Potential Changes to the Fee Schedule

I’d like to propose a change to the Deposit/Withdrawal Fee schedule on Viperswap. I will list several potential options - these are by no means exhaustive, but will be representative of the various possible approaches (and I may miss some so feel free to contribute other approaches//tweak numbers).

I start with a simple premise: DeFi users don’t like high fees. High gas fees have caused BSC DeFi to explode in volume compared to ETH DeFi. ONE DeFi gas is much cheaper than BSC, but BSC is cheap enough (especially after they recently halved the gas fees) that the options (and for diversification of risk) makes sense to still also use BSC.

For reference, currently the Viperswap fee schedule looks like this:

0.75% deposit fee when adding liquidity to any pool

.5% after 5 days but under 2 weeks.
.25% between 2 weeks and 4 weeks.
.1% after 4 weeks.
Extra penalties will apply for the following conditions:
1% fee if a user withdraws under 5 days
2% fee if a user withdraws under 3 days.
4% fee if a user withdraws under 24 hours.
8% fee if a user withdraws under 1 hour.
25% slashing fee if a user withdraws during the same block (in order to disincentivize the use of flash loans).

These fees are based on your first deposit or most recent withdrawal. There is a notification telling you what fee bracket you fall in when you attempt to withdraw.

I was new to DeFi when I started on Viperswap, so I wasn’t really aware, having not been a part of DeFi summer. But now after some time, I’ve been able to explore other options on ONE chain, and also on BSC (for me - beefy, pcs, and bunny). Comparatively speaking, as far as I can tell, none of the other DEXes I am using currently have any deposit fee. As for withdrawal fees, beefy has one that is between .05-.1%; and bunny had a fee (but I think this makes more sense as they offer auto compounding pools). Bunny’s fee used to be 0.5% if withdrawn within 72 hours, though recently as far as I can tell, all the pools show No Withdrawal Fee. Not sure if it’s temporary or if they implemented a change that I didn’t notice. The overall withdrawal fees for VIPER and the length of the schedule are far too prohibitive in my opinion.

To be honest, I think a fee structure change to coincide with the start of DeFi week probably would have made more sense, but anyway, no reason not to implement an improvement even if the timing isn’t optimal. From a UX perspective, in order for me to get into new pools launched on DeFi week, I had to look at the whole launch schedule and ask myself which pool I wanted to be in the most (for me it was Cake but I also added a bit of DSLA and WISE), then just wait until it was launched. Otherwise, for me to go into new pools would be extremely cost-prohibitive (compared to other available dexes). My other option would be to add significant new total capital every time I wanted to participate in a pool, but sometimes that just isn’t feasible for a user.

We are about to go from 16x emissions to 8x for a while, and continually decreasing until the next time it gets to 16x sometime in Q1 2022. I think this is a big consideration for lowering fees soon.

With that in mind, here are a few general proposals:

Method A.

  1. Reduce deposit fee to .5% or less
  2. Shorten extra penalties schedule to 3 days (with 1% being the 3day end period)
  3. Shorten regular fee structure to 2 weeks or 3 weeks total

Method B.

  1. Remove deposit fee
  2. Shorten extra penalties schedule AND reduce penalties (ex. .5% begin the 3day end period)
  3. Shorten regular fee structure without changing numbers

Method C.

  1. Remove deposit fee
  2. Shorten extra penalties schedule AND reduce penalties (ex. .5% being the 3day end period)
  3. Shorten regular fee structure AND reduce fees taken (ex. 0% after 2weeks, .1% after 1weeks, .25% between 3days and 1wk)

I think the slashing fee for flash loans can stay; but the 8% fee for under 1hr should go away completely.

Any combination of the above or tweaks to the number of days or % is possible. I just think some kind of reduction to bring it in line with other DeFi offerings is important.

Please chime in.

1 Like

Thank you for taking the time to post this request. Unfortunately, I do not agree on changing the withdrawal fees. They are created to reduce the possibility of pumping and dumping. This is a huge problem in our space and whiles there’s no true way to stop, this is a deterrent for having it done. Please
be aware that there IS a way to see what the fee is on the withdrawal screen. I’m not sure when your last attempt to withdrawal was but the UI was updated with this functionality,

The deposit fee will l be looked at because 0xViper is working on additional functionality that will require the removal of that fee. However, that hasn’t been determined.

