xINCHb is an ERC20 wrapper for the 1INCH token and the 1inch staking process. xINCHb holders express a long term bullish view on the value of 1INCH and 1inch staking rewards. xINCHb is a set-and-forget token, requiring no active participation from holders. xINCHb holders participate in governance via the Samuelson Mandate, where voting decision-making/deliberation is anchored around the doctrine of center-left economist Paul Samuelson. Read more about Mandated Governance here.
xINCHb: Samuelson seeks to invest in the 1inch ecosystem and foster experimentation, new features and innovation. The Mandate advocates for a meaningfully sized and highly involved community of users with a focus on development of the protocol.
The swap fee is a fixed fee charged on each trade completed via the liquidity protocol. In order to attract liquidity, bolster rewards to stakeholders and finance future projects, the fund supports a 0.35% fee — slightly higher than industry standard.
Decay time is a technical innovation by the 1inch team to slow the change in spot price, capturing a share of arbitrage profits for LPs at the expense of arbitrageurs. The fund votes for a 4:00 minute decay, inline with current rough community consensus. The fund will continue to monitor community discourse, but neither instance of xINCH will take an opinionated view on Decay Time until more information is known about the governance implications of this highly technical protocol configuration.
The referral reward is collected by the dApp, wallet, or other integrator directing trades to 1inch Liquidity Protocol. At this stage in the protocol development lifecycle, most of the development work is being done by the 1inch team and other motivated parties. Incentivizing those front end hosts and encouraging easy and intuitive interfaces for 1inch users is critical and worthy of investment. The fund supports an allocation in the middle of the range at 7.5%.
The governance reward is the share of swap and price impact fees to be allocated to token holders for staking in governance. The fund supports a large and robust governance ecosystem, which requires incentivizing stakeholders to oversee it properly. These fees can be reinvested in staking and development or used for operations. The fund votes for a maximum governance reward allocation of 10%.
Price Impact Fee
The price impact fee is an innovative addition from 1inch, contributing to the growing toolset of AMM management and governance. Charged on top of the swap fee, it is proportionate to the price slippage of a trade. This feature attempts to add a dynamic pricing component, targeting traders with low elasticity of demand, i.e., those who are willing to pay more for immediate settlement. As a means of attracting liquidity providers to the platform, the fund supports a maximum 100% fee during the early experimental stage of the protocol.
Samuelson's work examined the realities of markets and economies, helping advance the view that these systems don't exist in a vacuum and can require management, investment, and intervention over time. With that in mind, the fund supports investment in a broad ecosystem of resources, available to all flavors of stakeholders. In order to incentivize the development of the most robust ecosystem, the fund votes for a 65% governance allocation, a 20% operational allocation, and a 15% referrer allocation via the reward distribution.