@BigSky7 @setoshi @scott_lew_is
I have three points to cover.
We believe BTC2x-FLI is the best proxy we have for estimating how the next wave of FLI products will perform. Using the actual cost / revenue data from BTC2x-FLI, here are the actual profit numbers under the current 60/40 agreement, as well as what they would have been if the BTC2x-FLI has always been operating under the proposed 60/40 post-gas agreement:
Basically, the proposed 60/40 post-gas split would have resulted in a swap of $13k from DFP to IC, yet DFP still would have made 50% more profit than the Index Coop on BTC2x-FLI on this product.
Note, “profit” here does not include the cost of contribution, which leans extremely heavily towards the Index Coop as well.
To add to this reference, what would it look like if we actually did a 60/40 rev split + 60/40 gas cost split (meaning DFP pays 40% of the gas cost as well)? I am not necessarily proposing this, but I think it is helpful to look at the numbers to understand the whole picture:
Now, my opinion is that an agreement that yielded that sort of return for both sides ^ is starting to feel more like something that both sides should be able to feel great about.
To be honest, the 60/40 post-gas split does very little to persuade me vote in more FLI products when we have the option to put out our own leverage products for 100% revenue. I would love to keep launching FLI products with DFP, and I really don’t want to be so nit-picky about the splits because I agree this isn’t a zero-sum game, but the economics just still feel too far off what a sensible business would agree to, in my opinion.
We got into this whole back-and-forth because there wasn’t clear boundaries set around the initial 60/40 fee split on ETH2x-FLI and BTC2x-FLI. We cannot move forward with ambiguous language like this again. I would maybe be ok launching one FLI product with a 60/40 post-gas split just to see how it performs and what the economics look like, but I am not in favor of multiple FLI products being agreed to with this split.
I have been saying this for a while, but I think the steps forward are actually pretty simple. If DFP is set on this 60/40 post-gas split arrangement and won’t consider anything else, then that is fine - I would encourage them to get another product up go DG1/DG2 so we can determine as a community if we are willing to move forward with that product - I feel like we have gotten almost no where with all these discord channel negotiations.
At the same time, I would like to see one of the Index Coop leverage products go to DG1/DG2 so we can test our ability to launch simple leverage index products and the communities appetite for going down that path.
In short, this can be a much more fluid situation than it is - at the end of the day, the vote is what determines whether we go forward with something - and the vote is a forcing function for us to make decisions. We have wasted too much time here already, so let’s move forward.