Remove Withdrawal Fees

I think Pickle is making a bad shortsighted decision by keeping withdrawal fees. The logic behind their keeping withdrawal feels is “we want to go slow” but thats not true. The reality as I see it is that the Pickle team is scared as soon as they remove the withdrawal fee there will be a mass exodus of TVL.

What they are not realizing is that a 0.5% withdrawal fee means that you need three weeks of farming before you breakeven. Three weeks in DeFi might as well be a lifetime, a lot can change. As Andre Cronje says “Liquidity has no loyalty.” Pickle’s intention in keeping withdrawal fees is to be able to tax users of the UNI pools on the way OUT once UNI farming ends.

By them removing withdrawal fees now they will actually have NEW TVL come in and make even more money than the fearful approach of wanting to tax users on exit and being scared money will leave. I believe more money will be made by removing the withdrawal fee NOW rather than later.

Later on the APYs (pickle rewards) will ALSO be lower, thus yet again disincentivizing new money from coming in. So if they remove the withdrawal fees in lets say a month, when we’ve had 4 additional block reward reductions, it looks MUCH less appealing to new money. By removing it now new money will come in hoping to capture that high APY before its reduced knowing they are free to leave at any time.

This even has the positive consequence of good marketing and good will with the community.

Every day that goes by without change not only will block rewards go down, TVL will leave, AND pickle price will bleed. When these three things converge it’s called REKT CITY.

TLDR: Pickle team does not want to remove withdrawal fees. I believe its a critical error. They should remove withdrawal fees for the reasons listed above.

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I agree with you that long-term, it would be better, maybe necessary, to remove the withdrawal fee and increase the performance fee. Having thought about it, and listened to others in Discord, I no believe it should be done immediately, for the following reasons:

  • The UNI farming ends on Nov 17, and a lot of that TVL will leave—from all farming platforms—and we don’t want to miss that withdrawal revenue.
  • Removing the withdrawal fee is best accompanied by an increase in performance fee, and an increase in performance fee is best done during positive PICKLE momentum.
  • Even if we lose TVL in the short term, the TVL currently in the DeFi space is only the tip of the iceberg, in terms of what’s to come. Not all of the incoming capital will be exclusively looking for the highest APY. There will be other considerations, like trust, security, UX, etc. There is plenty of space for Pickle to exist as a successful endeavor. We have influencers like the Delphi guys, Tyler Reynolds and others who are happy to give us a signal boost whenever we need it.
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We can’t afford to wait weeks or month to remove the fees while our rewards are going down. This is reducing our growth, and growth is compounding fast in DEFI, we will fall behind and might not be able to catch up or make it very difficult on ourselves. The growth is probably reduced by more than 50% and likely by 80-90%.

Right now if you have to wait 10 or 20 days just to get to break even and farm for double or triple that time at the end withdraw fees will eat up 30-50% of your profits and this is more than a month time, extremely long in DEFI.

In response to yyctrader, saying Dr.Eggplant cares about whales while he is focuses on holders:

Removing fees brings equal amount of whales and small farmers, the returns are in % does not matter how much you put in. Keeping it does not keep “holders” it just deters entry from people, some of those will be potential holders some will be dumpers, but you are punishing both and slowing the TVL grown leading to less FEEs, leading to less buybacks, leading to lower token price. Fee does not help “hoders” just hurts them less, at the end you will have less TVL from both groups.

No one want’s to be forced to be holder or skip on opportunities and be behind on profits because they moved out after few weeks and they had to pay 0.5% on their whole deposits, not even holders.

Point being I don’t think Ddoes not care about non-whales, and you are not helping non whales, you are hurting both groups.

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You can’t fight a downtrend with the same approach. Remove fees, big deal some will leave but we will rebound. The performance fee is working for other’s, do it. I know you’re all pulling your hair out from arguing but this is the magic of a DAO. Stuff can changed quickly and at this point what have we nothing lose.

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I don’t think it is likely that the pools will be disabled on nov 17. Maybe 1 pool but def not all 4. And more pools will be added, if we attract more people now instead of scaring them away because of the fee, they will get used to our protocol and keep using us after nov 17 either in the same pools or the new ones added by UNI.

Increasing in fees will be minor reduction in reward for the vaults, but it will be huge boost to APY in staking,this is likely to lead to price increase and more fees. Even if people start leaving as APY goes up others will stay and it will balance out to be competitive. But what is more important price will start going up, creating a positive feedback loop.

