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SIP-0031.md

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SIP Title Author Status Track Created
0031
Splitting AMM fees with stakers
cowsant (@cwsnt), John Light (@john-light), Ororo (@ororopickpocket)
Approved
Contract
2021-09-07

SIP-0031: Splitting AMM fees with stakers

Description

  • Currently only AMM Liquidity Providers earn a fee from swaps conducted using the Sovryn AMM.
  • This change will split the fee between AMM Liquidity Providers and the Fee Proxy contract (the smart contract responsible for holding fees until stakers withdraw them).
  • The split will be 0.25% to LPs / 0.05% to Fee Proxy.

Motivation

Although the Sovryn AMM is a core piece of the Sovryn protocol, which SOV stakers must take care to govern well, SOV stakers earn no share of the fees generated by the AMM and are therefore out of alignment with the incentives of AMM LPs. This SIP aims to better align the incentives between SOV stakers and AMM LPs by splitting AMM fees between SOV stakers and AMM LPs.

The fee split proposed here is implemented on the Converter Contracts. The owners of the converters (also called pools) can set the conversion fee which is paid to the LPs, but the height of the protocol fee is under the control of Bitocracy. It is configured centrally for all pools on the new Swap Settings Contract and is charged on the traded amount after the conversion fee is paid.

License

Copyright and related rights waived via CC0.