Proposal to Add Fees to Swaps


After participating in the popular revenue thread, we’ve put together a proposal to implement fees, taking into consideration the varied opinions in the community. This proposal is to add fees on all swaps.


We propose a fee placed on all swaps, this could come in the form of a flat fee (.05% for example) or the fees being separate for stablecoin swaps and non-stablecoin swaps ( Eg:- stable pairs: 0.01%, 0.02%, 0.03%, 0.04%, etc & non-stable pairs 0.1%, 0.2%, 0.3%, 0.4% etc.). We believe that targeting an average fee of .1% or less will not have a significant impact on the user experience or costs and could drive significant revenue to the DAO. Hopefully, through the comments on this post some consensus can be made on what the appropriate fee amounts are, if any. Initially, these collected fees should be deposited to the DAO’s treasury account. Changes to the tokenomics should be addressed at a later date, once we have a plan for consistent revenues.

To give an idea of the potential revenue and view the daily and cumulative volumes on swaps please see this Dune Dashboard. Using that data, since the launch of the DSA v2 accounts (94 days at time of writing) there have been 1.9b in swaps performed. If this volume is consistent, you can assume a yearly swap volume of roughly 7.2b. To create an example, if there was an average fee of .05% applied to these swaps we would see $3.6m in annual revenue brought to the DAO. To get an idea of how swaps are used, using data provided by the team, 77% of swaps happened while using strategies and 23% were user directed swaps (rounded to the nearest whole percent.)

Arguments for

While the benefits can be explored more in the comments, three strategic goals would be achieved in applying a fee and making the DAO revenue positive.

  • Value Proposition - The value proposition of the INST token will be more clear by having revenues. Instadapp has incredibly high growth in volumes, users and TVL. Having the DAO benefit from that growth will promote long term thinking around owning the INST token. Because of our LM program, users of the InstaDapp platform are able to accrue INST tokens. The right revenue model further incentivizes a long-term ‘stickier’ userbase because of the added value in accrual of the treasury account.
  • New Tokenomics Options - It opens the door for further tokenomics discussions. There are many popular token models out there that can be utilized once there are revenues. These models vary and can address different systemic security concerns, or drive token holders value, or a combination of both. Exploring more tailored tokenomics options should happen after fees have been adopted and have proven to not significantly slow user growth.
  • Treasury Diversification - Currently, the treasury faces low liquidity when selling and has no payment options without liquidating INST (generating selling pressure.) Having an inflow of stablecoins and other tokens will give the treasury an option to pay in USD or other currencies without liquidating INST. As it is now, relatively small sales can have an outsized impact on the price.

Arguments against

  • Possible Slowed Growth - Fees could make the platform less desirable to use; Instadapp’s growth and competition needs to be heavily considered. Further, there is a balance between user interests, tokenholder interests and developer/security interests. Taking this balance into consideration when any changes are made is important when designing a system that best serves all parties.
  • Governance - Treasury management is important for all DAO’s, taking this into consideration early can avoid exploitative actors from draining funds. Discussion around future treasury management may be needed before implementation.

Required actions

  • Implement a fee on all swaps via Instadapp with the proceeds going to the treasury. This may require creating a new connector.
  • Update Instadapp UI to reflect these changes; to inform users of fees being charged.

Voting - (To happen after %'s are finalized)

A vote “Yes” would be for implementing a fee on all swaps.

A vote “No” would be to leave the fees at 0 (no change.)

Thanks to Miscao and Hillbilly_Chess and data/advice from the Instadapp Team for helping me put this proposal together!


One of the reasons why a protocol governance token is a bad idea, it incentivizes rent seeking. If you want to add value to INST find other solutions, not by taxing the users.

Collect fees to treasury only from the WETH/INST pool.

Thanks for posting @Duo - I have a few initial thoughts and hope others weigh in as well because this is a big move.

  1. Do we have examples of other tokens/protocols that started collecting fees and the positive/negative impact to their market cap and/or community? This could help us understand the possible outcomes.

  2. Has there been any discussion around providing a discount or free swaps if one of the asset pairs is INST?

Overall I’m on the fence here mostly because I’m not sure what the impact will be. Obviously we are looking for a positive impact to both market cap and community, but if the impact is negative, are we willing to pivot and/or revert?

At the end of the day when we’re talking about small percentages .01 - .05, it should have a small impact on costs.

What if we just waive the fee for users who hold x number of INST for x amount of time?


Hey thanks for doing the research and synthesizing the information here. Here is some examples of what the fees could look like:

10 BPS Non-Stable (0.01%) / 5 BPS Stable (0.005%)

$10,000 Non-Stablecoin Strategy Transaction - Cost: $10
$10,000 Stablecoin Strategy - Cost: $5
$1m - Non-Stablecoin Strategy Transaction - Cost: $1000
$1m - Stablecoin Strategy Transaction - Cost: $500

20 BPS Non-Stable (0.02%) / 10 BPS Stable (0.01%)

$10,000 Non-Stablecoin Strategy Transaction - Cost: $20
$10,000 Stablecoin Strategy - Cost: $10
$1m - Non-Stablecoin Strategy Transaction - Cost: $2000
$1m - Stablecoin Strategy Transaction - Cost: $1000

I think these numbers are very reasonable and equate well with the savings users achieve by not having to commit multiple transactions and the convenience of achieving complex DeFi transactions. I also think when we develop more cross chain functionalities these costs will continue to seem reasonable.

