Thank you everyone for your comments. We note the concerns regarding the sudden drop in trading rewards and the potential effects in liquidity.
Govmos supports the spirit of this proposal: simplicity, predictability, and cost-effectiveness. We believe setting C = 0 is defensible if accompanied by strong mitigating measures as outlined above — especially compensatory adjustments in Surge or related programs, and a smooth transition for stakeholders.
It is important to note that we are planning to implement this proposal in conjunction with the simplification of trading fees. removing the conditions linked to market share and exchange share on dYdX. This change aims to encourage new makers to onboard, and to incentivize both new and existing makers to provide additional liquidity on the platform, thereby increasing volumes and fees for the protocol.
We note that this proposal would benefit especially market makers which are currently generating between $25m and less than $300m of monthly volume (4% of exchange maker share). These corresponds to current users from fee tier 4 to 8 which are the users which are the most impacted by the fee tiers.
As a result, given that the trading rewards account for less than 10% of total incentives, the new fee tiers will mitigate the impact of the end of trading reward and should mitigate any adverse effect. As mentionned by many of the comments, we plan to monitor the effects of those two proposals on the overall trading and liquidity on dYdX once these are implemented.