If we miss out on getting users in now ( so they stay later ), and lower our growth we might fall too far behind in a month. The compounding growth is a big deal and we should reduce everything that creates friction, taking fee from the total amount is huge disincentives for pools with low APY, and those pools are the biggest TVL magnets. This is why it is important to at least remove the fee on all pools with sub 10-20% APY

1 Like

Main concerns I hear are UNI pools going down. UNI will be farmed over 4 years and pool duration will most likely be extended.

Other concern is negative feedback loop where price / TVL spiral down. This is impossible because as people take out TVL, the ones left will get more in PICKLE, and with the increase in fees leading to pickle APY increase there will be equilibrium created and growth started at some point starting a positive feedback loop.

What we gain by keeping the fees is noting in comparison to what it is costing us daily in new users that are likely to continue using is once they start which they wont because of the fees.

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I’m also not a great fan of withdrawal fees. It’s supposed to disincentivize capital leaving, but in fact it disincentivizes capital from entering too. There’s no real difference, apart from semantics, compared to having an entry fee, and I don’t think anyone would advocate for an entry fee.

Also, ‘other projects do it’ doesn’t seem like a great argument…

A compromise could be to keep the fee structure as-is for existing pJars and phase out the withdrawal fees for new ones.

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A static per-determent fee does not disincentive and keep people IN the pool from exiting. It only keeps people distinctiveness entering.
Once you are in the pool, the fee is already accounted for.
There will be no increase in people exiting by changing the fee to 0%. There is no change in incentives for people who were already in, the 0,5% was “already paid” from their point of view, its just extra 0.5% return airdrop.

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There is no change in incentives for people who were already in, the 0,5% was “already paid” from their point of view, its just extra 0.5% return airdrop.

Hence my suggested compromise - keeping the fee for existing jars means there would be no change for existing LPs so it doesn’t penalize them in any way. Removing the exit fee would mean pickle community would effectively spend 0.5% of TVL. IMO it’s worth it to draw in extra TVL and can be compensated by raising the performance fee, but the cost non-negligible so I can see why some members of the community might disagree.

I am for removing withdrawal fees in the long run but short-term it’s hard to justify unilaterally changing the fee structure since (a) we need the community to agree to take a short-term hit on profits and (b) we want to avoid setting the precedent of changing fees on a whim - LPs will avoid PICKLE if they think the fee structure they agree to when entering the pool may be entirely different when they exit!

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can we have both pools with and without withdraw fees. so anyone want to stay long term with higher profit rate can stay in withdraw fee pool. Anyone want to quickly withdraw for any emergency reason, can stay in without withdraw fee pool but lower profit rate?

And properly reduce the withdraw fee 0.5 to 0.2% to balance between two pools as majority people are now prefer no withdraw fee.

Of course, swapping between fee and no fee pool may be considerred as well.

I know it may make implementation a bit more complex, but maybe it is worth to explore.

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Keep the fee for the old pool while adding copy of every pool without a fee for the newcomer will solve the problem. You can even move the old pools to “legacy” since no one will be adding to them.

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Previously, DEFI APY was much higher, and everyone would not think the 0.5% withdrawal fee is big thing, while nowdays APY is mostly around 20% ,which is 0.05% per day, It takes 10 days for farmers to farm to be break-even,which is really a big stumbling block to attract new users to step in, this is the worst idea for pickle to learn from YFI.

To learn from harvest,let’s gives farmers the freedom to move money in and out, freedom is valuable in defi industry, we have to give money freedom on money network,which is also the value propositon of open finance.

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strongly advise we could remove withdrawal fee immediately without any delay.

I think it is a very ignorant and wrong idea to remove withdrawal fee with any delay, to keep tvl in a lock-in way is the same as to solve the flood by block, which will only make oneswlf drowned.

The right way to do this is to put yourself on the same level as your competitors and find out your own weaknesses. Otherwise, pickle’s teams and communities won’t be able to grow and be powerful.

Just as Bitcoin will definitely win the money competetion in the future precisely because it gives everyone 100% monetary freedom, not because of fucking stupid entry barriers and exit fee, so I think to remove the withdrawal fee anytime asap is the most right decision,Any delay will increase pickle’s chances of dying.

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My thoughts are based on a proposal posted on the $INDEX forum (https://gov.indexcoop.com/t/add-0-5-redeeming-fee-to-defi-pulse-index-dpi/159)

The 0.5% withdrawal fee seems to be a drag for those who want to leave (which for me is good) and for those who want to enter (“long” period before ROI).

