A viable alternative to percentage-based transfer fees?

[jakub]

I have created a BSIP draft and a separate forum thread dedicated to percentage-based fees based on CER (Core Exchange Rate), as I believe this concept is superior to my previous ideas.
https://bitsharestalk.org/index.php/topic,20789.0.html

Let's continue the discussion there.
(Mods, would you lock this thread, please?)

[kenCode]

The goals
There are two important goals I wanted to achieve:
- to allow users to pay lower transfer fees for smaller transfers (while charging them more on bigger transfers)
- to allow referrers to earn extra income associated with bigger transfers (while taking away from them the current income associated with smaller transfers).

Exactly.
If I want to send 2 BTS to someone as a donation or tip, I have to pay ~32 BTS just to send it. This has to be fixed ASAP.

[clayop]

Bump this thread and found @jakub 's proposal basically in line with my idea.
What about having minimum transfer (or order creation too) fee to prevent spam, say 1 BTS, plus percentage based fee for referrers?

[jakub]

1. I think your proposal in  https://bitsharestalk.org/index.php/topic,20709.msg267842.html#msg267842 is lack of incentive/method to UIA issuers which want to earn some money in payment business .

What incentives do we have now?
The only one I can think of is this: set CER at such a level that paying the transfer fee in UIA is more expensive than paying in BTS.

I did not say that we have incentives for the issuers now. So better to add some. For example a profit split between referrer and issuer. However, it's best if referrers and issuers come to discuss this, I'm more a user or a developer.

The simplest solution is for the issuer to play the role of a referrer and specialize in attracting new users who would mostly use his asset.
Otherwise if we try to split profits between issuers and referrers, everything becomes very complex in conjunction with the Referral Program and LTMs.

[abit]

1. I think your proposal in  https://bitsharestalk.org/index.php/topic,20709.msg267842.html#msg267842 is lack of incentive/method to UIA issuers which want to earn some money in payment business .

What incentives do we have now?
The only one I can think of is this: set CER at such a level that paying the transfer fee in UIA is more expensive than paying in BTS.

I did not say that we have incentives for the issuers now. So better to add some. For example a profit split between referrer and issuer. However, it's best if referrers and issuers come to discuss this, I'm more a user or a developer.

[jakub]

@bitcrab , would you support percentage-based transfer fees for all assets except BTS if transfer fees for BTS were kept flat and made very low (~ 6 BTS)?
This would effectively mean excluding BTS transfer fees from the referral program.

And this would also mean percentage-based transfer fees are an opt-in feature - up to the issuer to decide if it's beneficial for his asset.

[jakub]

1. I think your proposal in  https://bitsharestalk.org/index.php/topic,20709.msg267842.html#msg267842 is lack of incentive/method to UIA issuers which want to earn some money in payment business .

What incentives do we have now?
The only one I can think of is this: set CER at such a level that paying the transfer fee in UIA is more expensive than paying in BTS.
So it's just based on the assumption that users won't notice the difference and this difference goes to the issuer's pocket.
My proposal does not take away this option from the issuer: to some extent he can distort CER a bit to earn a little profit (he can't distort it too much anyway as users are not stupid and will start avoiding paying the fee in UIA).

Additionally, my proposal offers further benefits to UIA issuers and their assets:
- UIAs which are worth something will benefit from having a reasonable pricing structure for transfers.
- UIAs which are worth nothing or almost nothing will be able to be transferred almost for free (for 6 BTS instead of the current 30 BTS).

EDIT: Anyway, if an UIA issuer for some reasons does not find the above features beneficial, he will be able to keep the existing flat fee structure. So this an opt-in feature decided by the issuer.
Basically, the percentage-based transfer fee mechanism is a deal between issuers and referrers. The intention is to make both sides happy.
The network itself is not involved in this deal (apart from benefiting from larger number of transfers happening and pocketing 6 BTS on every single one of them).

