How about as a first test measure "FRR = (average of all current swaps/85)*100"? This would mean that the 15% fee of Bitfinex is added statically on top of the FRR, as currently if you lend at FRR, you receive only 85% of the average rate in reality.
This would mean the FRR rises the more it gets used and no fancy programming would need to happen (unlike "FRR +/- X%" scenarios, that can also end up cancelling each other out).
Are you proposing including the FRR swaps in the calculation and not just the fixed rate swaps?
I don't see how your calculation will raise the rate due to more FFR swaps being taken. I think the FRR would get a one time boost when the new formula is implemented and then will proceed to drop just as it does now.
This is one of the main issues. Our goal is not to raise the rates, or lower the rates. Whatever the rate is, we would like to see it adjust to market conditions. That is one of the main problems with this discussion, is that we are looking for ways to improve the FRR, not improve returns for people providing swaps. Most suggestions are looking for ways to increase returns for swaps providers, and while many of those suggestions could work, they are not actually answering the question that was asked, how do we improve the calculation of the FRR? In my opinion, as bitcoin goes more and more mainstream, I think the swap providers will be competing with more of the open market for returns, and I don't see how rates can stay at this level, when they start competing with the expected returns that most people are used to.
That being said, I think we are getting close to an announcement on how we will adjust it. Stay tuned.