Overview: Indigo is a decentralized platform built on the Cardano blockchain that enables users to create and trade synthetic assets. Currently, the platform does not generate any revenue, which makes it challenging to pay for its maintenance and development. Therefore, the proposal aims to generate revenue to increase the treasury and support the continued development of Indigo.
Proposal: There are different options to generate revenue for the Indigo platform, such as redirecting a portion of the withdrawal fee, implementing a transaction fee, or creating a new revenue stream. We need to narrow down these options and determine which one is the best to propose to a temperature check poll.
Option 1: Half of the 2% withdrawal fee to the DAO treasury: This option suggests redirecting half of the 2% withdrawal fee charged to users on the Indigo platform to the DAO treasury. The remaining 1% will be redistributed to governance stakers. This approach provides a consistent revenue stream for the DAO treasury, while still incentivizing governance stakers.
Option 2: Increase the withdrawal fee to 3% and allocate 1% to the DAO treasury: This option proposes increasing the withdrawal fee from 2% to 3%, with 1% going to the DAO treasury, and the remaining 2% being redistributed to governance stakers. This option generates more revenue for the DAO treasury and maintains higher incentives for governance stakers.
Option 3: Implement a transaction fee of 1-2 ada and allocate it to the DAO treasury: This option proposes adding a transaction fee for every trade executed on the Indigo platform, which would be redirected to the DAO treasury. This option has the potential to generate significant revenue, but it could also discourage users from trading on the platform.
Conclusion: To determine the best option, we need to consider the trade-offs between generating revenue and maintaining user incentives. Option 1 and Option 2 provide consistent revenue streams and still incentivize governance stakers. Option 3 has the potential to generate significant revenue, but it could also discourage users from trading on the platform. We propose conducting a temperature check poll to gauge the community’s opinion on the best option for Indigo.
I would opt for the one generating more revenues as ultimately stakers would also get higher rewards along with higher revenues. The most important is indeed not how more INDY stakers can have but how sustainable the Indigo model can be. Option 1 looks more appropriate. No change at current fee structure, less rewards short term for stakers. Still rewards would generate higher return that what currently gets from other Cardano pools.
I agree option 1 is better than 2. However option 3 still seems very promising. the goal would be to keep that fee nominal. As the price of ada increases we could vote to adjust the fee. another option to look into might be to have the fee at a set USD value, maybe 25 cents, and the ada value will be calculated at the time of each transaction.
Option 1 would indirectly devalue the token, losing 50% of possible gains from indigo is too much. I would opt for option 2, increasing the commissions by 1% does not change anything for those who close a CDP considering that it can last a very long time and especially compared to variable protocols that have an APY of 4/5%
I would try to not implement any fee on the swaps for the dex aggregator as other mentioned already, but I think both of the options 1 and 2 are a good start to find revenues for the DAO, I like option 1 the most.
True, I did not see this aspect actually! What if we implement then a mix of both options to try to not impact INDY and also stay low in withdrawal fees so to be the most competitive now that the protocol is getting a lot of attention and traction?
To me, there are two proposals that have been presented.
Distribute a specific relativ amount of all $ADA fees to the DAO treasury.
I am convinced that it’s a good option to pay a defined percentage between 10% and 50% of all fees paid in $ADA to the DAO.
I am certain that we should start with a lower percentage, as a strong $INDY token will increase the usage of the protocol and thus more fees will be paid. The $ADA price is pretty low at the moment and the usage of the protocol is also low. Let’s see how this works out for 6 months and reconsider if it needs adjustment.
The highest priority for us should be to make the protocol attractive with sustainable fees. Increase usage!
Charge a fee for the dex aggregator
I would suggest to open another thread it’s a different topic.
What about a smaller % from all 3? Something like .33% from each or .5% from two of the proposals. This would also help to not discourage doing one thing on the platform over another and would seem fair to all users as some only use one part of the platform. If anything, we want to encourage liquidity and help the platform to grow.
Firstly I encourage everyone to run the numbers on the above proposal options 1 and 2. While 1% can seem like a low number, I think it is way to high not only now but especially in the future.
Option 3 seems a more balanced approach but it would be great to understand the revenue potential which seems quite low considering around 1000 CDPs are open at the moment.
That being said, here is already a way for the DAO to earn part of the 2% CDP closing fee:
The DAO can stake some of their tokens in the INDY protocol. Due to the DAO not participating in governance only ADA rewards would be farmed.
We as DAO Members should vote on the token allocation to Indigo governance staking and be mindful about crowding out effects. This approach would scale well with the protocol and moreover would not distort the initial assumptions of revenue of the INDY token when staked or cost of using the protocol.
I dont prefer any particular option over another but i would prefer to make the fee increases smaller than whats proposed to encourage continued adoption and use. Any small fee increases/additions should he directed to the dao but lets start small and see how it goes. Also i think a small fee for opening a cdp is warranted.
Why dont we remove the PoL that the DAO owns of ada/indy on Sundae, consolidate it all to Minswap.
Then lock it up in the Indy farm and start farming $min and ada.
Ada earned can be keep in the DAO wallet and min farmed can be sold and given to Indigo Labs.
I’ve come to agree that 1% may be too high. What are yout thoughts about changing the withdrawal fee to 2.25%. 1.75% will go to Indy Stakers, 0.5% will go to the treasury.
The revenue potential for 3 is significant as it encompasses all transactions on the platform. Pay the fee when you open the CDP, deposit into SP, collect Indy rewards, deposit Indy to governance, etc. Every 5 days I think most users are performing at least two transactions.
Unfortunatly we cannot yet stake our Indy as it is locked in a contract that will take months of development to unlock. While I agree that would be a great avenue to explore once those funds are unlocked I think the DAO needs to look into other revenue generating strategies that might be implemented quicker. I’m not trying to get a perfect solution that will be implemented forever, just something that can get us by until other strategies are developed.
I suppose it will be one of their priorities to develop that once they get a contract. Hopefully @EC_ATX , @CodyCodes or some other team members could clarify what their developmental intentions and capabilities are. It’s really hard for the DAO to do anything without knowing what we can do.