Blur Fee Switch Discussion

Governance
5

Dear Alex and the Arca team,

I enjoyed reading your proposal about turning on the fee switch. I actually have been waiting for a substantial player to kick off the discussion on this since the freeze has expired so thanks for starting this conversation.

I support the ideas around building utility for Blur, such as providing fee discounts. However, I have concerns.

  1. In the short term, the fee+buyback & burn could provide some support to BLUR token price (~$20 - $30K of buy pressure/day, or $600K - $1M/month based on current volumes). However, this comes at a cost. It will have a negative impact on Blur’s ability to capture and retain market share, given the hyper-competitive NFT marketplace landscape. Several marketplaces already have lower fees than <1% (e.g. OpenSea Pro)

  2. Timing. IMO this is probably the worst possible time to turn on the fee switch:

  • Users’ price sensitivity to fees is probably at an all-time high, given the bleeding floor prices and low volumes throughout the year.
  • Liquidity is already low as farmers switch out to farm FT and other opportunities. 1% fees will chase farmers away and could lead to a “death spiral” (probably not the best term but you get what I mean) in liquidity and users.

I would suggest waiting for NFT volume and interest to show signs of returning first. When prices are rising, users will not be as turned off by fees + fee generation will be significantly more substantial compared to in today’s low-volume environment.

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