TEMP CHECK | Goal-driven fee basis: Community Pool delegation fee to reSDL stakers and NOP delegation fee

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TEMP CHECK | Goal-driven fee basis: Community Pool delegation fee to reSDL stakers and NOP delegation fee

Abstract:
The proposal herein discussed entertains the idea of altering the delegation fee for both NOPs and the Community Pool, with the best interest of the protocol in mind. It is written at this time as an alternate viewpoint to the recent Temp Check entitled “TEMP CHECK | Increasing Community Pool delegation fee to reSDL stakers”. The purpose of this TEMP CHECK is to achieve fee consensus through goal driven measures.
In short, I am indifferent to a fee increase or decrease, but rather seek to drive the fee in the direction of the protocol’s underlying long term goals.

Rationale
If >> Then
If the goal is to increase rewards to benefit community pool members, then we shall have no qualms regarding such an increase. The benefit is clear: an immediate increase in our share of SDL Pool Rewards.
However, I ponder if this could dissuade future participants into the SDL ecosystem with the emergence of competitors. I also further wonder if this could attrition our already impressive business moat, as we have the advantage of first-mover in this environment. We have a competitive advantage in the form of low fees, and as was previously presented, in the form of a nearly 4.4% market share of staked LINK. A future competitor could take market share by finding the least possible fee basis; therefore, I suggest we compete with ourselves and bring our fees as low as possible, though not necessarily in perpetuity, but at least until we find a reasonable roadmap to potentially increase fees as we achieve certain milestones. I would argue that to achieve the scalable 10-100-1000x returns in the SDL Pool Rewards construct, such a fee increase would not occur anytime soon.
Instead of seeking to raise fees so early on, I am wondering if we should consider an alternate strategy; that is, for both NOPS and Community pools to decrease their fees to ensure scalable adoption of staked LINK on the SDL platform. While we do not have visibility into NOP margins at this time, that is, visibility into the balance sheets, I am wondering if there is room for both NOPS and Community Pool to decrease their fees.
My underlying thought process seeks to achieve maximum growth through scaling which could provide 10-100-1000x returns in the future by ensuring market dominance in the current affairs by applying a conscionable and minimal fee to our customers – the LINK stakers.
I fear that by increasing fees to 10-15-20% (which I had originally supported), we could lose our competitive advantage, and lose a much greater proposition.
The contrarian in me is asking if both NOPS and Community Pool members could rationalize a delegation fee decrease with the intent to safeguard the current state of affairs, and augment users desirability to stake LINK in SDL.

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Eventually I assume node operators may stake their SDL, to gain more from their work supporting the chainlink network and other services. Their vesting begins to unlock soon and this would directly remove another source of revenue that could help operating costs, expansion and so on.

I believe the moat is much bigger than just fee scheduling, as the core team and 15 independent node operators have been doing business development with institutions for years. But I want to understand your point further because any non zero potential threat should be addressed. Let’s say the fee was lowered to 0, and they get the full 4.25% from the community pool and whatever they get from the nop pool right?

Even if this competitor offered zero fees, they would have to capture a significant portion of the node operator pool rewards to get anywhere near the apy SDL offers via stLINK. And this would assume the other hypothetical competitor could convince pretty much all remaining non SDL node ops to join. And that all of those nodes deposit full allo.

I see low risk in raising the fees right now.

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My take on everything that has transpired thus far is that, it appears we are headed towards a delegation fee increase, and that this trial increase should be conservatively edged.

I will further await the proposition of an incoming SLURP; see where the dialogue goes.

Seems like the most logical plan is to side with the Council members given their visibility. It seems like moving methodically, mechanically, is the best way in this moment.

If there are issues of alignment, those will need to be addressed.

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