2. I'm curious why rare people in referral business come out to comment on your proposal. (Btw I'm also curious whether there is someone from referral business in the committee).

@fav , as a referral business would you comment on this proposal?
https://bitsharestalk.org/index.php/topic,20709.msg267842.html#msg267842

3. Perhaps we could use FBA to attract people who really care about this issue. Say, with a percentage fee schema, 20% or 80% of fees (deduct the basic network fee) go to FBA holders.

That might be a good idea.
But first we need CNX confirm that my proposal is doable. And also we need a cost estimate for this.

[abit]

Bitshares have a long way to go to get competence comparing with Paypal, please do not raise the fee first, but raise the competence first.

Let's assume that 2% is the maximum fee people are willing to tolerate when they transfer money.

The above assumption gives us these conclusions:
- With the current flat transfer fee of 30 BTS, we only support transfers above $5 (~1,500 BTS) and effectively send people away if they want to transfer anything less.
- With the percentage-based solution, we will support transfers above $1 (~300 BTS). So we will cover a very important segment between $1 and $5.

Any major payment system on this planet (including Bitcoin, PayPal, debit cards, bank transfers) supports payments between $1 and $5.
But we don't. We seem to know better.

We want to compete as a payment system, but are happy to ignore the most important customer segment.
In the real world such a product has no chance to survive.

No business (certainly not mine) is going to build a payment system around the current flat fee structure.
This needs to change, it cannot stay this way unless we want to kill the referral program or give up being a payment system.
Percentage-based fee structure is the only solution capable to reconcile those two.

Guys, I'm trying to fix a major flaw.
Why does nobody care?

1. I think your proposal in  https://bitsharestalk.org/index.php/topic,20709.msg267842.html#msg267842 is lack of incentive/method to UIA issuers which want to earn some money in payment business .
2. I'm curious why rare people in referral business come out to comment on your proposal. (Btw I'm also curious whether there is someone from referral business in the committee).
3. Perhaps we could use FBA to attract people who really care about this issue. Say, with a percentage fee schema, 20% or 80% of fees (deduct the basic network fee) go to FBA holders.

[jakub]

Bitshares have a long way to go to get competence comparing with Paypal, please do not raise the fee first, but raise the competence first.

Let's assume that 2% is the maximum fee people are willing to tolerate when they transfer money.

The above assumption gives us these conclusions:
- With the current flat transfer fee of 30 BTS, we only support transfers above $5 (~1,500 BTS) and effectively send people away if they want to transfer anything less.
- With the percentage-based solution, we will support transfers above $1 (~300 BTS). So we will cover a very important segment between $1 and $5.

Any major payment system on this planet (including Bitcoin, PayPal, debit cards, bank transfers) supports payments between $1 and $5.
But we don't. We seem to know better.

We want to compete as a payment system, but are happy to ignore the most important customer segment.
In the real world such a product has no chance to survive.

No business (certainly not mine) is going to build a payment system around the current flat fee structure.
This needs to change, it cannot stay this way unless we want to kill the referral program or give up being a payment system.
Percentage-based fee structure is the only solution capable to reconcile those two.

Guys, I'm trying to fix a major flaw.
Why does nobody care?

[abit]

no one would like to contact "Huangniu" just to save 1CNY.

Right. As I said if there is "high difference".
And I agree that we should concern competence first.

[bitcrab]

I feel that charging a (high) percentage fee for transferring BTS (the core ASSET) is very strange. No other coin does this.

Our real competitors are payment processors like PayPal, bank transfers and debit cards, not the limited niche of "other coins".
People outside the crypto-world are used to percentage-based approach, it makes perfect sense to them.
To any rational person transferring 5k USD is more beneficial than transferring 5 USD.

Bitshares have a long way to go to get competence comparing with Paypal, please do not raise the fee first, but raise the competence first.

