Adjust positive slippage reclamation

As we all know, the treasury has a flow of income from the positive slippage. This is great for the DAO, but unfortunately, it’s not good for traders.

Reasoning
Users that have done large trades and lost a huge amount to this surplus. Weather this is intentional or unintentional, it can hurt the trader only benefiting the DAO.

Proposal
Either let users vote on how much should be taken or change it so we only get 50% taken like our competitors. That way when there are large trades that cause big positive slippage, the trader, and the DAO, are happy.

Thoughts?

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Thank you for giving me something to think about.

Also, I apologize for the length of the article as I was thinking about it.

If a trader is satisfied with the price of a trade, he or she may understand that not receiving the positive slippage is not considered a loss by the trader.

The percentage of positive slippage returned to the trader and the percentage of
and the number of users of 1inch exchange
It is natural to assume that there is some correlation between the percentage of positive slippage returned to traders and the number of users of 1inch exchange, although the strength of this correlation is unknown.
If we imagine that the number of users will increase when the percentage of returned pages is increased, there is a possibility that there will be a percentage that maximizes DAO’s profit in total.

Whether that percentage is 50% or not, no one knows. I think it would be difficult to experiment with varying the percentage, considering the emotions of traders.
They will be happy with the increased returns, but if it turns out to be a mistake for the DAO, will they be able to reverse it…
What would happen to the feelings of traders if they had to reduce their returns once they had increased them?

In a situation where there is a lack of data to support the argument, the possibility of gambling increases, but I am always reluctant to make a bet that might reduce my profits.

The situation may change if I can find evidence that the probability of winning the bet is quite high.

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Interesting topic for sure. Essentially, the DAO would be giving up a % of their income stream and allowing traders to keep it instead. I really like @ma70_supra 's point that this might lead to an increase in revenue since more people would be incentivized to use the 1inch protocol (would like to see a breakdown of how the competitors deal with this).

Maybe this feature is well suited to be added to the Aggregation Protocol’s Instant Governance UI? Stakers would be able to dynamically vote on a value ranging from 0% to 100% – it would just need be an additional widget on that UI.

But back to ma70_supra’s point, we should try to put some numbers on how much extra protocol traffic we think this change would drive.

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If we were to vote and decide on percentages without control, it might be difficult to find the best percentages.

The value that results from a vote is the value that most people who have the right to vote agree on, not necessarily the value that maximizes the benefit of the DAO.

Just as an example, it would be interesting to vary the percentage for each trader based on the frequency of his or her trades.
If the frequency of trading for the exchange as a whole is also correlated to the size of the slippage, it would be really interesting to factor this in as well.

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It would be better to take into account not only the frequency but also the volume of trades, because if you only take into account the frequency, you can cheat by increasing the number of trades with a small amount…

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Susecptible to Flash loans

Thanks for pointing out the possibilities.
Do you have any ideas on what to do about it?

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Well, I think 50% would be o.k. The treasury collected 3 million USDC in 1 month. I believe 1.5 million in 1 month would be sufficient and might bring more traders in. Though I do think testing different percentages above 0 might be interesting. Either way, 100% of the surplus is more than the competitors.

This might be an issue if the treasury funds start being used up all at once, like if someone decides to buy back and burn a large amount of token or if we use the treasury to give back to the community.

I think 0% is too little. There might be problems with allowing people to vote. I think a lot of whales for the gas refunds will vote for 0% until that’s over. A vote above 25% is probably the limit I think would be okay.

to continue this thread, maybe each individual volume could influence it rather than cumulatively decreasing for frequent users. For a large trade, the positive slippage might be less than 1% of the swap and wouldn’t matter much either way to the whale but for small trades, they could be a much larger percentage that’s bad for the user.

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