Especially since once the LPs have been withdrawn, it is still necessary to exchange them for their original respective tokens, and therefore to pay new costs (gas and slippage costs).
If we remove all withdrawal costs, the subsidiary costs remain to be paid.

Would it be possible to allow participants of the jars to withdraw all or part of their LP in their original respective tokens, directly from the UI / UX?
This possibility would make it possible to gain in number of tasks to be carried out to find its original tokens.
It might also save transactions and slippage fees …

How would you feel about applying a 0.5% “redeeming fee” only to those who would like to use this option?
Eventually, those choosing this option would not pay any profit fees.

Those who prefer to get their LPs back would not pay a withdrawal fee, only a profit fee (as offered by @BigBrainBriner)

The idea is also that the 0.5% redeeming fee is competitive with the fees necessary to get its original tokens as it exists today.

For the example, suppose I want to withdraw my stake in a jar for example pJar 0.69c (UNI USDT / ETH), and I want to retrieve USDT and ETH in my wallet :
With the current system, to I would have to pay

  • 0.5% withdrawl fee on my entire LP + tx gas costs to withdraw it
  • slippage for withdraw tokens from the LP + tx gas costs

With what I propose, I should only pay :

  • profit fee + tx gas costs to withdraw my LP
  • slippage + tx gas costs
    OR
  • I should pay 0.5% redeeming fees of my total LP + gas costs

Perhaps it would be possible to offer to exchange LPs for $PICKLE with lower redeeming fees ?

I did not do any calculation to compare these solutions, I trust the proposition found on the $ INDEX forum.

Of course this is only an idea, I am probably making mistakes in my argument, I especially hope that you understand what I want to propose.

I keep re-iterating it but I will keep doing it since it is major misconceptions leading to the decision to keep the fee. The withdraw is not a concern for people who want to leave, they have already entered and the fee is locked, it is equivalent to paying on entry

It is ONLY drag on people who want to enter and has 0 effect to people in the vault.
From their point of view, they already paid the fee on entry

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some community members even don’t understand such rationality, this is actually an entry barrier very much more than an exit fee, pickle has to remove withdrawal fee and replaced with uprise PJAR performan fee(20%-30%) immediately, otherwise pickle will go nowhere…

1 Like

Data thanks to @0xBoxer:
I updated my dashboard once again to visualise the data on how much the treasury is earning from which sources. I hope we can all have a more reasonable discussion about withdrawal fees and general fee structure with that information.If u scroll down all the way I also calculated harvests per strategy and total withdrawals and deposits to show you where the data is taken from.

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Ok my two pickles worth. Thanks @0xBoxer for the really cool dashboards. Now i have to admit that I am new to all this, but if i think logically, there is a 0.5% fee on withdrawal. I think for anyone with large hoards of crypto this should be abysmal compared to what you are earning. I am saying this as a really small bag holder and I think its fair to tax a little of your earnings on the way out. Now from the dashboards its pretty evident that the withdrawal fees is whats making most of the revenue to the treasury. Why then is there such to a push to kill this ‘Golden Goose’ when we have not really discussed (may be it has been - I have probably not seen it) how to generate revenue for the treasury and hence value for pickle. I think the discussion should be first about how to generate and keep revenue for the Treasury and then think of removing the withdrawal fee.

I guess this is unless someone can strongly show a correlation between declining TVL or not increasing TVL and withdrawal fee other than here say. If evidence can be presented or may be poll conducted and everyone urged to vote with the right logic presented for why the withdrawal fee is in place and compare Pickles Dev fee/ Performance fee to other protocols - it may lead to surprising results i think!!

The point is that no matter how big your stash/investment into a jar, the 0.5% fee vs the current APYs mean you are looking at 7-14 days before you start to make a return above the fee. So you stash $1m in a jar, the 0.5% fee is $5k. Your earnings on the jar after 7-14 days will be $5k … beyond that you earn. But the argument is that yield chasers don’t like being locked in for a month at a time, which I get when new and shiny stuff comes along weekly such as Harvest or Barnbridge or Surf or whatever comes next.

Yes it would be a gamble - who knows if 27% performance fee will be even less attractive, given the APY would drop somewhat.

But I think one thing is clear, for me at least - until it is known what Uniswap plans beyond mid-November, it makes more sense to keep the current fee setup than to switch it now

3 Likes