@bitcrab keep bts transfer fees low but other assets high would encourge p2p trading to avoid the high fee. In China it's called "Huang Niu"

//edit: asset-specific fees will benefit market makers       if the differences are big and demands are high, as users always look for lower cost.

no one would like to contact "Huangniu" just to save 1CNY.

[jakub]

In this way IOU issuers may abuse the fee system / spam the network with a very low core_exchange_rate, as the system don't know the real value of the assets. But users of smart coins have to pay much more. Just some thoughts..

The minimum fee of 6 BTS is just for this purpose: to prevent spam.
6 BTS is the minimum that covers our costs - maybe it should be more, I don't know exactly.

I wish we had this problem. What we have now is the opposite: long series of empty blocks.
Absolute waste of our resources. In the corporate world that's another thing I'd be fired for.

[abit]

In this way IOU issuers may abuse the fee system / spam the network with a very low core_exchange_rate, as the system don't know the real value of the assets. But users of smart coins have to pay much more. Just some thoughts..

[jakub]

Yes @jakub I understand your meaning as you have already explained earlier. I just feel it strange. It's one of the many ways of how crypto currencies change the financial world, isn't it?

Maybe we could consider very low flat rates just for BTS as moving BTS around indeed belongs only to the crypto-world, normal people won't use it anyway.
I don't know, I'm just playing with this thought right now - I'm open to this idea.

But if it is technically possible, IMO we should introduce percentage-based fees for everything else.
And this way worthless UIAs like FISTBUMP would be very cheap to transfer, which makes perfect sense: it's should cost almost nothing to move an asset which is worth nothing.

[abit]

@bitcrab keep bts transfer fees low but other assets high would encourge p2p trading to avoid the high fee. In China it's called "Huang Niu"

//edit: asset-specific fees will benefit market makers       if the differences are big and demands are high, as users always look for lower cost.

[abit]

Yes @jakub I understand your meaning as you have already explained earlier. I just feel it strange. It's one of the many ways of how crypto currencies change the financial world, isn't it?

[jakub]

I feel that charging a (high) percentage fee for transferring BTS (the core ASSET) is very strange. No other coin does this.

Our real competitors are payment processors like PayPal, bank transfers and debit cards, not the limited niche of "other coins".
People outside the crypto-world are used to percentage-based approach, it makes perfect sense to them.
To any rational person transferring 5k USD is more beneficial than transferring 5 USD.

Our current pricing policy is just plain stupid:
- we charge horrendous transfer fees for small amounts, so nobody can use it for tips and micro-payments
- we give away almost for free a service of transferring bigger amounts, whereas people (outside the crypto-world) are willing to pay much more for this kind of service

As a result, we disregard one segment of our customers and at the same time lose potential revenue in the other segment.
If I presented this "pricing strategy" in the corporate world, I'd be fired.
Rightly so. We need to grow up and face the real world.

[abit]

I still prefer my suggestion, your method can be applied to BitAssets.
this is not only a problem of small or big transfer.

if there's one way to help me to pay to a US bank account from China, then maybe 0.5% fee is OK.

but now transfers of BTS are not so useful yet, not so useful as BTC yet. transfer of BTS are mainly deposit/withdraw to/from exchange, user always compare the fee with other cryptocoins, is 30 BTS not expensive for a 50000 BTS transfer? I think everyone feel it is expensive, not because 30 BTS is too much, but because it is much higher than other coins. 

BitAssets is a little different, perhaps it can be used as payment tool for merchants, so higher fee can be accepted. and can give chance to referrers.

for UIA and privated smartcoin, I think the issuer need to decide how to develop the business, if they feel referrers can help, they can share fees with them, otherwise they can define low transfer fee to attract users. issuers need to have this kind of freedom. issuers always need to pay a lot to bootstrap the market but the high fee always plays a role to drive the users away, this is absurd.

referrers can also be issuers to make profits.