3 Likes

Likewise, I support the withdrawal fees as it incentivizes longer term commitment vs dumping.

As for the the deposit fee - it could be slashed/removed although we need to keep in mind this helps fund the treasury which will support further development.

3 Likes

I have no problem with the withdrawal fees and the necessity to strategically plan my defi-schedule. It makes it so that even the small players can have an edge vs someone with much more wiggle room in terms of pool share an ability to access the highest pool yields. I fear otherwise people would just constantly be piling into the hottest pool of the day. Which will still happen but at a more reasonable rate. Also considering Harmony has practically no fees the small fees to commit to the project I believe are in line with a team aspect, after all we’re trying to grow the community so a small fee from everyone who’s active should benefit the greater populous. TVL attracts people in via liquidity and anyone who parks their money here should benefit from the pit capture fees. Addressing the deposit fees or lowering them shouldn’t make you want to invest more, but paying them makes you committed which is the correct mechanism for growing TVL.

1 Like

The deposit fee will probably be gone by the time auto compounding is pushed. As for the other fees i believe they should stay the same.

By design Viper wants to appeal to long term and stable investors, i personally don’t think the fees are that restrictive, the impact it has after 5 days is minimal, your proposal benefits only drive by investors that want to hop from pool to pool on a very short amount of time, there are a lot of emerging dex’s on harmony that do that if people want to do it.

You probably see it as an inconvenience and that other dexes are getting a bigger chunk of the market, but you’re looking at this a little bit too closely, defi in this chain is new and a lot of people are rushing to gain as much as they can as fast as they can, you’re probably thinking it’s better to appeal to people with easy entry / exit but in the long term it’s not ideal. I see it as an advantage that viper is the only one tightening the structure to maintain a mid to long term investment and commitment rather than chasing next week’s gains by hopping from farm to farm, it creates fidelity among users, a long lasting one, viper is aiming to be the flagship dex of harmony’s defi, the de-facto choice when anyone wants to trade using harmony and we won’t get there by doing what the others are doing.

5 Likes

Just to bring some additional points to consider:

I realize that the fee structure was initially created to disincentivize pump and dumps. However, that doesn’t mean the fee structure as it currently exists is perfect (after all, Viperswap launched with this schedule and before that it was “untested” in terms of the real world usage for the specific circumstances Viperswap finds itself in (on the ONE chain vs DEXes on other chains).

That being said, there’s already another mechanism in place to discourage P&D, and that’s the 95% locked rewards system. It may be possible that this current version of the fee schedule could be reimplemented once the lockup period expires, but currently, it feels far too high/long (there’s a fee that goes up to 8%…).

When Viperswap first launched, emissions were much higher and pools were less (people have less choices and are less likely to move around pools). As more and more pools launched, especially with an initiative like DeFi week, existing users are basically pidgeonholed into their previous pools or have to really choose/plan carefully on which pool to join. I understand Viper fee structure doesn’t need to match others, and it doesn’t need to compete to be the lowest (0 fees), but it’s important to evaluate other DEXes and consider what’s “industry standard”. For example, BUNNY had a 72 hour period for .5% fee on several of its pools until very recently, which as far as I can tell, are now gone. Keep in mind this is in comparison to other DEXes that currently exist and are as established or more so than Viper - Viper needs to sustain growth in the long term, which also means making sure offerings are somewhat competitive to peers (this can be in terms of available pairs; available farms; deposit/withdrawal fees; performance fees; or deflation mechanisms, etc.)

It’s good to hear that the deposit fee is going away (though still, if only out of necessity rather than out of some thought into whether it’s a good fit, I think there’s room for that).

As for the withdrawal schedule - you don’t think taking 4 weeks+ to reach the lowest range of the fee schedule is perhaps too long (in DeFi world it seems like an eternity)? Or you don’t think an 8% fee for any reason is too high? There’s a lot of room for change and I only intended to lay out the general question of - could some change be warranted? Up to the community to really think and decide what is appropriate.

3 Likes

I actually feel you’re looking at it too narrowly, looking at how this system hurts “drive by investors” - I agree that it does.

I am trying to bring up the point that it’s also hurting the long term investors (I came in during week1 and only very recently moved a portion of it away, but still have a few thousand USD in VIPER). So the question is whether current system appropriately discourages drive by investors while also not overly restricting long term users.

