cBridge Fee and Pricing Curve Change

Celer Improvement Proposals
#1

CIP-10: cBridge Fee and Pricing Curve Change

Summary

Change the cBridge fee schedule and the pricing curve in order to

  1. Boost more volume
  2. Accrue more fee earnings to CELR stakers and LPs
  3. Reduce slippage when users make transfers and reduce the impermanent loss for LPs
  4. Achieve a more balanced pool liquidity

Abstract

Improvements to the cBridge fee schedule and pricing curve

Motivation

While cBridge has seen significant growth in volume in the past few months, there are users complaining about the higher fees as compared to some other bridges, which leads to user loss. Moreover, some users suffer from slippage when making cross-chain transfers and LPs may also have an impermanent loss when their liquidity is moved across chains, which impedes the cBridge adoption among users and LPs.

After carefully analyzing the on-chain historical data traces for cBridge, we propose to change the cBridge fee schedule and the pricing curve parameters, in order to boost more volume, accrue more fee earnings, balance pool liquidity, and provide better experiences for users and LPs. We hope cBridge to become the primary go-to bridge for most of the cross-chain traffic.

Proposal

Adjust the percentage fee schedule such that the cBridge fee rates stay competitive for bluechip tokens (e.g., USDC, USDT, ETH) and high-TVL chains (BNB Chain, Polygon, Avalanche, Ethereum).

  • Specifically, reduce the fee rate to 0% for some of the most used bridge pairs such USDC/USDT/ETH transfers among BNB Chain/Polygon/Avalanche/Fantom.
  • For some of the less-used tokens and chains, the fee rate is slightly raised.
  • We expect the overall volume to increase.
  • We also expect the overall fee earnings to increase given the higher volume. In fact, the fee schedule is carefully simulated based on the historical cBridge data traces to make sure the overall fee earnings won’t be compromised even under the same volume as today.
  • The detailed fee rate change can be found in the following table

1600Ă—308 128 KB

Change the cross-chain pricing curve parameters such that there is 0 slippage for the majority of the cross-chain transfers.

Poll

  • Yes
  • No

0 voters

3 Likes
#2

Yes for this proposal! Adjusting the fee is definitely a plus to cBridge volume.

4 Likes
#3

I like it. I want Celer to dominate and this is how we do it.

4 Likes
#4

Celer will be the “Go-To” for major/minor asset movement, so lets as a community make the environment efficient and enjoyable for users and holders together !

3 Likes
#5

What is the percentage of users complaining that the fees are too high in cbridge. Is that the number one reason why we are lacking volume? You say you carefully reviewed on chain data but not what conclusions you got out of that can you offer these conclusions to validate the proposal?

Have you calculated what volume increase we need to get some fees as stakers. Can you offer a calculation on estimated volume increase and how that will compensate for the lack in fees? This proposal could effectively make staking not worth anymore if the generated fees will fall and thus influence the price of celr token as it is connected to the amount of fee it can get. The tokens you mentioned are the ones that generate the most fees for stakers.

My opninion is that the fees are low enough and this proposal would benefit users that bridge low amounts but will have a negative effect overall for the the stakers.

1 Like
#6

I agree it would probably lower the fees generated by staking short term, but long term this is 100% the right move.

If Celer becomes the #1 used bridge in crypto, you won’t need to worry about the token price and how much fees are being generated, I’ll be more than ever.

3 Likes
#7

Not sure I agree either. At least not without additional clarifying information.

  • What analysis was done and how was it performed?
  • Is this proposal a permanent change or temporary to help bootstrap more users?
  • How will people be incentivized to provide liquidity for these assets if they will be earning no fees?
  • Is it necessary to take the rewards to 0% or would it be sufficient to reduce them in half?
3 Likes
#8

I would like to see a proper calculation on this then. A proposal that only consist we feel doesn’t justify such a big change that has big consequences.

The prodigal says there was a investigation done in chain. Please provide said conclusions with numbers. Otherwise we could assume this proposal is only a benefit for people who want to bridge for free. What purpose will cbridge serve for staked in that case.

You state I cbridge will be number one bridge you don’t have to worry, please present some proper calculation. I did a calculation if cbridge did uniswap volume(2 billion per day) and that would give one staked celr token 12 cents per year in fees. If lowering the fees to 0 or close to that you need to do volume exceeding of multiple of 2 billion. I would like to see some numbers in relation to the competitor that had lower fees and what that would mean for the fees in cbridge. Take away feeling and assumptions and preeenting solid number would help this proposal I think.

2 Likes
#9

Smart adjustment. I vote yes.

2 Likes
#11

I can’t logically process how this was calculated. If you reduce the fee rate to 0% for the bluechip tokens on the most used chains (BNB Chain, Polygon, Avalance and Ethereum), how could the overall fee earnings not be compromised under the same volume today???

However, having said that, if the intention is to drive adoption by using loss leader strategy, then that’s fine as long as the team have done the necessary stats to understand the on-chain patterns and market demands.
Would be great if @Kuro could provide some data that form your conclusion that this is the right approach, so that the community can vote with more info.

3 Likes
#12

Yes, lower the fees. We are still working on adoption and awareness so lowering the fee helps. Many businesses use this same tactic to get more exposure.

2 Likes
#13

I’ve changed my vote on this. I did a thorough comparison between all competitive bridges (Multichain, Synapse, etc…) and Cbridge is currently the fastest growing.

At this rate, Cbridge will be #1 within 6-12 months.

Removing fees on the most used bridges could really hurt stakers without much benefit to growth.

2 Likes
#14

Can you share your research?

1 Like
#15

I regularly documented the volume each major chain got and compared them over time. Celer has now surpassed Synapse and is catching up to Multichain. I can prepare my findings if needed but it’s pretty easy to see if you go to each bridge’s analytics page.

2 Likes
#16

This is definitely a legitimate concern. However, I want to point out that the reduction of per-transaction fee does not actually equal to the reduction of total fee.

The methodology of analysis is to compare cBridge with all major bridges on the market and analyze where are the gaps and why those gaps are there. We identified that the gap of processing volume mainly exists in alter L1s and large-size transfers between them. The reason is that with the current percentage fee set up, the cumulative fee becomes higher than competitors on the market for large-sized transfers.

The motivation of this schedule change is to play some catch up to zero-out the fees in the area where cBridge is falling behind in volume. Once we start to attract some high volume users, we can re-tune the fee structure with a new proposal so that the fee structure for large-transaction users stays reasonable with a cap but overall achieves higher fee for the entire system.

Based on your feedback, a modification of the above schedule can be to add a minimal constant-value fee for each transfer between these alter-L1 chains. In that case, even with this initial change, we can try to see if there is an increase in overall fee value assuming the amount of transfer increases.

Having said all that, the goal of this proposal is to increase the adoption and ultimately capture higher market share in the cross-chain bridging space for the entire protocol and any proposed schedule is subject to future adjustment.

How about let’s set a “check point” date to review the effect of this change? We can make the change and review in three months:

  • If the overall volume increases and also the overall fee increases, then it is clearly a success.
  • If the overall volume increases but the overall fee decreases, then let’s discuss and see how we can further tune this.
  • If the overall volume decreases and also the overall fee decreases, then it is clearly a failure and we can revert to the original schedule if needed.

Of course, all check point metrics should be measured based on relative market share because the overall market demand may also shift.

7 Likes
#17

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image3658Ă—736 282 KB

See the above reference. The goal is to increase the overall fee + volume. So the goal for this change is to achieve a Pareto optimal point.

Again, if this does not achieve the goal, let’s make a new proposal to revert this change.

6 Likes
#18

That’s nice proposal.

3 Likes