SIP-385: Arbitrum perps v3 fee model

Author	cyberduck
Status	Draft
Type	Governance
Network	Arbitrum
Implementor	TBD
Release	TBD

Simple Summary

This SIP introduces a fee-sharing mechanism for Perps v3 deployment on Arbitrum, where liquidity providers earn 40%, the protocol's treasury earns 40%, and integrators earn 20% of the base fee in Synthetix's native Arbitrum stablecoin. The proposal also instructs the Treasury Council to bridge the protocol's earned fees to Base to be used for the buyback and burn mechanism of SNX as per SIP-345.

Abstract

This SIP proposes a fee-sharing mechanism for liquidity providers, the protocol's treasury, and integrators of the Synthetix Perps v3 deployment on Arbitrum. Liquidity providers will earn 40% of the fees, integrators will earn a 20% fee for trades processed through their integration, and the remaining 40% will be earned by the Synthetix treasury to be used to buy back and burn SNX on the Base chain. All fees will be distributed in Synthetix's native Arbitrum stablecoin. Future products or networks will require additional proposals to set the integrator fee share.

Motivation

This fee distribution model follows a proven model already in place on Synthetix's Base deployment, where we're seeing a continually growing total value locked by liquidity providers, enabling increasing trading volumes by front-end integrators. The SNX buy-back and burn mechanism on Base has proven effective for channeling value to SNX holders during the interim period of isolated chain deployments, and as such can also be applied to fees captured on Arbitrum.

Specification

Integrators will request a unique tracking code for each integration they wish to track and provide an address to which they will receive fees. A 20% fee relative to protocol fees earned, excluding gas, execution fees, or funding fees, will be directed to the corresponding address for all trades executed using an integrator tracking code.

The Treasury Council will periodically transfer earned protocol fees from Arbitrum to the Base SNX Buyback contract. SIP-345.

Rationale

Having a consistent and transparent fee structure across chains is key to attracting and retaining liquidity providers, integrators and Synthetix tokenholders alike.