I am a huge fan of the cow protocol and I think a rev share via staking would be the next step that the Dao should take. Aave also considers a proposal for a rev share lately and there is the idea coming from.
The numbers cow is doing are amazing.
Short summary what the fees would generate (pls excuse me for any mistakes that could happen in my discussion. I am not an expert of the technical aspects of cow by any means)
All tokens are staked and the 100% of the revenue is split among the stakers
341.900.000 tokens unlocked
1.089 Eth fees generated the last 5 months
—> 217,5 per month —> 2613 Eth per year
—> 7.840.000 $ per year (3.000$ per Eth)
Tokens / revenue = 0.0229 $ cow/year
So the apy would be north of 10% when cow tokens is at .2
You could also add the revenue of the mev blocker which is 2 eth per day. With that the apy would be close to 15% with all tokens staked.
I personally think that a rev share would bring a true utility to the token and would increase the price significantly. Many new people which use cow swap and know the numbers would buy the token and stake it. With that also more ppl would get their eyes on cowswap which also would get the volume higher.
Also all following developments (fees on new layer2s and evm chains) which increase the volume and the apy.
I think this is a smarter step then spending millions for a cex listing, when the token has no usecase.
Imo this should be the next step asap, cuz nobody knows how long this bullrun will take and this also would cow survive a bear market.
The one difficult point is the legal process of the rev share model, but I guess this shouldn’t be an issue if aave is planning to do this and the world gets crypto friendlier every day
What is your opinion on that?
What are pros and cons that I didn’t mentioned?
Ty for your time and if I made a mistake or didn’t knew something just tell me.
I think this is a good idea, and something that certainly should be considered for the $COW roadmap. More-immediately, though, we need to understand how operational costs are balanced against revenue. The solver competition is quite costly to maintain, though I expect there are costs to be saved there. And support and development expenses are more likely to increase than decrease in the mid-term. But IMO the DAO should be reporting on all of these openly.
Yeah, we need definitely need to know what amount of money the dao needs to run confidently.
But I guess the expenses like solvers, developing etc. could also be paid via rev share.
I know the dao itself hold a large amount of cow tokens, and with that staked, I think roughly 30-50% of the whole revenue can be used for the above mentioned things.
And if the dao itself doesn’t hold enough tokens, but u could say like 20% of the revenue still goes to the dao itself. I dunno the exact numbers, but the numbers cow are doing are insane. This is for sure a point to discuss and where we need more informations.
I think the rev share model is a nice suggestion, however I’m sceptical if it adds any fundamental value to the DAO.
Already today, all revenue is captured by token holders as the entire treasury is subject to COW governance. Building a staking product would create additional friction imo (not all token holders will stake) and is structurally very similar to paying a dividend. Note that CoW DAO is already buying back CoW from the market using part of its revenue so the effect on value creation should be comparable (cf. Dividend vs. Buyback: What's the Difference?).
I do agree though that doing something actively with your tokens (putting them somewhere to see number go up) might have a positive effect on perceived token utility.
Traditionally, I think early state tech projects tend to be careful about paying dividends and rather build a war chest and re-invest their revenue into growth. I share @marshy’s concerns about being mindful of the ongoing expenses the development and competition incur. We are still at the very beginning of what this DAO can do and while it’s great that we are able to demonstrate the value the CoW product suite is adding, we should be thinking primarily about growing the pie not splitting it up.
Hi thank you for your response, i do agree with you that the buybacks are a very good way, but I think it ain’t communicated even for me as a holder well. People who do see cow from the outside, don’t rlly know about the buybacks and only see the bad looking tokenomics and are feared of the inflation.
I dunno how much of the revenue goes into the buybacks but, I would say that buybacks should be as high as possible to fight the inflation.
But from the outside it looks better to have a usecase for the token. I believe it would be much better if a major part of the circ. Supply is staked and people won’t sell the tokens cause of the amazing apy. This opens the way for new investors cuz they are not that scared of the tokenomics.
This would automatically bring more attention and more volume to cow, and building is still funded cuz cowdao would have a major piece of the rev share. With that all future developments would leverage the rev share.
The current buybacks are great but I think rev share is even better to get more people on board. It would be a win win situation in my opinion.
Your proposal for implementing a revenue-sharing model via staking for the Cow Protocol is intriguing. Here’s a brief summary of the potential financial impact and key considerations:
Summary of Financial Impact:
Token Details: 341,900,000 tokens unlocked.
Fees Generated: 1.089 ETH over the last 5 months.
Monthly Fees: 217.5 ETH.
Annual Fees: 2,613 ETH (approximately $7.84 million, assuming $3,000 per ETH).
Revenue Per Token: $0.0229 per Cow token per year.
APY Estimate: Over 10% if Cow tokens are priced at $0.20.
Including MEV Blocker Revenue: Adds 2 ETH per day, boosting APY to nearly 15%.
Pros:
Increased Token Utility: Revenue sharing provides direct benefits to stakers, enhancing the token’s use case and appeal.
Attraction for Investors: A higher APY could attract more investors and users to the Cow Protocol, increasing token demand and price.
Enhanced Visibility: Greater interest in staking could drive more attention to CowSwap, potentially increasing its trading volume and overall platform activity.
Sustainable Growth: Revenue sharing could make the token more resilient to market fluctuations, supporting its value during bear markets.
Cons:
Legal and Regulatory Challenges: Implementing a revenue-sharing model might involve complex legal considerations. Ensuring compliance with regulations is crucial.
Technical and Operational Costs: Managing the revenue distribution mechanism could incur additional costs and require technical adjustments.
Market Volatility: APY projections are based on current revenue and token price, which can fluctuate. High APYs might attract short-term speculators rather than long-term holders.
Considerations:
Comparative Analysis: While a revenue-sharing model can enhance utility, it’s important to compare it with other potential use cases or investments, such as CEX listings, which might also offer significant benefits.
Long-Term Impact: Evaluate how sustainable the revenue streams are and how they might evolve with future developments and market conditions.
Overall, a revenue-sharing model could be a smart move to enhance token utility and attract investors, provided that legal and operational challenges are addressed effectively.
