When TomoX launched, I had a discussion on Telegram where I shared my opinion about a potential issue with TomoX Lending and its incentives to create liquidity.
The issue I noted was the following: currently the exchange fee is paid by the borrower only (0.5% on TomoDEX and VisioDEX). No exchange fee is payable by the lender. The exchange fee payable by the borrower goes in totality to the relayer used by the borrower. If the lender uses another relayer, then this other relayer receives 0$ even if it is its client that provided the liquidity for the loan to match.
From the start, I advised that in my view this would create a liquidity problem. Relayers that are able to attract liquidity (lenders) will have zero incentive to do so. If all the borrowers are on one platform, then why would the owner of a relayer work to attract lenders if there is no revenue to be made?
I was told that this would probably not happen because there is normally a surplus of liquidity (lenders) in the market.
Since the launch on TomoX, I think we can all agree that this is not true (at this stage, at least). Many loan requests are there for many days and are not filled.
Our DEX, VisioDEX, have gathered some liquidity to help the lending market. That being said, for us to make any revenue, we have to speak directly to the borrowers to convince them to put the loan request (bid order) via our DEX. If they do not do it, we will have 0 revenue from our OTC service.
This situation is not efficient but is the result of - in my view - a flaw in the economics behing TomoX Lending system.
My proposition is simple: the exchange fee paid by the borrower should be split 50/50 among the relayers if the lender and the borrower are not using the same relayer. That way, all actors will have incentives to find borrowers AND lenders. Also, a liquidity service like ours will have an incentive to fill the loan requests from users of other relayers. That will be good for us, but also for other relayers as their clients will know they can be filled no matter which relayer they use to create their loan request (bid order).
I think this element was overlooked too rapidly at the start and should be looked at again. The numbers speak for themselves.
I may be wrong but I think it is worth it to give it a try or at least consider it seriously. If at some point there is too much liquidity, then the masternodes could then decide to change the 50/50 percentage. In the meantime, I think we need to put economic incentives in place to help create liquidity.