The following text is just a subjective copypasta of conversation with Anton Bukov and Sergej Kunz from 1inch.exchange team that took place in LobsterDAO. I've tried to cut off the flood and edit some messages to make this post as readable as possible. If you think, that something important is missing from the original conversation, please contact me and I will add it. If you took part in this conversation and do not want to be a part of this text, please contact me and I will edit it.
ivangbi: Are there any stats on 1inch dao collection so far?
Valentin Mihov: Any info on this? I am pretty sure they generate quite a bit of revenue but, I can't get info how it's shared with token stakes (token buyback?) and what are the amounts.
I only found the wallet which is collecting the slippage surplus. But it's quite a mess of transactions: 0x68a17b587caf4f9329f0e372e3a78d23a46de6b5
Luciano: 70k USD positive slippage collected in 1 single tx: 0xf24227fc961a729c59fb041a04865e3fd9eda42e66ec377617c49c962e693de9
Valentin Mihov: The protocol is making crazy money
Luciano: Sure, until users start to use other DEX aggregators that provide them the positive slippage.
Anton from 1inch: It makes no sense use aggregator which will give you guaranteed worse price and will eventually give you better price 🤷♂️
Pepe de Gen: Average execution price is matters, not the guaranteed price. I don't believe that you don't understand this, Anton. I don't believe, that you did not make simulations, which you can share and prove that you are right.
Anton from 1inch: All simulations you are referring to are about 1inch v1. They are no longer valid since v2 release.
Pepe de Gen: Have you just said, that in v1 average price for a user was better with a lower guaranteed price than with a higher guaranteed price but with a positive slippage fee?
For example we have:
1) Matcha, gives a lower guaranteed price but do not charge positive slippage;
2) 1inch, gives a higher guaranteed price but charges a positive slippage fee;
In which option user makes more money on a long distance?
Just to clarify. I like 1inch a lot. I own a shit ton of 1inch tokens. But I don't like hidden fees and misleading users.
Sergej from 1inch: We have no hidden fee. Please read our token release block post. DAO can decide how much on the left overs should go to them and how much to referrers.
Governance Rewards are already started for distribution among 1inch token stalkers.
If you have huge amount of 1inch, then maybe the best idea would be to stake and to vote?
Pepe de Gen: Does 1inch frontend shows to user how much fee was charged?
Sergej from 1inch: We don’t have that in the front end. It is not a fee, this is unexpected increase of the return amount during the transaction time
And the DAO benefits from it and the referrers
Valentin Mihov: Any info on 1inch DAO collected fees so far?
Sergej from 1inch: The UI team is working on a dashboard. We can show very soon the rewards.
Almost 8% earnings for LP, referrers and 1inch token stakers from the daily volume on 1INCH-ETH pool!
ivangbi: And how much is for DAO from this? Aka token holders
Sergej from 1inch:
ivangbi: So 6% out of 260K?
Sergej from 1inch: Yes, 16k in 24h.
Luciano: The thing is that they are not going to the 1inch contracts (the ones to distribute to governance and stuff). They are going to an EOA of 1inch team.
Sergej from 1inch: This is a lie, here is 1inch governance fee receiver: 0x4dfa40fdaa7694676899f8887a45603922609af4
Here is the referral fee receiver: 0x735247fb0a604c0adc6cab38ace16d0dba31295f
Luciano: then what about that tx? 0xf24227fc961a729c59fb041a04865e3fd9eda42e66ec377617c49c962e693de9
Sergej fron 1inch: and what about this?
Luciano: 0x68a17B587CAF4f9329f0e372e3A78D23A46De6b5 continues to receive a ton of referral fees + positive slippage from the platform trading
Sergej from 1inch: Wait wait, look what we have at Aggregation Protocol, 0x68 got referrer payout:
Luciano: "Is this address from you guys? 0x68a17B587CAF4f9329f0e372e3A78D23A46De6b5" - this question is from 4 months ago, still unanswered but it continues to pipeline a ton of 1inch referral fees + positive slippage there. So 0x68 isn't you guys?
Sergej from 1inch: This is a referrer address of 1inch team, yes. The team host the UI of the protocol and earn based on the DAO votes the referrer rewards.
Luciano: they earn on positive slippage as well? so basically any positive slippage traded through 1inch.exchange goes to the team?
Mark: Yes, that's stated in their terms & conditions as well.
ivangbi: Team holds most team tokens. That's the point as they can just claim part of DAO fees. Why is it not this way?
Azeem: I figure if there's no referrer then referrer goes to them seems fair enough.
Sergej from 1inch: Once again, the DAO decide how much should get the referrer and how much the stakers:
I see the @Luciano is our hater number one, but a company which host the frontend and the backend which runs the Pathfinder algo, what is quite expensive should also earn something to be self sustainable to. The team runs around 100 very expensive services to offer a great and fee service. Referrer reward is an option to offer the team to earn and be able to may for expenses.
Alejo: So the refereer fees are a way to have some stable income to pay up servers?
Sergej from 1inch: Yes. Look, our servers are quite expensive. Around 100 servers with each 64 CPU cores and 128 GB RAM. Just make the calculation how expensive it is to run it. The 1inch team is 33 man big. Working on better DeFi and invotate continuously.
We are working hard to offer the best experience and rates. We didn’t sleep last 6 months by working on what we delivered on Christmas night 🙂 and it is not about the money for us, it is about that we write right now with all you guys togheter the history.
Valentin Mihov: Thanks for clarifying all these. I think it’s important to have these details, so that a proper valuation can be made on the 1inch token. from what I can see now, the dividents that 1inch pays are 6x larger than SUSHI.