This is what I effectively propose:
- you need to pay 6 BTS for transferring 50 BTS (12% fee, instead of the current 60% fee)
- you need to pay 300 BTS for transferring 50,000 BTS (0.6% fee, instead of the current 0.06% fee)
If you say an increase from 0.06% to 0.6% (on bigger transfers) in exchange for a reduction from 60% to 12% (for smaller transfers) is a bad deal for you - indeed, we are not able to reach an agreement.

I feel that charging a (high) percentage fee for transferring BTS (the core ASSET) is very strange. No other coin does this.

[jakub]

I still prefer my suggestion, your method can be applied to BitAssets.
this is not only a problem of small or big transfer.

if there's one way to help me to pay to a US bank account from China, then maybe 0.5% fee is OK.

but now transfers of BTS are not so useful yet, not so useful as BTC yet. transfer of BTS are mainly deposit/withdraw to/from exchange, user always compare the fee with other cryptocoins, is 30 BTS not expensive for a 50000 BTS transfer? I think everyone feel it is expensive, not because 30 BTS is too much, but because it is much higher than other coins. 

BitAssets is a little different, perhaps it can be used as payment tool for merchants, so higher fee can be accepted. and can give chance to referrers.

for UIA and privated smartcoin, I think the issuer need to decide how to develop the business, if they feel referrers can help, they can share fees with them, otherwise they can define low transfer fee to attract users. issuers need to have this kind of freedom. issuers always need to pay a lot to bootstrap the market but the high fee always plays a role to drive the users away, this is absurd.

referrers can also be issuers to make profits.

This is what I effectively propose:
- you need to pay 6 BTS for transferring 50 BTS (12% fee, instead of the current 60% fee)
- you need to pay 300 BTS for transferring 50,000 BTS (0.6% fee, instead of the current 0.06% fee)
If you say an increase from 0.06% to 0.6% (on bigger transfers) in exchange for a reduction from 60% to 12% (for smaller transfers) is a bad deal for you - indeed, we are not able to reach an agreement.

[bitcrab]

because private/public defined assets are different. 3 is to provide flexibility to private asset issuer to develop their business. 2 is for public assets, mainly consider how system and referrer can make profits. for example, for TCNY, maybe I can set that only fixed fee is charged, no issuer defined fee, but for BitCNY maybe this is not possible.

But this will deprive referrers of an income from private bit-assets, which will hurt for the Referral Program.

can I say that the referral program is now hurting the whole community?
because of the referral program, everyone need to bear the high fee, and we always feel difficult to invite a new players to join.
if you really think it hurt, it's ok that let the committee define the x%, issuer only define the fee, then issuer have to give part of the revenue to referrer but he can define whether he charge the fee from the user.

I understand your point. That's why what I proposed here is an attempt to reconcile the needs of referral businesses with the needs of micro-payments users.

The referral businesses do not aim to earn rewards on small transfers, as their customers usually don't do micro-payments. As a referral business I don't want an 80% cut in transfer fees when a small amount is involved and the fee is ridiculously high. Instead I want an 80% cut in bigger transfers where the transfer fee is a good deal both for me and the user.

So for small amounts the transfer fee can be really small, just enough to cover the network's cost. For bigger amounts users are willing to pay more and that's the area where referral businesses should make their profits.

If we just manage to differentiate between small payments and bigger ones, I think we can make everybody happy. The current problem is that we treat every transfer in one way and that's absolutely crazy from the business perspective. We've been doing this not because it makes sense but because of a technical difficulty: up till now BM has been saying that there is no easy way around it.

I still prefer my suggestion, your method can be applied to BitAssets.
this is not only a problem of small or big transfer.

if there's one way to help me to pay to a US bank account from China, then maybe 0.5% fee is OK.

but now transfers of BTS are not so useful yet, not so useful as BTC yet. transfer of BTS are mainly deposit/withdraw to/from exchange, user always compare the fee with other cryptocoins, is 30 BTS not expensive for a 50000 BTS transfer? I think everyone feel it is expensive, not because 30 BTS is too much, but because it is much higher than other coins. 

