Core Contracts

The `_initializeFeeTypes()` function in the `FeeCollector.sol` is responsible for setting up default fee types according to protocol rules. While the fee types for most categories appear to be configured correctly, the fee calculations for the Buy/Sell Swap Tax `(feeTypes[6])` and NFT Royalty Fees `(feeTypes[7])` are inconsistent with the documented intended percentages.

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The function initializes several fee types with values expressed in basis points. For instance, `feeTypes[0]` through `feeTypes[5]` set percentages that sum to 100% (10000 basis points). However, the following fee types exhibit discrepancies:

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Buy/Sell Swap Tax `(feeTypes[6])`:

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Documented as "2% total"

Values provided:

veRAACShare: 500

burnShare: 500

repairShare: 1000

treasuryShare: 0

Total = 500 + 500 + 1000 + 0 = 2000 basis points

This total corresponds to 20%, not 2%.

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NFT Royalty Fees (feeTypes[7]):

Documented as "2% total"

Values provided:

veRAACShare: 500

burnShare: 0

repairShare: 1000

treasuryShare: 500

Total = 500 + 0 + 1000 + 500 = 2000 basis points

Again, this sums to 20% rather than the intended 2%.

The discrepancy indicates that either the numerical values or the intended percentages are misconfigured.

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Consider a transaction where a Buy/Sell Swap Tax is applied on an amount of 100 tokens. With the current configuration:

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A fee of 20% would result in a 20-token fee.

However, if the intended fee is 2%, the fee should be only 2 tokens. This clear mismatch demonstrates that the values configured for feeTypes[6] and feeTypes[7] are likely an order of magnitude too high.

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Excessive Fee Charges: If the fee percentages are applied as configured, users may be charged fees up to 20% instead of the intended 2%, leading to significant user dissatisfaction and potential loss of participation.

Misallocation of Protocol Revenue: Incorrect fee calculations can distort the distribution of fees among stakeholders, such as veRAAC holders and the treasury, adversely affecting the protocol’s economics.

Protocol Trust and Adoption: Overcharging fees may deter users and negatively impact trust in the protocol, reducing its overall competitiveness and market adoption.

Review and Correct Fee Values:

Confirm the intended fee percentages. If the intended fee is 2% (i.e., 200 basis points out of 10000), adjust the values for feeTypes[6] and feeTypes[7] accordingly. For example, a possible correction for feeTypes[6] could be:

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Edit

feeTypes[6] = FeeType({

});

Similarly, adjust `feeTypes[7]` so that the sum of its shares equals 200 basis points.

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Update Documentation:

Clearly document the intended fee percentages and ensure that the code comments and variable names reflect these intentions accurately.

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Implement Unit Tests:

Create tests to simulate fee calculations for each fee type to ensure that the computed fees match the intended percentages, preventing regression in fee configuration.

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By addressing these issues, the protocol can ensure that fee distributions are accurately calculated, preserving the intended economic incentives and maintaining user trust.

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