@CPix18 I think a membership model makes the protocol into a tiered system, I don’t really like that in general, although maybe under different circumstances (if the token was vested or has some veCRV like voting mechanism)


A reasonable, adequate fee for convenience and savings when using the instadapp platform! Profit distribution is made weekly to INST holders in a special pool on the platform - a sufficient incentive to accumulate and keep INST
At the same time, you can use a deflationary model - half of the profit is sent to buy INST on the market and burned to the remainder, for example, 50,000 INST. The second half is distributed among the INST holders. This model shows itself well with the BNB token


love the deflationary model!

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I agree that the fees outlined under the 10 BPS scenario seem very reasonable given the cost savings from using the platform.


This is also very interesting and another way to incentivize users to accumulate and hold INST token.


Incentivizing users to hold abs accumulate $inst is the key. Token holders/stalkers should earn revenue.

Thank you for your proposal. This is a good idea and will have to be done eventually. 100% agree.

However, I think it’s a bit early to introduce fees.

Instadapp is in its early stages and fees can be introduced at any time.
We have good competitors like DeFi savor and there will be more products in the future. There is no guarantee that Instadapp keeps being No.1 in this space.

It’s not too late to charge fees after Instadapp grows more in the next few years, after other DeFi aggregators start charging fees.

Because we are not hurting for money right now, and it is not the time to worry about token prices. The more the community discusses Instadapp and makes it easier to use, the more people will naturally be interested in holding tokens.

Personaly I like what Uniswap does. Even though they are the most famouse AMM and can charge fee from LP fees any time but they don’t do yet.

I’m in Kyber community and they decided to distribute the protocol fees to KNC stakers and we were excited.
But competitors grew after that and now it doesn’t work as we expected before.

Why don’t you wait for 3 years, at least 1 year? Introducing is easy but retracting is hard.


It makes no sense to postpone the moment of charging for the service, especially for 3 years! In three years, maybe Ethereum will not be needed by anyone. We are a friend in the crypto space - everything happens here at cosmic speeds - today you are a leader - and in a year you can become an outsider. Additionally - there is a psychological moment - if you provide a good service for free - people’s subconscious will inspire them with doubts about its unreliability - there is no fee - there is no responsibility

Good point!

Competitors without commissions will grow and threaten Instadapp

We still need to acquire new users, and they will try the no-commission protocol first rather than the commission protocol.

A good team will finally try to harvest after it has grown enough

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Good points made here.

Defisaver currently charges .25% fee on swaps, where I think we could target .05% or less and maintain our lead. I would not be opposed to rolling back the fee if a competitor had no fees and did gain traction and would make that case to the community. I think it’s worth noting we also have LM rewards so a small fee the user would pay would be more than paid back in INST assuming we don’t end the LM program.

While KNC had issues I find that other communities that I am involved with such as CRV/SPELL/CVX/SUSHI all have fairly robust revenues and have benefited as there needs to be game theory around why one should hold the token, especially if you are trying to distribute a large amount of the token in a few years as was Instadapp’s goal was initially. Looking at Curve, 80%+ of emissions are locked due to the good token design and well aligned interest leading to them eclipsing Uniswap and Sushiswap’s combined TVL, despite offering less trading fees to LPers than either of their largest competitors.

I’m not opposed to waiting but I think that not having a long term emissions plan or long term value accrual implemented could potentially slow adoption in the long term. If we weren’t to adopt this I think working on a more comprehensive plan around emissions, tokenomics and timelines would be important. That plan could have some delay before implementation but seeing how Instadapp commands so much TVL and attention now, it may be good to capitalize on that rather than wait for something with more aligned tokenomics/incentives to come along and then try to adapt.


I agree that you want to bring some tokenomics to Instadapp because some projects has good tokenomics and it makes them stronger. It’s exciting if Instadapp can introduce such a good mechanism.

If I understand correctly, the great point on CRV is that their tokenomics (CRV lock, boosting etc) makes them more competitive. In other words, fees they charge makes takers happy too.

More CRV locked, more liquidity (competitive rate) on Curve. Because veCRV holders are incentivized to provide liquidity on Curve more by boosting. I think that’s one of the reason Curve has huge liquidity with small fee for LPs.

Good tokenomics like CRV has a possibility to make themselves more competitive while charging fees. If they doesn’t have veCRV, their TVL might be not huge as they have now.

On the other hand, if we see Instadapp, charging fees now just makes it less competitive, makes it harder to get new users. It might be good for INST price but I think it’s not top priority.
I would define adoption (top priority) as getting new users, more TVL, number of times strategies used. I feel that charging fees right now doesn’t help that.

Potential users doesn’t know how Instadapp is good and worth to pay fees yet. So I’m concerned if charging fees makes hurdle for trying. Unlike DEXes, we already have high hurdle because we need to ask users to deposit their funds.

That’s why I think it’s better to wait a bit.

But I still feel we are on the same page.

  • we will charge fees on swap, strategies.
  • we can discuss about tokenomics more.

It depends on INST holders so I won’t complain if we start charging fees. If it has passed, let’s discuss about Instadapp more.