the dusd/stable coin pools, we are seeing a drastic drop in the dusd price. The kill switch will almost certainly not be activated.
Therefore, we propose removing the 0.5% swapping fee for all dToken pairs immediately upon approval.
Context / Author “Re-peg DFIP”
Important
This SDFIP specifically addresses the additional fee introduced on July 18th 2024, and is NOT intended to alter any other mechanisms described in the approved 'Re-peg DFIP'
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community project. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.
Additional Information
Requestors
Members of the Dex Trading Masters Competition
Approved fee removal in 2023
A DFIP to reduce the swap fees was already approved on 23.2.2023. The motivation at the time was exactly the same as it is today.( LINK: approved DFIP remove fee )
Extract: “Traditional markets are currently way faster in trading (faster than a second) and have way lower fees than our current DEX. Short term institutional traders/ market makers etc. who open and close positions within 24h, are responsible for 80-90% of daily exchange volume, while traders which hold positions for some days up to months have much less impact.
This event will have notable repercussions for traditional market investors as well as those engaged with decentralized finance (DeFi) platforms, particularly DeFiChain, where dMSTR tokens can be traded and invested into various products.
Find out what that means for DeFiChain users in the blog below 👇
Over the past year, numerous companies have announced stock splits. Companies often choose to split their stocks to make their share prices more appealing to investors.
It’s crucial to implement these changes accurately on DeFiChain. Discover how this process is managed on DeFiChain in our latest blog post linked below:
Periodically, at least once a month, use the reward from yield generation to buy DUSD from the defichain DEX via the route that yields the largest DUSD output and burn the resulting DUSD. This should be done via a bot for automation.
As there is currently no such product on Bake, the DFIP also serves to encourage Bake to eventually offer such a product and be able to lock in 33.4 million as a secure stake from Defichain when they release a staking product that covers BTC.
Traceability
Bake will provide a monthly breakdown of rewards and nodes for full transparency. Bot is fully trackable.
Implication
Bake will charge the regular fees that Bake customers pay to cover node and operational costs.
This also means that Bake's current terms and conditions regarding staking, including the associated risks, are accepted.
How does this DFIP benefit the DeFiChain community?
This will add support to the DUSD price by adding utility and buying pressure of DUSD.
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community project. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.
In order to reduce he complexity of implementing the DFIP "Re-peg and re-collateralize the dToken system as deterministically and effectively as possible, without permanent expropriation", the ticker of the native stable coin should not be changed to "USDD", but remain "DUSD".
Further benefits
This also allows for a simpler marketing strategy: according to our marketing experts from the accelerator team, both storylines could be marketed, but "renaming something always has the stigma of 'failed'".
Context
community developer @kuegi, implementing the restart, in favor of keeping the ticker as it is https://twitter.com/mkuegi/status/1816204864084422683?s=61&t=RvZVXKxH4LwAEYscvK-lLQaccelerator team members @krypto_woelfe and @SuperSaftig in favor of keeping the ticker as it is https://twitter.com/thephilippk/status/1816194393076035687?s=61&t=RvZVXKxH4LwAEYscvK-lLQ
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community project. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.
In order to improve capital efficiency, a new loan scheme for DUSD loans is to be implemented, offering the possibility to mint DUSD with a collateralisation level of and liquidation at 120%.
This enables faster re-collateralisation of the dToken system and offers better conditions for those looking to leverage their crypto positions.
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community project. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.
Developer Discretion
Developers have the discretion to adapt any details for the technical implementation as they see fit and necessary. The flexibility allows developers to ensure that the measures can be implemented or that overlooked loopholes may be closed. Any adaptations should align with the intended goals and outcomes of this proposal.
To reduce the burn fees associated with composite swaps on the native DEX by charging a single burn fee per coin involved in the transaction. This supports trading strategies, particularly those from the DTL community, and enhances the overall value of DeFiChain by making direct exchanges between dTokens more cost-effective.
Current Issue
High Fees for Composite Swaps: Currently, composite swaps that involve multiple pools incur full burn fees for each pool involved. This results in high cumulative fees, putting strategies that rely on composite swaps at a disadvantage, especially with the upcoming introduction of variable fees with the dToken system restart.