BitAssets is a little different, perhaps it can be used as payment tool for merchants, so higher fee can be accepted. and can give chance to referrers.

for UIA and privated smartcoin, I think the issuer need to decide how to develop the business, if they feel referrers can help, they can share fees with them, otherwise they can define low transfer fee to attract users. issuers need to have this kind of freedom. issuers always need to pay a lot to bootstrap the market but the high fee always plays a role to drive the users away, this is absurd.

referrers can also be issuers to make profits.



 

[jakub]

because private/public defined assets are different. 3 is to provide flexibility to private asset issuer to develop their business. 2 is for public assets, mainly consider how system and referrer can make profits. for example, for TCNY, maybe I can set that only fixed fee is charged, no issuer defined fee, but for BitCNY maybe this is not possible.

But this will deprive referrers of an income from private bit-assets, which will hurt for the Referral Program.

can I say that the referral program is now hurting the whole community?
because of the referral program, everyone need to bear the high fee, and we always feel difficult to invite a new players to join.
if you really think it hurt, it's ok that let the committee define the x%, issuer only define the fee, then issuer have to give part of the revenue to referrer but he can define whether he charge the fee from the user.

I understand your point. That's why what I proposed here is an attempt to reconcile the needs of referral businesses with the needs of micro-payments users.

The referral businesses do not aim to earn rewards on small transfers, as their customers usually don't do micro-payments. As a referral business I don't want an 80% cut in transfer fees when a small amount is involved and the fee is ridiculously high. Instead I want an 80% cut in bigger transfers where the transfer fee is a good deal both for me and the user.

So for small amounts the transfer fee can be really small, just enough to cover the network's cost. For bigger amounts users are willing to pay more and that's the area where referral businesses should make their profits.

If we just manage to differentiate between small payments and bigger ones, I think we can make everybody happy. The current problem is that we treat every transfer in one way and that's absolutely crazy from the business perspective. We've been doing this not because it makes sense but because of a technical difficulty: up till now BM has been saying that there is no easy way around it.

[fav]

because private/public defined assets are different. 3 is to provide flexibility to private asset issuer to develop their business. 2 is for public assets, mainly consider how system and referrer can make profits. for example, for TCNY, maybe I can set that only fixed fee is charged, no issuer defined fee, but for BitCNY maybe this is not possible.

But this will deprive referrers of an income from private bit-assets, which will hurt for the Referral Program.

can I say that the referral program is now hurting the whole community?
because of the referral program, everyone need to bear the high fee, and we always feel difficult to invite a new players to join.
if you really think it hurt, it's ok that let the committee define the x%, issuer only define the fee, then issuer have to give part of the revenue to referrer but he can define whether he charge the fee from the user.

you may find it difficult to invite new people. do not talk for the majority

thanks

[bitcrab]

because private/public defined assets are different. 3 is to provide flexibility to private asset issuer to develop their business. 2 is for public assets, mainly consider how system and referrer can make profits. for example, for TCNY, maybe I can set that only fixed fee is charged, no issuer defined fee, but for BitCNY maybe this is not possible.

But this will deprive referrers of an income from private bit-assets, which will hurt for the Referral Program.

can I say that the referral program is now hurting the whole community?
because of the referral program, everyone need to bear the high fee, and we always feel difficult to invite a new players to join.
if you really think it hurt, it's ok that let the committee define the x%, issuer only define the fee, then issuer have to give part of the revenue to referrer but he can define whether he charge the fee from the user.

[jakub]

because private/public defined assets are different. 3 is to provide flexibility to private asset issuer to develop their business. 2 is for public assets, mainly consider how system and referrer can make profits. for example, for TCNY, maybe I can set that only fixed fee is charged, no issuer defined fee, but for BitCNY maybe this is not possible.

But this will deprive referrers of an income from private bit-assets, which will hurt for the Referral Program.

