Worth reviving this discussion based on some observations on mint/redeem transactions the last 2 weeks. There is strong evidence for volume based fees to be the primary value accrual mechanism which would allow the Coop to significantly cut DPI streaming fees for customers.
Basically it’ll shift value accrual to charging arbitrageurs a tax and charging end customers a lower streaming fee vs charging end customers a high streaming fee. To end customers of DPI, they will see a lower streaming fee, and continue to trade on Uniswap (which collects a 0.3% LP fee) with minimal impact.
Based on the volume this weekend, at a 10 bps mint and 10 bps redeem fee, the Coop would have generated $2k in fees (25k DPI * $80 DPI price * 0.1%) in 1 day. Assuming the same daily volume, that’s $60k in monthly fees, compared to the $10k in estimated streaming fees per month. Of course, volume numbers could vary widely and the fees could be toggled.
This is an example of what fees INDEX would pulled in the last 30 days with various mint / redeem fee parameters:
Additionally, arb bots such as this one capture ~3 ETH per ~$200k or around 5-15 bps of the transaction amount. It even makes sense for INDEX to run an arb bot at 0 spread with the mint/redeem fee, which means better prices for customers. And if the bot uses KeeperDAO liquidity pools proposed in this post, the Coop can mine ROOK tokens as well.
What it could look like:
- Cut streaming fees to less than 50 bps
- Introduce a 0.1% mint and 0.1% redeem fee (parameters to be discussed)
- Run an INDEX arb bot using KeeperDAO liquidity at 0 spread
Curious to hear more thoughts here.