I personally don’t think that raising the origination fees is the best solution as if was mentioned in an earlier post that it may deter short-term borrowers. Instead I think it may be better to introduce an interest rate of let’s say 1% p.a.
I do like the idea of possibly introducing a benefit of a 0% origination fee for wallets staking more than a certain amount of Baln as a reward level (similar concept to the Nexo token). This would also provide an added incentive for people to buy and stake baln. Not sure if it’s possible technically?
@McLucks I strongly disagree with the idea of 0% origination fees. That would mean a substantial amount of network fees is not given to the BALN stakers. When the price of ICX goes up, more people take loans, and that helps in the network fees more so than trading on Balanced. If anything, we should increase it to a larger number and then decrease it based on the situations. It seems like most of us here agree that its cheap to take out a loan without even considering the current incentives (daily BALN allocation).
Yeah I actually agree with you regarding offering a 0% origination fee but I don’t think we should increase the origination fee. It disincentivizes shorter term loans.
I think introducing an interest rate is a better idea. So a 1%-2% p.a interest rate would still be a super attractive proposition. And then allow a higher LTV to 45%~50%.
@benny_options agreed with @McLucks if we can change to introduce interest rate instead may be future? for short term we already too attractive for ppl to join in balance. just need to promote in DEFI space. make big advertisement
I really like this suggestion. We need to incentivise users to stake BALN for example:
Users with x amount of BALN pay the 1% origination fee (Decent amount of BALN staked)
Users with x amount of BALN pay 1.5% origination fee (Low Amount of BALN staked)
Users with no BALN staked pay the 1.75% origination fee
Something like the above would nice good, almost how other platforms use different types of ‘memberships’ to reward holders and stakers of the native token.
New users would have to pay increased origination fees but if they are serious about the platform and want to reduce cost, they could buy a large amount of BALN to stake.
Anyway, just a thought - I will bring up other suggestions in the future to incentivise BALN token holders/ stakers. We need to drive more reasons to stake BALN and reward the people that do so!
Agree with your idea. Good. Should be the way to join the VIP club, you have premier or platinum status ( decent of BALN), gold ( second tier) and silver ( third class) and blue ( normal) the lower origination fee applied for platinum and accordingly. I think that is really awesome. Provide more utilities for staking Baln
Increasing the origination fee for borrowers should be treated the same way as reducing or removing BALN rewards for borrowing. In my opinion both should only be considered once there is more utility for BnUSD. Simply having it as collateral option on OMM, for example, would be enough to justify making the proposed changes.
I also support the idea of having tiers based on amount of BALN staked, granting lower fees.
Another option in terms of adjusting origination fees is having different fees per collateral type in the future as an incentive to use ICX. ICX can have lower fees compared to other collateral types. Overall I think we can raise origination fees a small amount (maybe up to 1.15%) based on the feedback I’ve gotten here. I suggest we vote on this after the decision is made on BALN rewards allocations (initial proposal coming later this week)
Low fees is being BALANCED. Attracts all walks of life to OUR BANK. This bank is intended for use for everyone when BTP and ICON2.0 goes live. People here wanting to increase the fee are only thinking of the market right now. If you believe this project is multi-billion dollars worth than keep the economics healthy and attractive as per the monicker, be balanced. You want quick paydays right now or do you want to hold onto a future monster while attracting every type of user base. Whales and shrimps like low fees for their holdings.
I disagree and my stand still stands. If a user can earn 80%+ APY just by borrowing, it would make sense to increase the origination fees. Even if the incentive is reduced to 10%+, there will still be borrowers because of the incentives given. I’m excited to see the new proposal on the emission distribution of BALN proposal by @benny_options in the coming days.
So you want this because people are being rewarded a difference that covers beyond the fee? This is crypto, and decentralisation to me is to reward people as much as possible.
More importantly, by your reasoning we would have to raise another proposal after BALN is distributed to lower fees because no one is getting rewarded anymore?
If attracting new users Is the priority, is making them pay a higher origination fee than current users with BALN, the best way to do that ? Companies give discounts to new users to entice them to jump onboard, not charge them more.
would you feel like it’s a good idea to move over to balanced, pay a lumpsum out of pocket, to then receive the lower origination fee ?
Just to make sure we’re on the same page, everybody pays all the same fees all the time. There’s no preferential treatment for BALN holders. I understand that earlier users paid lower fees if this proposal passes, so if that’s what you meant, then we’re on the same page.
Having said that, borrower rewards are still considerably higher than the fee paid. APY is currently sitting at ~70%, meaning Balanced pays you 70% annually to borrow money based on current BALN price and current BALN inflation.
Even if we cut that in half, they would still get ~40x more money in terms of rewards than what they paid on the fee over the course of a year. I don’t think new users will be looking at historical data before using balanced, I think they’ll see that they are getting paid to borrow money and don’t need to even pay an interest rate (balanced has 0% ongoing interest rates). Personally I am not concerned about a small increase in origination fees and its effect on user growth - there will be other initiatives around attracting new users, such as new collateral types.
I believe we are on the same page @benny_options, unless I have misunderstood. This was in reply to some suggestions in some other replies of having a tiered origination fee, dependant on the amount of BALN staked, which I personally don’t believe is a great idea.
What will the increase accomplish? The 1% currently is paid out to liquidity providers and baln stakers right? Or how is it divided, and where are the funds used?
I don’t see any point in raising the origination fee, i would vote no without a good reason to vote yet other than “more fees for stakers and liquidity providers”
As far as rewarding borrowers; as far as i understand it the timeline will reduce rewards as less baln is issued year after year; although the price of baln is expected to increase to compensate as well.
regarding the “interest rate” being added instead of up “points” origination fee; I strongly oppose. if people want to borrow money for short term then that is what OMM is for.
Can I ask who any other stakeholders you have in mind? Only people with BALN in LP and staked BALN can vote (and receive network fees), so I am a bit confused at who else it should help?
I think more fees for stakeholders is always the goal, just more ‘net’ fees, and if a lower origination fee ends in more total fees, then all the better. But is there any other stakeholder we are missing in this equation?
A good point by @Snowonseas. The developers need to be incentivized as well, and their interests need to be aligned with the users. I say this having no idea of how their compensation is structured, but something to keep in mind.
A slight increase of .15 percentage points is something I support.
I think development is funded (maybe?) through the Balanced Worker Tokens. 20% of minted BALN goes to Balanced Worker Tokens.
Balanced worker tokens (BALW) provide continued incentives to develop the platform and are explained in more detail in the Governance section.
Balanced worker tokens
Balanced worker tokens are entitled to a certain portion of the daily Balance Token inflation. At launch, and unless Balance Token holders vote otherwise, Balanced worker tokens will be entitled to 20% of the Balance Token inflation.
Balanced worker tokens can be transferred two ways: either by the holders of BALW, or via a vote by Balance Token holders. There will only be 100 BALW, with the initial allocation split between the initial workers: ICX Station, ICONOsphere, PARROT9, Mousebelt, and ICON DAO.