The following thread aims to bootstrap the implementation of a service fee strategy on the Aada Finance protocol. The protocol will fund a treasury to support the project and incentivize the $AADA token holders by introducing a principal platform fee on collected loan repayments and liquidations.
Ensuring a high retention level for the $AADA token holders is of utmost importance for Aada Finance. In this regard, introducing a service fee will complement a fully-fledged buyback strategy for $AADA.
The collected ADA from platform fees will be used to:
Use 50% of the profit to buy $AADA on the open market;
Store all tokens in a DAO treasury to create scarcity;
Incentivize the community to hold onto their tokens and thus increase the demand for $AADA.
That way, the treasury would help maintain the security and growth of the dApp. Token holders will receive a portion of the collected fees and have a say in deciding what to do with the rest of the treasury - distribute it, fund the protocol development, marketing, or other. Ultimately, the strategy will promote the organic community growth of long-term supporters and create more use cases for $AADA.
a. 2% fee on collected interest from all repaid and liquidated loans.
b. Plus a linear 1 ADA fee from the borrower when creating a request (to be refunded if the request is canceled)
c. And a 1 ADA fee from the lender when withdrawing.
Convert 50% of the collected ADA to AADA and deposit all tokens in a treasury.
Airdrop the accumulated ADA to all AADA token holders on a monthly basis. The reward amounts should be determined by the percentage of tokens held based on the circulating token supply.
Note: Display the data from a specific user perspective. i.e., Show only relevant information.
Example: If a borrower is trying to take a 1000 ADA loan with a 7% interest. The lender should see a 1000 ADA loan with a 6.86% at the app’s Market page since he/she is making a decision based on the earned interest ( Total interest - fees). And show accumulated interest based on the 6.86% number on the lender’s Dashboard ( Since that’s what is relevant to the lender).
All details (including fees) should still be visible at the NFT bond check.
The team has to provide monthly statistics on the amount of ADA collected and burned, the amount of AADA bought (price, market, market fees, etc.), and stored and distributed tokens (if yes).
The community’s commitment to ensuring the protocol’s safety and growth is crucial for every DeFi platform. For this reason, it’s essential to implement a proper method for sustainable funding and increase the $AADA token’s utility. Besides, the buyback incentive will keep the circulating supply low and the demand high, attracting more users and investors.
Voting should be considered approved/disproved only if 10% of the circulating supply participates in the voting. The 10% of circulating supply is ~1.05M AADA.
Community members’ proposals (Alexander Legolas, Decaf & others) on implementing protocol fees and profit sharing.
Other References (Protocol Fees):
Swaps - 0.3% to the Liquidity Provider (LP) Fee + 2% Batcher Fee + Network Fee
Withdraw from CDP - 2% + Network Fee
Stability Pool Account Adjustment/Rewards Withdrawal Fee - 1 ADA + Network Fee
Open New CDP - 2 ADA + Network Fee
Create Stability Pool Account - 5 ADA + Network Fee
Borrowing/Lending - 1% Principal Fee with a minimum threshold of 4 ADA + Network Fee
Voting should be considered approved/disapproved only if 10% of the circulating supply is used in the voting. The 10% of circulating supply is ~1.05M AADA.
Proposal Reviewers and Contributors: Dado, Alexander Legolas, Mazen Khaddaj, neophyte, Decaf, Trainacomin