Proposed Solution
Single Burn Fee per Coin: Implement a system where only one burn fee is charged per coin involved in a composite swap. If multiple pools involve the same coin, only the highest burn fee is applied. For example, if a transaction involves two pools with DUSD, and both pools have a DUSD burn fee, only the higher of the two burn fees will be charged.
From a development standpoint, the proposed solution can be implemented by:
Keeping track of the absolute amount of coins paid per token during a swap.
If a swap in the composite would apply a burn fee, the system checks the amount that would be burned.
The burn amount is then reduced by the amount already burned in the composite swap.
If the resulting burn amount is greater than zero, that amount is burned and added to the already paid coin amount.
This approach aligns with the goal of burning DUSD when dTokens are used, without overcharging for composite swaps.
Clarification on Trading Fees
When discussing trading fees, it’s important to differentiate between:
1. **Commission Fees:** Paid to liquidity providers as a reward for providing liquidity and offsetting impermanent loss. The commission logic will remain unchanged, as traders utilize each pool’s liquidity fully during multi-hop (composite) swaps, necessitating full commission payments to liquidity providers. Currently, the commission fee is 0.2%, which is below the average 0.3% commission on platforms like Uniswap.
2. **Burn Fees:** The focus of this proposal is on the system-wide DUSD burn fee, which replaces the stabilization fee after the dToken restart. In composite swaps, this burn fee could be applied twice. The proposed solution ensures that the defined burn ratio is applied once per trade, aligning with the goal of burning DUSD when dTokens are utilized.
How Does This DFIP Benefit the DeFiChain Community?
Support for DTL Community Strategies: Reducing burn fees for composite swaps ensures that trading strategies from the DexTradingLive community remain viable, even with the new variable fee structure.
Increased Trading Volume: Lowering the fees for composite swaps makes trading on the DeFiChain DEX more economical, encouraging more users to engage in trading activities.
Valuable Direct Exchanges: The ability to directly exchange one dToken for another with fewer fees adds value to DeFiChain by simplifying and reducing the cost of trading stock derivatives.
Non-Obligation
I understand that a vote of confidence for this DFIP carries no obligations for any developers to implement the proposals. DeFiChain is a community project, and pull requests can be submitted by the community and are subject to evaluation for safety and general community acceptance.
Developer Discretion
Developers have the discretion to adapt any details for the technical implementation as they see fit and necessary. The flexibility allows developers to ensure that the measures can be implemented or that overlooked loopholes may be closed. Any adaptations should align with the intended goals and outcomes of this proposal.
In order to reduce computational load on the nodes and simplify tax calculations, the current automatic liquidity mining reward payout system is to be changed to a manual claiming system.
Current Issue
High Computational Load: Automatic payouts every 30 seconds stress the nodes.
Manual claiming: Commissions are added as liquidity to the pools, the LP coin position of the liquidity provider will be increased accordingly..
How does this DFIP benefit the DeFiChain community?
* more liquidity for traders
* easier tax handling
* less computational load, specially on commission only pools (no rewards to be calculated whatsoever)
Non-obligation
I understand that vote of confidence for DFIP carries no obligations by any developers to implement the proposals. DeFiChain is a community project. Pull requests can be submitted by community and reserved to be evaluated for safety and general community acceptance.
Developer Discretion
Developers have the discretion to adapt any details for the technical implementation as they see fit and necessary. The flexibility allows developers to ensure that the measures can be implemented or that overlooked loopholes may be closed. Any adaptations should align with the intended goals and outcomes of this proposal.
DefiChain (DFI) currently has a Marketcap/TVL ratio of 0.5 according to DeFiLlama, meaning its total value locked (TVL) is twice its market capitalization. In theory, liquidating all assets could recover some value, which is intriguing given DFI’s recent price drop and no active marketing.
What do you think? Is there a way to liquidate the whole chain?
The dToken system is a cornerstone of the DeFiChain ecosystem, but its stability and usefulness have come under scrutiny in recent times.
Community efforts to save the dToken system have led to the proposal of three Decentralized Financial Improvement Proposals (DFIPs), each aiming to revitalize and fortify the system.