How are the rewards being paid out to the DAO stakers?
Sergej from 1inch: 1inch has no dividents, 1INCH token has no financial velue. It is a governance and utility token which is right now on the beginning if the trip. We started here with instant governance and as a connector token for our liquidity protocol and going to deliver next year around Q2-Q3 a new invention in the DeFi space which would change it again.
CryptoCat: Any comment on these addresses?
Sergej from 1inch: Some of them are auditors, some of them are early supporters.
Pepe de Gen: What owns DAO and what owns 1inch team?
Sergej from 1inch: You have the right to vote and to decide and participate. Suggest improvals etc. The 1inch team just offer the API and the servers. And develop protocols.
Pepe de Gen: Who owns frontend?
Sergej from 1inch: The team. You can build your own if you like.
Pepe de Gen: Can DAO vote regarding frontend?
Sergej from 1inch: You can create an improvement proposal if you like.
Luciano: Btw, 0x68 received 31k $1INCH (it was among the top 50 wallets that received 1inch tokens).
Sergej from 1inch: So what? We had to test the governance in production, to avoid problems. The wallet did some swaps on 1inch. We forgot to exclude it from the drop.
Alexander: When will Mooniswap contract be open sourced on Etherscan?
Sergej from 1inch: Mooniswap is deprecated. We introduced 1inch Liquidity Protocol where the DAO and the liquidity provider can vote for specific settings like fixed swap fee, decay period and the new invention the price impact fee which is charged based on the price slippage. All contracts are uploaded to Etherscan. I guess right now Etherscan has some problems with verifying the pool contract, but you can see the whole code under MIT license under the factory.
Luciano: 363k 1inch received in total: (https://etherscan.io/token/0x111111111117dc0aa78b770fa6a738034120c302?a=0x68a17b587caf4f9329f0e372e3a78d23a46de6b5#tokenAnalytics)
Sergej from 1inch: You mean by moving the tokens in and out? 🙂 and swapping, just stop to troll 🙂
Luciano: No, that's the incoming 1inch tokens to that address. I'm only accounting for that
Pepe de Gen: How much DAO gets from aggregation protocol? 10% with current voting? And scale for voting is set from 50% to 100% which is weird. https://1inch.exchange/#/dao/governance/vote/leftoverReferralShare
1st improvement proposal for 1inch: set scale for referral reward for aggregation protocol to 0% to 100%.
Sergej from 1inch: No referrer, no frontend, no frontend no volume, no volume no DAO.
Pepe de Gen: I don't suggest to remove fee. I suggest to change scale.
Sergej from 1inch: The problem is that everyone would vote i guess for 0, and that means no frontend, no server to run the algo etc. It’s like chicken egg.
Pepe de Gen: If token holders would vote for 0%, their 1inch token would cost 0.
Sergej from 1inch: If no frontend, no algo, no liquidity in the pools, no value behind the protocols. No team bind it => no value.
ivangbi: So DAO can only act within what is allowed?
Sergej from 1inch: there is a range, yes. Feel free to setup a proposal to improve it
Pepe de Gen: Sergej, you are saying, that if scale would be 0 to 100%, then DAO will vote for 0%. Why now it is not the minimum 50%?
Sergej from 1inch: It could be also an attack from competitor to vote with huge amount of tokens for almost 0 to damage the team.
Pepe de Gen: Do you understand game theory behind voting? You just lose money. You are lying or don't understand basic things.
Sergej from 1inch: Not sure 🙂 what you mean.
Pepe de Gen: If a competitor would make an attack and vote for 0%, he will lose money. Otherwise your governance model is bullshit.
ivangbi: 1] transparency on wallets is there now
2] transparency on 1inch taking a cut at every step is there
3] community disagrees with the "we are so humble everyone fucks us" approach and tone, that's not how things are
3] the argument of Sergej on "competition rek the vote" etc. are anti-game-theory because any bad vote = tokenholders rekt = attackers rekt. Make a veCRV style mode maybe, or require a days of vesting after a vote to prevent from flash votes
That is it. summary
Luciano: Wait, tbh, we can even make a 1inch Improvement Proposal and grant the Sushi's front-end developers to create a front-end for 1inch and capture all that value for the DAO instead of the team right?
Sergej from 1inch: You don’t understand the value of the DAO, without a great team you have ZERO value.
Luciano: The proposal will just create more competition, not eliminate the 1inch team.
Sergej from 1inch: It would eliminate the team if it would damage the team. why should I work for something that damage myself?
Anshul S: Would like 1inch to incorporate some sort of trade mining. Like Whenever 1inch team gains from +ve arb, 1inch tokens are awarded to the user. Or simply rewards in 1inch token every time one trades.
Sergej from 1inch: It is already through the governance rewards.
banteg: I really don't understand the need to rug users after raising $22m and printing billions for yourself. they way it reads is the team has spent everything on lambos and can't afford the server bill now.
Sergej from 1inch: 14M, and self sustainability is important, without that you have a dead project like 0x, which launch new token on costs of ZRX holders.
banteg: When they launch a new token, i'll grill them too. I have nothing against extracting value if the terms are explained clearly.
Sergej from 1inch: What is not clear?
banteg: I think the gauge descriptions are just not very clear. it's really not that hard. I would be much happier if the description went something like this: "all trades originating from 1inch.exchange frontend have their referral rewards going towards sustaining 1inch development, feeding the brain power and paying the development and server costs."
Just explain the terms clearly without sugarcoating and people won't feel like they were rugged even if you extract value from them.
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