This proposal aims to distribute a portion of the fees generated by the Moonwell protocol to WELL token holders. This initiative seeks to enhance the token’s utility, incentivize long-term holding, and strengthen community alignment with the protocol’s growth.
Proposal Details
**Fee Source and Allocation:
** Fee Source: A percentage (e.g., 10-20%) of fees generated from the protocol’s lending and borrowing activities will be allocated to a dedicated distribution pool.
Distribution Criteria: Rewards will be distributed proportionally to the amount of WELL tokens held by each participant. Tokens in staking pools, compatible wallets, or DApps will also be eligible.
Distribution Frequency: Payments could occur on a weekly or monthly basis to minimize gas costs and administrative overhead.
Implementation Plan:
A smart contract will manage fee collection, conversion (if necessary), and distribution to eligible wallets.
The allocation percentage and eligible addresses can be adjusted through community governance.
Benefits:
Increased Utility: Direct financial benefits from holding WELL incentivize long-term participation in the ecosystem.
Token Demand: The prospect of passive income can drive demand for WELL, potentially increasing its value.
Alignment with Protocol Growth: By linking token rewards to protocol-generated fees, holders are directly tied to the platform’s success.
Governance and Transparency:
Fee allocation and distribution will be transparently managed through on-chain reporting tools.
WELL holders will have the opportunity to vote on the exact parameters, such as fee percentages and distribution intervals.
This mechanism is an important one to be discussed with the well community imo. The fee-switch that adopted some protocols brings them a lot more value for the token and more TVL. It was a concept that was successfully implemented, and, the next US admin will probably be more open to tolerate this kind of mechanisms for DEFI protocols.
However the fee-switch will have to be implemented imo after a long debate to maximize the positive value that will elevate moonwell in the much competitive lending sector of DEFI.
First the OEV implementation needs to be done, the WELL core market also for some weeks, time necessary to adjust the starting parameters of the core market and to evaluate the positive value to the protocol.
From your points : Fee source = I think a percentage more or less of 50% will be a lot more appealing for token holders, event though 10-20% should be a minimum.
Distribution Criteria : I’m totally agree, this mechanism should reward token holders and stakers on the well protocol BUT people who lend their WELL must not be rewarded imo, the borrowers who holds the token should be rewarded, bringing incentives to borrow the token, maximize the utilisation of the core market, and pushing the use of arbitrage between a great apy for lending or to be rewarded by the fee of the token. That will incentivise also other DEFI dapps to create well lending markets and pushing up the utility of the token.
Frequency : I think a weekly payment will be more useful to evaluate the mechanism and adjusts parameters if necessary
On the other points, i’m completely in phase with you.
Hope that other people from the community will enrich this debate, thank you very much to opening this task.
This proposals sounds great. However, we definitely do need time for the DEFI lending sector, Moonwell, to grow in volume and establish a larger base of users.