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Sifchain Public Ideas Portal
Created by Guest
Created on Oct 21, 2021

IMPROVING ROWAN VALUE CAPTURING

Intro & Motivation:

ROWAN has been a great utility relative to those who trade on the DEX often, but it could be more, ethereum value acquisition shines as transaction medium because of the plethora Dapps build on top of it. I do not know if sifchain intends to be frontend smart contracts heaven that leverages its deep liquidity in the future, however, considering the next milestone, margin trading, I propose creating an incentive plan to increase ROWAN value proposition for its traders and validators.

How it works:

The proposal will incentivized those who hold a threshold amount of ROWAN in their wallet by reducing the trade fees on the DEX. This can change accordingly as the TVL of the DEX increases through governance. For instance, we could take a look on the current "small- to medium-sized" CEX models:

  1. Kucoin provides 20% reduction in trading fees for its KCS holders, we could ranged the reduction of ROWAN holders from 1%-10% through a tier list. i.e. 5nk ROWAN for n% reduction where n = {1, 2, ...,9, 10}.

  2. AscendEX models the fees reduction with a higher barrier on the amount of ASD to retain but a much lower 30 days average trading volume shown in the Figure below.

I believe providing fees reduction through the trailing 30days trading volume and the amount of ROWAN the trader holds are good examples that we could learn from CEX, because if anyone is trading with a large size, the first thing they would look for is the fees which is also correlated to the liquidity depth.


Considerations:

On the surface, this implementation will reduce the incurred fees for liquidity providers and validators, if the % reduction is too high.

Suggestions:

The stated problem could be reduced through a medium to high entry barrier for fees reduction, thus allowing only those who heavily invested in the project benefits from that, which could increase the efficacy of the fees reduction to increase the value of ROWAN without reducing a significant income to LPers thus covering the impermanent lost of ROWAN hodlers that provide liquidity.

The calculation of ROWANs could include pooled rowans therefore incentivizing LPs to trade on the DEX instead of just providing liquidity.

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  • Guest
    Oct 21, 2021

    NOTE: if this idea is to be implemented, Sifchain's team should also measure the effectiveness of the idea, such as through tracking the trading volume, the number of rowan holders relative to the thresholds, the value of ROWAN as well as other useful factors. If the idea is ineffective, I believe it should be terminated.