[In return for these KNC incentives and the strong support provided by the Kyber community, 10% of the DMM liquidity provider fees collected from trading activities will be sent to KyberDAO (the other 90% goes to liquidity providers).
In addition, we propose that KyberDAO converts those fees to KNC tokens to reward KNC holders who stake and vote. This allows for a positive loop where KNC holders have the ability to easily stake KNC rewards for additional voting power and rewards.](KIPs/kip-8.md at master · KyberNetwork/KIPs · GitHub)
I’m very worried that KyberDAO will no longer pay rewards in liquid ETH, instead KNC voters will receive more KNC as reward. As it is obvious, KNC is an illiquid asset, from an economic standpoint, an asset rewarding its holders with a higher liquidity currency, makes the asset much more desirable, and therefore demand increases. If the fees of the DMM are collected either in ETH, USDT, USDC, DAI, please reconsider NOT converting them to KNC and reward KyberDAO instead with higher liquid assets.
Reconsider paying the reward in ETH and let KyberDAO voters to decide if they want to convert it to KNC or not, but at least they have a high liquid asset to begin with their decision. Please reconsider this, it is not a good idea. Makes KNC a less desirable asset.
In addition, if fees of DMM are collected too in illiquid assets, you make an extra unnecessary barrier for people to use DMM of having to exchange highly liquid and available asset to illiquid asset in order to pay the fees, it wouldn’t make sense for volume based product. This must be respected as well as the inverse, for rewarding KyberDAO voters, don’t make us have this same barrier.