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.
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
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.
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.
I am in favor, too.