And my main example for that was based on the launching of the new pools. An existing user of viperswap cannot easily move in or out of liquidity pools (still all on the same platform) without incurring hefty fees in the short term. Even if I am patient, I need to wait 2 weeks in one pool in order to be at the top end of the what other DEXes are charging, if that.

Pancakeswap is the de facto DEX of BSC and it doesn’t charge fees; that doesn’t mean it can’t succeed (obviously it did). I am not saying we need to go to no fees; but I am saying there should be an effort to look at every part of the fee schedule and decide whether % and timeframes are truly optimal. I feel fairly confident in my assertion that the current schedule is not optimal for the current state of Viperswap (given the increased pool choice, decreasing emission schedule, and increased popularity of other DEXes on Harmony or offchain).

1 Like

I understand your reasoning but i still think you’re looking at it with a magnifying glass, PCS has been around for months, we’re barely coming out of one, changing the fees drastically right now just to allign ourselves with other dexes will hurt viper both in the short and long term, nevertheless if people agreed on a change it would have to be minimal and over several months as more products are launched and the userbase grows.

I suggest you make a poll and see who’s interested in doing what and then go with the proposal to 0xviper

Edit : you might wanna wait on that poll until viper decides if he wants to go with local governance directly on the dex or using the governance tool of harmony

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I like how well thought out this post is, and the different methods. If we were to choose from the three options, I’m partial to Method A but getting rid of the deposit fee. Keeping the treasury stocked is really important, but maybe we can just dedicate more of the other fee mechanisms to that purpose? Deposit fee isn’t something I’ve seen elsewhere and we should be focused on making as few hoops as possible, imo (not that it’s expensive)

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I think these penalties/fees are doing their job. It prevents liquidity going to 0 when there are some turbulence in the market prices, that’s only a good thing for a DEX from a user perspective in my opinion.

I’ve been mainly looking at the deposit fee for now and I’m personally leaning towards removing it. Compounding should be encouraged - and when we have auto-compounding features like zaps it makes even more sense to have no deposit fees.

The withdrawal fees also need some tweaking - I personally feel that something like 8% for withdrawing under 1 hour is acceptable since there shouldn’t really be a lot of reasons for someone to enter and withdraw within an hour (new pools aren’t launched on an hourly basis - and one could expect that people DYOR and plan for more than one hour into the future). But we could also lower it when we lower other fees - it’s probably mostly optics since there are probably very few people that end up paying the <1hr fee.

The primary issues with the withdrawal fee system are the 4% fee for withdrawals under 24 hours and the 2% fee for withdrawals under 3 days. That’s usually the time period when new pools launch and users might want to switch over to a new pool.

Right now I’ve been thinking along the lines of:

  • 0% deposit fee

Withdrawal fees:

  • 0.25% after 5 days but under 2 weeks.
  • 0.10% between 2 weeks and 4 weeks.
  • 0.05% after 4 weeks.
  • Extra penalties will apply for the following conditions:
  • 0.5% fee if a user withdraws under 5 days
  • 1% fee if a user withdraws under 3 days.
  • 2% fee if a user withdraws under 24 hours.
  • 5% fee if a user withdraws under 1 hour.
  • 25% slashing fee if a user withdraws during the same block (in order to disincentivize the use of flash loans).
20 Likes

I like it

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I would be okay with this proposed fee schedule; though I think a 3 week max period could be considered instead of a 4 week maximum; or a 0% withdrawal after 4 weeks (and keeping nothing for 3 weeks).

Also, if we are removing the deposit fee for sure (which I am for, especially if you’re introducing auto compounding), then maybe part of the withdrawal fee could go toward the treasury instead? If it doesn’t already.

I think your proposed fee schedule looks like a big improvement to me, and trying it out will let us know if it feels like a good equilibrium. If it still feels too high/long, further tweaks can be made.

I am glad to hear everyone’s input.

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0% deposit fee makes total sense! #HODL

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I’d agree with this proposal.

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Sounds great.

I also agree with this proposal.

I’m new, and consider much if this an experimental and fun experience and so I’ve racked up assortment of these % withdrawl and deposit penalties already trying out different allocations. What exactly happens to thise collected fees? I assume they go towards the DEX in some way that may support future improvements.

I vote in favor of the proposal to remove the deposit fee.

late to the party… any updates on this? seems interesting