[bitcrab]

1. for BTS transfer a minimum fixed fee(1-5 BTS?) is charged.
2. for BitAssets transfer a tier fee structure is defined(10/30 BTS?)
3. for UIA and privated smartcoin transfer, there will be a fixed fee(1-10 BTS?) + issuer defined fee structure. and x% of the issuer defined fee will go to the referrer, x will be defined by the issuer. the fixed fee will go to the network.

What's the reason concept (3) cannot be applied to regular bit-assets?

because private/public defined assets are different. 3 is to provide flexibility to private asset issuer to develop their business. 2 is for public assets, mainly consider how system and referrer can make profits. for example, for TCNY, maybe I can set that only fixed fee is charged, no issuer defined fee, but for BitCNY maybe this is not possible.

[jakub]

Below is a detailed proposal for a percentage-based transfer fee solution.
The main idea is to derive the BTS value of an asset transfer from the Core Exchange Rate defined by the asset's issuer.

The problem
Having a flat transfer fee of 30 BTS, BitShares is not a competitive payment solution for transfers between the equivalent of $1 and $5, as for non-LTM users the current fee in this range is well above 2%.
The simplest way to solve it would be to lower the transfer fee but this would effectively kill the referral program. On the other hand, a simple percentage-based transfer fee is not doable as for most assets we do not have a way to determine their exact value at any given time.

The goals
There are two important goals I wanted to achieve:
- to allow users to pay lower transfer fees for smaller transfers (while charging them more on bigger transfers)
- to allow referrers to earn extra income associated with bigger transfers (while taking away from them the current income associated with smaller transfers).

The assumptions
The following description uses a fictional asset called BAX but this solution can be applied to all assets (i.e. SmartCoins, private bit-assets, UIAs and FBAs) and all non-stealth transfers.
Also, what I describe below refers to pay-as-you-go users. For LTMs exactly the same rules apply, except for the fact that in this case the referrer's income is redirected to the user's cash-back fund.
CER stands for Core Exchange Rate, an already existing parameter whose value is defined by the asset's issuer.

The concept
The transfer fee can be paid either in BTS or BAX.
(1) If the user chooses to pay the fee in BTS:
- The transfer fee is equal to 1% of the BTS value of the BAX amount being transferred, adjusted by a floor (i.e. minimum fee) and a cap (i.e. maximum fee): 6 BTS and 300 BTS respectively. So effectively the transfer fee is 1% but it is never less than 6 BTS and never more than 300 BTS. Those values are just an example, the actual values will be determined be the committee.
- To establish the BTS value of the transfer, CER is used.
- The fee paid by the user is split as follows: 6 BTS goes to the network, any excess above 6 BTS goes to the referrer.
- The issuer does not earn anything.
(2) If the user chooses to pay the fee in BAX:
Let F be the transfer fee (expressed in BTS) which was calculated as described in (1).
- To establish the BAX equivalent of F, CER is used.
- The issuer receives the entire fee paid by the user in BAX.
- The following amounts are deducted from the asset fee pool: 6 BTS goes to the network, and (F - 6) BTS goes to the referrer.
- The issuer makes a profit or loss, depending on CER being above or below the actual BTS/BAX exchange rate.

The main issue
What happens when the issuer attempts to artificially lower transfer fees on his asset by pretending his asset is not worth much and deliberately keeping CER below the actual BTS/BAX exchange rate?
- for the user: it is cheaper for him to pay the fee in BTS rather than in BAX
- for the issuer: he makes a profit on all those transfers for which the user, for whatever reasons, decides to pay the more expensive fee in BAX (instead of the cheaper one in BTS)
- for the referrer: no matter if the user pays the fee in BAX or BTS, he is deprived of a large part of the referral reward, as due to the distorted CER transfers are interpreted by the system as involving smaller value than they actually are.

