Reduce Trading Fee to Gain Market Share



Swerve’s main competition is Curve. Curve charges a 0.04% trading fee while Swerve charges a 0.03% trading fee. But when comparing exchange rates Curve still displays better rates for the highest volume pairs (even for small swaps ~$1000).

I propose we reduce the trading fee to 0.02% and give 100% of the trading fee to the treasury. Trading fee APY is insignificant for LPs anyway. This will allow Swerve to have a strong competitive advantage over Curve which will start drawing significant volume in. Once volume starts growing, and multiple Swerve pools exist, token price will rise as people see Swerve as a legit competitor. Once Swerve has carved out market share, we can increase the fees and offer fees to LPs.

This change will help the treasury grow even faster while also gaining market share over Curve.

As discussed in the governance channel, the current priority for Swerve Finance is to have a functional treasury capable of funding all short and medium-term dev efforts. This proposal furthers the initiative to help achieve that goal.

As stated in previous proposals, the fee redirected to the treasury will be gradually lowered once it has reached an optimum level.

The trading fee can also be raised once market share has reached a satisfactory level.


Current Specs

Trading fee: 0.03%
Treasury: 0.015%
LPs: 0.015%

Proposed Specs

Trading fee: 0.02%
Treasury: 0.02%
LPs: 0.00%

Next Steps

The community should discuss this proposal to determine if this should be the way forward. The goal with this change is to help gain market share versus Curve while simultaneously growing the treasury more quickly. The only sacrifice here is the miniscule APY that LPs are currently receiving for their trading fees (that can easily be added back once market share is gained and/or the treasury is at an optimum level). The vast majority of LP-yield comes from SWRV rewards anyway. If there is community support we should push forward an official proposal.

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