RGP-1: Ribbon Vaults Fee Recipient

Authors

@julian

Summary

Proposal to Change the feeRecipient of the Ribbon Vaults to the vault address itself, so that people who remain in the vaults will benefit from people who withdraw from the vault.

Background

Currently, the Ribbon vaults have a 0.5% exit fee. When depositors withdraw from the vault, this fee gets charged and gets sent to the vault’s feeRecipient address. This feeRecipient is a variable that can be changed to any arbitrary address, including the vault address itself.

If the feeRecipient variable is set to the vault’s own address, this exit fee will be distributed between users who remain in the vault. This incentivizes users to remain in the vault for longer periods of time.

Abstract

I propose two changes:
  1. Set the feeRecipient of Ribbon’s 3 vaults (ETH Covered Call, WBTC Covered Call, ETH Put Selling) to their own respective vault addresses.

  2. Distribute the fees collected so far in the current feeRecipient address to the vaults, as a one-time reward to depositors.

At the time of writing, the current feeRecipient address has collected approximately in fees:

  • 23.3 WETH
  • 18,900 USDC
  • 0.45 WBTC

Assuming that there are no new deposits over the next few days, this one-time distribution will generate an additional yield of:

  • ~0.5% to ETH Theta Vault Depositors
  • ~0.18% to WBTC Theta Vault Depositors
  • ~0.27% to ETH Put Selling Vault Depositors

Specification

To execute this proposal, the Ribbon Manager Multisig will execute the following transactions:

Change Fee Recipient:

Distribute Fees:

  • transfer all WETH balance from 0x6adEB4FDdB63F08E03d6f5b9f653bE8b65341B35 to ETH Theta Vault
  • transfer all WBTC balance from 0x6adEB4FDdB63F08E03d6f5b9f653bE8b65341B35 to WBTC Theta Vault
  • transfer all USDC balance from 0x6adEB4FDdB63F08E03d6f5b9f653bE8b65341B35 to ETH Put Selling Vault

Vote

Please vote on Snapshot here:

https://snapshot.org/#/rbn.eth/proposal/QmQoNoaJMxYfdZgDip27GUPkovJnzCvJmuW7SkhGGEZWL5

19 Likes

Strongly agree, at the long run vault favor longer staker

2 Likes

100% agree, incentivizes the strong hands in the vault. I will be working to write tests for this proposal

3 Likes

Would also strongly agree

Def agree as a long term staker

I strongly agree – I like encouraging long term stakers

2 Likes

Youshallpass
100%

1 Like

Legit thought this was the case anyhow.

Support

strongly agree, this is a great start to further incentivizing long term deposits

Playing devil’s advocate:

Do you feel the incentive to stay in the pool is not already enough? / There needs to be further incentivization?

I’m not 100% sure.

Other questions include whether it is a good thing to incentivize long term deposits and whether token stakeholders should benefit from fees vs. LP’s.

If all 3 of:

  1. Long term deposits (and therefore reduced fee generation) are actually good
  2. Fee generation is not going to stakeholders
  3. There isn’t enough current incentive with the withdrawal fee

It’d make sense to go forward with this proposal.

1 Like

I am unconvinced that this will change the incentives of staying long terms vs short term in a vault. It certainly increases the apy, making the vault a more attractive investment, but that is independent of holding horizon. I am not against increasing the apy of a vault, but I think it would be a good idea that a tiny part of it goes to the treasury making $RBN a fee generating protocol. How is the $RBN team currently funded? Were private funds raised? Anyone got the details? If the developers have enough runway the fees attributed to the protocol can be delayed indeed

1st proposal and it is fire! 100% agree as a long term depositor.

Might be quite interesting to track the impact on fees collected with this change: and whether this would ultimately contribute to the notion of keeping funds locked in situations where strategies can’t be deployed on account of the scale of the capital contributed - or in cases where the better choice for investors might be to draw down contributed capital in case of one-sided market swings. The other component to see if whether there could be other uses of this capital towards some form of a reserve, as suggested earlier - or even put to use in bootstrapping more capacity.

That being said - this is a great time and place to run these experiments and see what the ultimate outcome might look like; and generally very inclined to see long-term capital incentivised especially as Ribbon looks scale and grow. Personally also stoked to see returns as a depositor grow - so this looks like a wonderful starting point for Ribbon governance to kick off!

Investors are looking for cash flow producing assets. If we choose to send fees to LPs they won’t show up as protocol revenue in things like Token Terminal. As long as APY > staking I don’t see why the 0.5% fee back to LPs is necessary. If we choose to send this back to the token holders it will make the token more valuable.

The argument is that we could change this in the future to pull fees back to the DAO but I think if we went that route LPs would be upset and then withdrawal their liquidity.

1 Like

I am in favour of this. It helps incentive people to stay in the vault. This, and RBN token incentives should help distribute losses as well as gains to those brave ribboners who choose to stay.

Happy to agree in this instance, however would probably be a good idea to incentivise the vault manager by having a portion of the exit fee paid towards them. The sum of the current vault now might be small so 0.5% may not seem a lot but if thinking long term, when the vault increases in size it may be a lot harder to implement fee structure changes.

This incentivizes long term behavior. Strongly agree.

Strongly agree with the proposal to incentivize long term holders in each vault. But I think this is also a good point

How can $RBN become a fee generating token and what are some other ways that revenue can be generated other than withdraw fees…

Agree, though I hope that future methods of generating non option writing revenue are at least partially accrued to the treasury.

I wasn’t planning to withdraw anyways :smiley: I am in favor, too.