# **The Soft Fee Switch**

Governance
1

Forum Discussion: SOFT Fee Switch

Summary

We’re interested in opening discussions around activating a “Fee Switch” mechanism on SOFT Tooling smart contracts. This initiative is designed to generate revenue, expand the SOFT Treasury, and extend the project’s runway, enabling further development of revenue-generating SOFT smart contracts.

Discussion Overview

Objective: Implement a variable fee mechanism for the usage of SOFT tools by third-party projects. Fees collected will directly support the SOFT Treasury, fostering sustainable growth and development of the SOFT ecosystem.

Rationale: A sustainable revenue model is vital for the continued expansion and innovation within the SOFT ecosystem. By introducing a fee mechanism, we can secure a steady income stream, ensuring the longevity and success of SOFT projects.

Implementation Timeline: The deployment of this fee structure is contingent upon thorough testing and community consensus. Our aim is to roll out the optimized fee mechanism on the main net post-QA and community approval.

Enhancing User Experience Through Staking Incentives

We propose a tiered fee structure, where projects can enjoy reduced fees by staking SOFT tokens. This approach incentivizes deeper engagement with the SOFT ecosystem while providing projects with a flexible fee model tailored to their engagement level.

How It Would Work:

  1. Expression of Interest: Projects interested in utilizing SOFT tooling will review the proposed fee and staking schedules.
  2. SOFT Token Acquisition: Projects buy SOFT tokens based on the desired fee reduction and stake duration.
  3. Staking and Fee Selection: Projects use the SOFT staking interface to select their preferred fee structure and stake duration.
  4. Staking Requirement: A minimum of 5 days of staking is required before deploying SOFT tool smart contracts.
  5. Early Withdrawal: Unlocking staked SOFT tokens before the end of the staking period incurs an early withdrawal penalty, which is then contributed to the SOFT Treasury.

Fee and Staking Schedule

We propose a detailed schedule outlining the relationship between the amount of SOFT staked, the duration of the stake, applicable fees, and penalties for early withdrawal.

SOFT Staked Stake Duration Fee/Percentage Early Withdrawal Penalty
0 SOFT N/A 1% N/A
2500 SOFT 15 days 0.85% 10%
5000 SOFT 30 Days 0.75% 10%
10000 SOFT 30 Days 0.65% 5%
25000 SOFT 45 Days 0.50% 5%
50000 SOFT 60 Days 0.25% 2%
75000 SOFT 90 Days 0.10% 2%
  • Early Withdrawal Penalties/Fees diverted to SOFT Treasury

Open to Input, Constructive Criticism, etc

We invite the SOFT community to discuss and provide feedback on SEP-0005. Your insights are invaluable as we refine this proposal to best serve SOFT and the SOFT community. Please share your thoughts, concerns, and suggestions in this forum thread or through our official communication channels.

Conclusion

The $SOFT Fee Switch proposal represents a strategic step toward establishing a sustainable and self-reliant SOFT ecosystem. By aligning the interests of SOFT developers, users, and stakeholders, we can ensure the long-term viability of the project.

9 Likes
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Great proposal, a lot of interesting ideas in here!

3 Likes
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To refine and enhance the proposal for the SOFT Fee Switch, consider the following three suggestions:

  1. Dynamic Fee Reduction for High-Volume Projects:** Introduce a dynamic fee reduction system for projects that generate significant volume through SOFT tools beyond the initial staking-based reductions. This could incentivize larger projects to use SOFT tools more extensively, thus increasing overall engagement and revenue. The mechanism could adjust fees based on monthly or quarterly usage metrics, rewarding the most active projects with additional fee discounts.
  2. Community Governance Participation Incentives:** Offer governance voting power as an additional benefit for projects staking SOFT tokens. This approach not only encourages a deeper financial commitment to the SOFT ecosystem but also fosters a more involved community. Projects with skin in the game are more likely to participate in governance decisions, leading to a more vibrant and engaged community ecosystem.
  3. Transparent Fee Use Case Reporting:** Commit to regular, transparent reporting on how fees collected from the Fee Switch mechanism are being utilized within the SOFT ecosystem. This could include detailed reports on development funding, community initiatives, or liquidity provisioning. Transparency in fee usage can build trust within the community, ensuring that stakeholders feel their contributions are directly fostering the growth and sustainability of the SOFT ecosystem.
6 Likes
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are there any existing examples of the dynamic fee switch?

1 Like
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For number 3, I imagine any usage of funds would go to a DAO vote by token holders.

1 Like
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