5th option… keep the fees earned in the native token it was earned in. ie - if fee earned in MKR, keep the fee in MKR. Place these assets in a pool and distribute a % weight token where users can deposit the token into the contract to withdrawal their share.
This allows through diversification of tokens in a model similar to Berkshire Hathaway.
Earning fees in this manner means the strongest tokens in the Ethereum ecosystem are earned. And in a way these tokens that rise from small cap, to mid cap, to large cap will outperform the rest of the portfolio… And UNI holders will benefit as a result.
Burns don’t work as it creates a lack of velocity, lack of liquidity… Earning fees in this manner makes the UNI token a yield generator instrument where the user is actually earning the Ethereum ecosystem in a sense.
Compound interest has been described by Albert Einstein as “The most powerful force in the universe”
Compound interest is a fundamental component of wealth creation.
In the interest of every UNI holder especially the small ones are buying back and burning UNI tokens as that approach will maximize profit and create compounding wealth effect.
That is exactly what the most successful investor Warren Buffett is doing, reinvesting all profits, buying back shares and not paying dividends.
From a technical standpoint, only the first option is actually viable IMO. The rest require either breakthroughs in censorship resistance, the introduction of centralized points of failure, or huge amounts of engineering effort.
A periodic uniform price multi-unit auction of withdraw rights to all accumulated fees is the only pragmatic solution I have seen or been able to come up with. Any unclaimed fees would be rolled over to the next auction.
Any conversation about how we should distribute fees should come with a complete proposal on how to actually achieve the goal, because this problem is much harder than it sounds once you get to actually implementing something.
Everyday at random time, all Uni fees collected until that time should start conversion to UNI in order from highest to lowest.
After conversion is done, automatic sending all purchased tokens to burn address.
We should just straight up copy sushis model for fee distribution, they have a second version coming out soon that utilizes k3pr to collect the revenue from each pool. Its been working great and will be flawless in this next iteration.
I love(d) this conversation. Is this something that we can have a bounty/grant around to get a synopsis of the pros/cons of each of these options? I would love a consolidated summary of these points to supplement a vote on further investment.
Very interesting discussion, the option to switch on the fee should be available from mid march according to the 180 day time lock.
After reading through all these messages, I see the reasons not to buy and burn but to instead distribute X to all those that stake in the UNI voting contract for the following reasons;
Incentivises staking in the voting mechanism rather than just passive holding (As only those that register to vote get the benefits from fee distribution, encouraging more to vote)
Creates a situation where there is a P/E price of the token. (Based on $5 Uni, 400M volume and 100M tokens voting that’s about 6.8)
Similar to point 1, encourages user not to store there Uni on centralised exchanges. (As they’d be missing out on these rewards, reducing that attack vector)
Buy & burn, doesn’t properly achieve any of these goals.
The question then becomes what token should be
distributed?
I see 5 reasonable choices in my opinion.
ETH, DAI, UNI, (ETH/UNI) LP, (DAI/UNI) LP
