Although there is no firm timeline of when the flash mint module is going in, I would like to poll for the initial mint fee in advance so we are not blocked on this. Please note that debt ceiling does not need to be set to any number in particular, so we are going to roll out with something big enough to cover most use-cases (100M or so). There are a couple considerations in whether we want a fee or not, and if so what that fee should be. I will enumerate them below:
There are two main flash loan lenders currently - dYdX and Aave. Aave currently has the most liquidity, but they charge a fee of 0.09%. dYdX is free, but they lack liquidity. Here are the pool sizes as of writing this:
DAI - 9M
USDC - 7M
ETH - 300M
DAI - 138k
USDC - 2.2M
ETH - 185M
As you can see there is a serious lack of stablecoin liquidity in particular, so we have an opportunity to be the go-to source of liquidity for stablecoin flash loans moving forward. According to this site, Aave has done 2B in flash loan volume for a total profit of 1.9M in fees over the lifetime of the project.
I would suggest we should probably use the 0.09% as an upper bound for the fee to pick, but I’ll include a higher option as we do have access to unlimited Dai liquidity.
The closer the fee is to 0%, the more arbitrage benefit we get from the module. This should help to improve DAI’s standing as a trading pair and improve peg stability. This effect may actually be worth more to the protocol then the ~1M or so in expected fees at ~0.09%.
Coming out with a 0% fee flash mint module for the good of the ecosystem is a good PR move. We will be the go-to place for most flash loans as we have unlimited liquidity at 0% fees, and it is a good look for people who are interested in democratization of financial arbitrage. A 0% fee removes capital barriers of entry to users, and allows that kid learning to code on Ethereum the ability to construct profitable trades without having to compete against those with more capital.
Although Aave is currently making fees on flash loans, I believe the days of being able to charge a fee will be limited. WETH10 is already planned with a built in (free) flash mint feature, and it seems likely to me that other newly created tokens may include this as there is no extra cost. Market forces should drive the fee to 0% on all flash loan/mint features in the long run as there is no cost to operate them.
- 0.09% (Aave Fee)
- Higher than 0.10%
This poll will run until Thursday, February 18th to be included in an on-chain vote the following Monday, February 22nd if any options gain >= 50% of the vote (ignoring Abstains). A ranked choice vote will be used if multiple options are >= 50%.