Fee switch + New Pool subsidy

1

Think we need more discussion regarding the Fee Switch, but in the context of what it can bring to Uniswap as a whole.

One purpose of the fees would be to subsidize new pool creation. With v3, creating a new pool yesterday was 0.33 ETH. This is a large upfront cost for the initial pool creator to bear; however, this could be recouped.

By turning on Fees, we could allow for the first 0.33 ETH worth of fees to be used to payback the pool creator.

Benefits:

  1. Eliminates barrier to entry for new pools
  2. By using the fee accruals of that specific pool, it requires activity and prevents random 0 liquidity pools being spun up to game the system
  3. Allows a broad diversity of pools to be created which would otherwise not exist
  4. Fee accrual for UNI holders

It’s about time to give this serious thought and take action as a governance community.

Thoughts?

1 Like
2

I don’t like this idea for multiple reasons :

Eliminates barrier to entry for new pools

I think it’s the reverse, uniswap isn’t begging for new pools. V2 was already at 35k unique pools. I think that it’s users creating pools that should be thankfull to uniswap for providing this service for free, listing on a centralised exchange is really expensive.

By using the fee accruals of that specific pool, it requires activity and prevents random 0 liquidity pools being spun up to game the system

someone could trade enough money with himself, allowing to bypass this restriction. (and if you think yes but he would need to do lots of swaps, no flash swaps exists, they allows you to loan any amount of tokens without collateral (you just need to do that in 1 TX))

Allows a broad diversity of pools to be created which would otherwise not exist

if you are not capable to pay the fee to create a pool you will likely not provide enough liquidity for the pool to be usefull anyway. You need something like ~130k$ on V2 to allows to trade 1k$ with 3% of price impact (I havn’t made tho calculation on V3 yet).

Fee accrual for UNI holders

is this a goal ? I think it have been stated multiple time in other discussion here that this is too soon and not needed.

I see one more thing :
It’s not possible to implement such thing decentralised at the moment :
The fee paid by users is dependent of the gas price. However there is no way for us to query the gas price (chainlink doesn’t count, it’s centralised) we could refund a fix amount but depending of the gas fee this will either be too much (incentivising users to cheat the system) or too little (mostly useless), gas fee varies wildly also, it’s normal to see some fees at 200 Gwei from time to time, and as low as ~20 Gwei.

We would need EIP-1559 (setting the gas price according to a consensus, not arbitrarly) and EIP-3198 (querrying the base fee introduced by EIP-1559) to refund users fairly in a decentralised maner (both are schedulled in july).

1 Like
3

Thanks.
Regarding the wash trading part, if a user creates a pool themselves and churns it for the fees, then they’re paying for it themselves still.
I view the pool creation as a cost borne by the creator, which benefits others. So someone may want to create a small pool, for say $10k. A $1300 fee to create makes it prohibitive upfront but if fees go towards the pool creator they would get reimbursed.
And I think it’s time for revenue accrual to the protocol, in my view. But I suppose that’s a much larger topic at hand.

4

10k$ is not enough to make a good pool.
Either you would need to concentrate a lot but any price movement would kill your pool. Or you don’t concentrate much and have atrocious price impact for any serious attempt of swapping.
I don’t see any reason to subsitise a pool that is gonna be unusable since it doesn’t have enough liquidity. If you are able to provide something like 100k$ or let’s say 50k$ if you concentrate, 1k3$ of fees is likely not a lot for you.

5

Maybe “subsidy” wasn’t the best, and it’s really just the pool paying fees to UNI and once those accrued fees = the gas for Pool creation, payback occurs. So it’d still require volume.
Anyways, more I think on this once the bull of pools are set, any incremental legit project can itself afford the create a pool. So after a couple weeks of v3, may be unnecessary anyway

6

Uniswap if it doesn’t make the fee swap will eventually lose out competitively to other DEXs… at least for its native token. What good is holding if there are no long term benefits besides governance votes? The same protocol could be forked with fees on and then you’ll have another vampire attack