Overview
How do the fees work exactly at the stableswap pools? This is thoroughly answered in the Synapse docs, please take a look before reading the proposal:
Synapse documentation
My review of the competitors fees for using a bridge showed that the bridge era has only just began, and there's no "standard", at least for bridging stable assets.
The biggest and probably the oldest existing bridge is Ren, which is currently not supporting stables, but I heard it's being actively developed. Ren charges 0.15%, which I think can be used as a starting point.
Every nUSD metapool on chain other than mainnet (I will refer such chains as other chains) consists of nUSD (a LP token for ETH Synapse stable pool) and USD-LP (a LP token for local chain Synapse stable pool).
In my opinion, this metapool will work best if both assets are as stable as possible. That allows us to set the amplification parameter of the stable pool high, allowing very large nUSD <-> USD-LP swaps with almost no slippage.
But in order to do that, we need to control both nUSD and USD-LP virtual prices.
Proposal
Enable "interactive admin fee" for the ETH Nexus pool and the base stable pools on other chains. Update fees for swapping/bridging.
Enable following initial admin fees:
ETH/Arbitrum: 90%
BSC/Poly/Ava/Fantom: 100%
Reevaluate admin fee for each base pool on weekly basis based on the pool's LP virtual price (VP).
VP_new < min(VP_old, 1.0005) ===> decrease admin fee
VP_new > max(VP_old, 1.0005) ===> increase admin fee
Set following swap/bridging fees:
a. 0.03% = swap fee for the "base pools" (nUSD pool on ETH, USD-LP on other chains)
b. 0.04% = swap fee for metapools (nUSD pools on other chains).
c. 0.04% = bridge fee for nUSD from any chain to any chain (with the same minimum amount depending on the receiving chain as it now).
Reasoning
1, 2 (admin fees):
Initially, set a high admin fee for these pools. Keep track of the virtual price for the LP token. We want that price in the [1.0000 .. 1.0010] range (we don't want it to be less than 1 to avoid LP's IL). If virtual price is less than 1.0005 and is decreasing, decrease admin fee. If virtual price is over 1.0005 and is increasing, increase admin fee.
Current pools virtual price for reference:
ETH: 1.0010
BSC: 1.0025
Poly: 1.0018
Ava: 1.0058
Ftm: 1.0020
Arbi: 1.0008
ETH and Arbitrum pools are somewhat in the needed range, so the initial admin fee is lower. BSC/Poly/Avax/Fantom virtual price is higher, so the initial admin fee of 100% should return it to the needed range. The admin fee will be decreased once the VP is around 1.0005. If the proposal passes, there should be a discussion on how to establish a mechanism for distributing a part of the admin fees back to LPs to make sure their rewards are not paid 100% in SYN.
3 (swap/bridging fees):
This will lead to following total average USD* -> USD* swap fees (full math can be found in the docs, linked above):
- 0.03% for swaps on the same chain.
- 0.11% for swaps between ETH and other chain.
- 0.15% for swaps between two other chains.
This will also lead to fair fee distribution of nUSD-related fees:
- 0.04% to nUSD metapool on the starting chain
- 0.04% to nUSD metapool on the destination chain
- 0.04% to bridge smart contract
