SIP-203: Volume Source Fee

Summary

There are now a number of protocols integrating with Synthetix on Optimism, this trend is only expected to accelerate this year. However, the lack of sustainable revenue from these integrations is an impediment to growth. Adding a Source Fee at the protocol level will allow integrators to capture fees from the volume they route through Synthetix.

Abstract

An optional source fee will be added as a transaction parameter that can be passed from any front-end to the Synthetix Exchange Contracts.

Motivation

The current approach to Synthetix ecosystem partners is to leverage the volume program which pays out monthly rewards in SNX to integrators based on the volume generated. The issue with this program is that it does not scale linearly with volume so there is limited upside for integrators generating large volumes. By splitting the exchange fee into a Protocol Fee and Source Fee we can ensure that the upfront integration effort is worthwhile for potential ecosystem partners. This will create a reliance on revenue generated via a Synthetix integration and further reinforce the reliance of these protocols on Synthetix volume creating strongly aligned incentives throughout the ecosystem.

Specification

Overview

The volume source fee will be applied in addition to any other fees collected by the protocol. During an exchange (including atomic exchanges and those occuring in futures markets), the system will check for a fee associated with the volume partner code (VPC) passed in with the transaction, collect the fee (in sUSD), and credit the balance associated with this VPC.

Registering a VPC will be permissionless. Each VPC will have an owner associated with it. The owner can update the fee rate and withdraw the collected fees. The fee rate cannot exceed a maximum value, configured via SCCP. The owner can nominate a new owner for the VPC, and the nominee can accept ownership of the VPC.

This system will operate seperately on each network.

Rationale

The rationale for implementing this mechanism at the Exchange Contract level is to ensure that the code is audited and secure and that users of front-ends that implement this functionality can be confident in the execution of the transaction. Additionally the reasoning behind making this fee additive and configurable by the Volume Partner is that this creates two dimesions of competition, one based on net fees and another based on the UX of the implementation.

Configurable Values (Via SCCP)

MaxVolumePartnerFee - This is the maximum value allowed for the VPC’s fee rate.

Copyright

Copyright and related rights waived via CC0.