So for now the team has set a bridging fee of 5% on GRO. This IMO seems very steep for bridging and is not at all in line with the rest of the market. I can agree that GRO holders will likely benefit short term from the bridging fee, especially early stage when arbitrage opportunities are abundant between the two chains.
However longterm, as the arbitrage opportunities settle Id love for the fee to be more in line with other bridging services. This is for several reasons:
- Better ability to capitalize on staking gains across the various chains GRO will be available on.
- For us who like to participate in the DAO across the chains to not get hit in the face with a 5% fee everytime theres a proposal we would like to participate in.
- Longterm I think this will hurt longterm holders who would like to participate in the crosschain ecosystem more, than arbitrages would be able to gain.
My 5 cents. Would love to hear oppinions. Im thinking it would be nice to lower the fee down to 0.5%-1% within a couple of weeks after avax launch. Possibly have a set 10 days of 5% fees for every new chain GRO launches on, and then lowered to something more reasonable.
Would love to see more thoughts from the community on this.
Personally I think that the share of profits that can be taken from arbitragers through this 5% fee and the corresponding value it adds to GRO holders outweighs the potential scenarios in which a user would like to participate in two very important governance votes in different chains.
There is an average bridge time of 30 minutes to move GRO across chains, which is taken into account by arbitragers. That is why small arbs of a few basis points don’t get arbed and as the arb profit opportunity gets bigger the arbitrager captures a larger share of it vs the fixed fee of the bridge (to burn GRO). That is why with a 0.5% to 1% bridge fee you would be sacrificing over half of arbitrage profits compared to only 10-20% from a 5% bridge fee.
On top of that if the purpose of lowering the bridge fee is to encourage users to move across chains constantly with their GRO and voting through the different DAOs then a 0.5% or 1% would still be too much, it would have to be 0% to accomplish this purpose (but then you lose all of the burnt GRO benefits mentioned above).
Note that this isn’t a yes or no dilemma, it could perfectly be lowered if all the right conditions are met for a chain (I just don’t see them happening anytime soon to justify it).
Any other thoughts/comments from the community would be greatly appreciated so feel free to share your opinion!
I guess it sort of depends on the scenarios you envision GRO being bridged for. I see it as a function designed to take advantage of very large discrepancies in either price or staking yields, in which case the reward for bridging should well outweigh the fee.
I can’t really see a lot of scenarios in which users are repetitively bridging back and forth across chains (unless they know the reward is always outweighing the 5%)
Possibly worth revisiting if the utility of GRO is expanded to a point where frequent cross-chain transfers are required. But atm I don’t see anything wrong with there being less GRO going around, because remember if you’re someone bridging you’re doing so because there’s more to gain than the fee you are paying (so it’s a win-win for both that bridging user and all GRO holders)
The 5% fee is not too expensive, but not too cheap either. It will incentivize GRO holders to focus on the chain on which their GRO resides. My strategy is to wait for the bridge to the chain I like to be opened, and bridge my BSC GRO there. For example, if I liked Fantom more than Avalanche, I will wait until the Fantom bridge is released to pay the one-time 5% fee to park my GRO on that chain long-term. APY chasing can be profitable, but I believe the WHEAT APYs are only a cherry on top for GRO holders, while the main focus is governance. Maybe the HyBridge will resemble more of a cross-chain bridging service where people can take advantage of APY discrepancies across chains.
I think this is still a discussion that should happen.
I would like to add one more problem with the bridging fee: there actually always being at least a 5% difference between chains. If gro gets big, you wan’t to be able to buy it at about the same price everywhere.
I have to look where Gro is the cheapest everytime, transfering funds between AVAX and BSC, waiting for bridges, just because the price difference is sometimes so big. Also I am an AVAX user mostly. So the gro I have now on BSC is doing nothing, as I am not using BSC and don’t want to bother for the small yield it would give. That is dorment GRO I would love to vote with on AVAX, but is not being used in the ecosystem because of this fee.
I think with 2% you will capture more arbitrage, because it will be safer to do it. Instead of needing a 10% difference, already 4% difference is enough to take the bet to arbitrage.
I think more people will transfer funds, as 2% is more to handle than 5%.
Price will stay between 2-5% of each other, instead of sometimes going to a 10% difference.
I think overall, just as much, and maybe even more gro will be burned.
For example: to do an arbitrage, and burn gro, there has to be a lot of one sided price action. This doesn’t happen often. If the fee is lowered, even small difference can be quickly arbitraged. If enough of these small and quick arbitrages happen, it could mean that more gro is burned instead of less with a lower percentage.
But also has the 2 added benefits mentioned above.
Now for voting:
If gro for example is on 7 chains, it may get very hard to get a vote through, if there isn’t enough gro on a chain. I’m guessing by then the fee will be lowered, or it should be.
With every added chain, there needs to be less of a bridge fee, so that some chains don’t get stuck with no voting power. Or no bridge fee at all. But that is something for in the far future.
- I would support a deduction to 2-3% to try and have more burns than are happening now and be more healthy for users.
- I agree with having it at 5% for new chains, bootstrapping burns for hype of going onto new chains and the big price differences that come with it, but having it lowered after a couple weeks.
- having it in the back of our minds that one day it will be lowered to 0%, with every chain added, lowering it by a bit to make it more easily a crosplatform system, instead of each system on their own.