Incentivising arbitrage on boosted pools

Governance
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It is clear that the low swap fees are not doing enough in themselves to incentivise arbitragers to route through boosted pools. I believe boosted pools are one of balancers secret weapons, since they can capitalise on two revenue streams (good for veBAL holders and lps) and be adaptable to new yield sources etc (as proposed with bb-f-usd).

If we want to encourage more boosted pools to be created, the flagship bb-a-USD should be pulling in solid revenue.

One solution could be to incentivise directly with $BAL for any swap volume provably routed through the boosted pools (whatever the specific mechanic is that seems to not be getting integrated). Could run the same thing for the “internal balances” as I understand they are under utilised too. We should also take the opportunity to increase the swap fee to a suitable, sustainable level (IMO 2-4 bps).

Keen to hear thoughts on this

1 Like
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I believe we can’t rely solely on revenue from swap fees over the long run. I think the solution to turning boosted pools into a crown jewel for us is applying the protocol fee to the boosted yield. Then it does not really matter if arbitragers participate or not - and this instantly turns bbaUSD from being less profitable than stabal3 to being 10x as profitable, from the protocol’s perspective.

What you describe would be heavily gamed and I’m not sure there is any reason to think artificially increasing the volume (or swap fees) would lead to more aggregator integrations. There is plenty of demand for new boosted pools from projects, I don’t think we’re hurting much there.