Summary
Magicswap, a decentralized exchange (DEX) developed by TreasureDAO (“Treasure”), currently imposes swap fees that are substantially higher than its competitors. This proposal aims to address this issue by reducing swap fees on Magicswap.
This proposal was submitted by long-standing Treasure community member "The Smolinator".
Rationale
- Competitive Positioning: By reducing swap fees, Magicswap can enhance its competitiveness in the decentralized exchange market. Lower fees could attract more users and liquidity to the platform, thereby increasing trading volume and overall ecosystem activity.
- User Experience Improvement: High swap fees can deter users, especially those trading smaller amounts, from utilizing Magicswap. Lowering fees would improve the user experience and make the platform more accessible to a broader range of traders, including retail investors.
- Liquidity Incentive: Reduced fees can incentivize liquidity providers to stake their assets on Magicswap, leading to deeper liquidity pools. Deeper liquidity enhances price stability and reduces slippage, benefiting all traders on the platform.
- Community Satisfaction: Addressing the community’s concerns about high swap fees demonstrates TreasureDAO’s responsiveness to user feedback and commitment to creating a user-centric decentralized ecosystem. This can foster greater trust and loyalty among community members.
- Long-Term Sustainability: While high fees may generate short-term revenue, they could hinder Magicswap’s long-term growth potential by limiting user adoption and ecosystem expansion. Lowering fees can support sustainable growth and ensure Magicswap’s viability in the competitive DEX landscape.
- Network Effects: By reducing barriers to entry, lower swap fees can amplify network effects, attracting more users, developers, and projects to integrate with Magicswap. This positive feedback loop can accelerate the platform’s growth and establish it as a leading DEX in the decentralized finance (DeFi) space.
- Alignment with DeFi Principles: Decentralized finance aims to democratize access to financial services and reduce reliance on traditional intermediaries. Lowering swap fees aligns with these principles by making DeFi more inclusive and empowering a broader spectrum of participants to engage in decentralized trading and liquidity provision.
Proposa:
Adjust the fee structure on Magicswap to enhance competitiveness while continuing to incentivize builders to select Magicswap for their liquidity provision needs. The proposed fee structure is as follows:
Base Fee
Reduce the base swap fee from 3% to 0.5%, aligning more closely to the industry standard set by Sushiswap and the mid-tier fee tier of Uniswap. This reduction significantly lowers the barrier for entry for traders and encourages higher trading volumes on Magicswap.
Distribution of Fees
- Liquidity Providers: Allocate 0.4% of the swap fee to liquidity providers, ensuring they continue to receive a substantial portion of the fees generated by their provided liquidity. This aligns with the fee distribution model of Sushiswap and provides an attractive incentive for liquidity provision on Magicswap.
- Community Gamification Fund: Dedicate 0.05% of the swap fee to the Community Gamification Fund, supporting community engagement initiatives and incentivizing active participation in the Magicswap ecosystem.
- Community Ecosystem Fund: Allocate 0.05% of the swap fee to the Community Ecosystem Fund, which will be used to fund development projects, partnerships, and other ecosystem-building activities. This ensures sustainable growth and innovation within the Magicswap ecosystem.
This fee structure maintains a competitive edge for Magicswap while continuing to incentivize liquidity providers and builders to choose Magicswap for their liquidity needs.
Voting Period
Voting commences now, ending Friday, March 8, 2024 at 17:40 UTC (unix timestamp: 1709919600 - copy and paste here to see local time).
Voting Eligibility
- The following holders of MAGIC can vote:
- (A) Stakers in the Harvesters or the TreasureDAO Governance Staking contract, and holders of MAGIC-ETH SLP on Arbitrum One.
- (B) Holders of all listed Magicswap LP tokens and stakers in Beefy’s mooSushiMAGIC-ETH vault or Balancer’s 50% MAGIC / 50% USDC weighted pool.
- gMAGIC will be calculated on a 1:1 basis in (A) and 0.5 ratio in (B) (50% of MAGIC amount)
