Market Maker Fees

Being adaptable is the key to success for a decentralized exchange protocol. Instead of having fixed fees, it is beneficial to retain certain flexibility in the following scenarios:

• If the protocol is getting abused by wash traders on some particular token, LUX Token holders may vote to raise the fees in order to discourage such behavior.

• When the protocol is fighting for user preference with other decentralized exchanges, LUX Token holders may vote for lowering the fees.

• When the Lux Protocol needs to be upgraded, LUX Token holders may vote to take the designated portion of market maker rebates and pay a team of developers to improve the protocol.

• When the protocol has firmly established its place in the token ecosystem, LUX Token holders may vote to remove the fees altogether.

In the future it might make sense to add new liquidity pools for other token standards, such as non-fungible tokens. In this case, a new DAO smart contract would be created, and the DAO could vote to transfer the Lux Protocol ownership to the new smart contract. This would allow the DAO to adopt new features of the blockchain while keeping the same GLUX Token, contributing to the token's long-term value.

Each proposal would require tokens to be staked in order to prevent a spam attack on the DAO, and there would be a minimal amount of LUX required to present a proposal to be voted on. Each proposal would be active for a maximum of 30 days. Proposals would require staking user funds. As soon as a proposal passes the success threshold, its desired effect happens immediately via the power of smart contracts via Lux blockchain protocol execution of context free actions. The staked tokens from this vote would be available for withdrawal, and the changes to Lux Protocol would be performed automatically as part of the last voting transaction. Each token can only be used once per vote and is available for withdrawal after the vote is recorded onto the Lux Network. If the vote failed to pass success threshold for 30 days it would be considered to be a failed vote. No changes to Lux Protocol would be made, and those who had staked their tokens in this vote would not be eligible to make a percentage gain of the successful proposal outcome model. The successful proposal model is a reflection of the positive outcome for the use case described in the ricardian contract.