VNP-19 Change parameter trading fee rate

🗳️ Governance Proposals Network Parameter Proposals
1

Title: Change parameter trading fee rate

Description:

With the passage of vnp-12, the transaction fee decreased to 0.045%, but this is still considered high.

Trading on Vega Protocol is very disappointing. Liquidity is very low. And the futures prices traded on the Vega Protocol are different from the real market. (Based on December settlement futures)

The Vega Protocol order book has very large gaps, and when a market order is submitted, very large slippage occurs. When I submit a maker order, LPs do not actively take my order.

If protocol provide these trading experiences, traders will not want to trade on Vega Protocol. Additionally, transaction fees on the Vega Protocol are believed to be very high.

I would like to first lower the taker fee at least to 0.035%.

It is believed that the decline in taker fees can also actively encourage taking orders from LPs. Therefore, I propose a plan to lower the infrastructureFee to 0.02% in order to lower the take fee to 0.035%.

  • Lowering the infrastructureFee will not reduce the profits of validators or stakers. Miners will make more volume.
{
   "rationale": {
     "description": ""
   },
   "terms": {
     "updateNetworkParameter": {
       "changes": {
         "key": "market.fee.factors.infrastructureFee",
         "value": "0.0002"
       }
     },
    "closingTimestamp":, 1699612163
     "enactmentTimestamp": 1700216963
   }
}
2

Hi @olympus I don’t think this change is right at this point in time. The latest release allows for trading discounts to be applied for a number of reasons (referring other traders, accruing trading volume over 30 days, etc). I believe that these changes provide a good opportunity for traders to access lower fees and 4.5bps is a good starting point on which to apply further discounts.

The taker fee is similarly high for traders with “no VIP” status on CEXs and other DEXs. I think if we lower the base fee to 3.5bps, then the fees on Vega will be too low to support the operation of the network after the various discounts take effect.

Furthermore, the infrastructure fee is used to pay stakers and validators, and as I understand it the validators are not making a huge amount with the current parameters and volume levels.

If we decided to lower the infrastructure portion of the fee, I would want to see a larger portion of the fee go to the validators and less to stakers at the same time, ensuring that the validators do not earn less as a result of this change. Currently the validator commission is 20%. A reduction in the infra fee of 33% would require the validator commission to increase to ~40% in my view. This is not a change I would be opposed to, but it’s an unnecessary change given the new features we can use to provide loyal traders with a discount on their fees while keeping the base fee at 4.5bps.

In summary, I think we need to use the new features to create discount tiers onchain instead of lowering the base fee. More information about the discounts we can now setup is available here: https://github.com/vegaprotocol/specs/blob/master/protocol/0084-VDPR-volume_discount_program.md

And this spec provides details about the referral program, which I believe we should also activate ASAP: https://github.com/vegaprotocol/specs/blob/master/protocol/0083-RFPR-on_chain_referral_program.md

2 Likes
3

Couldn’t have put it better myself.

We will fully support any upcoming proposals for the creation of discount tiers and activation of the referral program.

4

First time hearing about discount tiers. That’s interesting.