How is the issue solved?
By keeping CER artificially low the issuer will effectively discourage users from using his own asset because transfer fees will only be low when paid in BTS, so the process of transferring the asset will be dependent on users having BTS in their wallets to cover the fees. Furthermore, if the issuer distorts CER too much, he'll not be able to benefit from it himself as users will start avoiding paying the fees in BAX. Also, it will be bad PR for the issuer to value his own asset below the market rate. At least in case of SmartCoins and major private bit-assets issuers are not likely to be wiling to sabotage their own assets in this way.

But if it turns out that a large number of issuers try to game the system, we can do the following:
- To enable percentage-based transfer fees, the issuer will be obliged to keep an open ask order on the BTS:BAX market and thus allow anybody to buy BAX at e.g. 120% of CER. As a result, if CER is out of sync with the market rate by more than 20%, the issuer will incur a significant loss.
- If the issuer is not willing to comply with the above requirement, the default flat transfer fee of 30 BTS will be applied.

This is an opt-in feature
As the issuer is the only entity that actually controls CER, the percentage-based transfer fee is a an opt-in feature decided by the issuer.
IMO most issuers will find it beneficial for their assets because:
- assets which are worth something will benefit from having a reasonable pricing structure for transfers
- assets which are worth nothing or almost nothing (i.e. most UIAs) will be able to be transferred almost for free (for 6 BTS instead of the current 30 BTS).
But if an issuer for some reasons does not find the above features beneficial, he will be able to keep the existing flat fee structure.

Conclusion
Being voluntary for issuers, the above proposal is actually targeted to the referral businesses: do they perceive it as a beneficial change for the ecosystem and a fair deal for them?
They will need to forgo the referral income on transfers below the equivalent of $2 but will substantially increase their income on transfers above the equivalent of $10. In the range between $2 and $10 they will get on average half of the income they have now. However the main benefit will be indirect: it's much easier to sell a reasonably priced product.

As a referral business myself, I find this very valuable. Actually, I cannot imagine building a viable business without percentage-based transfer fees because with the current flat fees I'm not able to offer my customers a reasonably priced payment solution for transfers in the most important range, i.e. between the equivalent of $1 and $5, as the current flat fee in this range is well above levels offered by the legacy systems.

EDIT: There is a separate thread dedicated to the above proposal.
https://bitsharestalk.org/index.php/topic,20789.0.html

[jakub]

1. for BTS transfer a minimum fixed fee(1-5 BTS?) is charged.
2. for BitAssets transfer a tier fee structure is defined(10/30 BTS?)
3. for UIA and privated smartcoin transfer, there will be a fixed fee(1-10 BTS?) + issuer defined fee structure. and x% of the issuer defined fee will go to the referrer, x will be defined by the issuer. the fixed fee will go to the network.

What's the reason concept (3) cannot be applied to regular bit-assets?

[bitcrab]

The main point is to turn an asset into a joint enterprise between the issuer and the referrer (they take the risk and share the profits) and to remove the blockchain itself from the equation (the network just cares about covering its fixed costs).

I wonder what @bytemaster thinks of this.

  The crux of this idea is golden IMHO and I would love to hear BM's perspective, both on the concept and how much effort it would take to implement it. No doubt it will not be easy and it has definite GUI requirements. It doesn't strike me as a quick fix for the short term, but it does sound like a very promising idea to incentivize business and put more control into the hands of individuals, while at the same time normalizing the income stream for the network.

the point is good, IMHO BTS itself should just play as a platform, not to define business model, currently all the things are around referral program, not flexible enough.

if an asset-dependent fee can be realized, then I now would like to suggest as below, only for transfer fee:

1. for BTS transfer a minimum fixed fee(1-5 BTS?) is charged.
2. for BitAssets transfer a tier fee structure is defined(10/30 BTS?)
3, for UIA and privated smartcoin transfer, there will be a fixed fee(1-10 BTS?) + issuer defined fee structure. and x% of the issuer defined fee will go to the referrer, x will be defined by the issuer. the fixed fee will go to the network.

the base idea of this suggestion is to avoid conflict of different business models:

BTS is the system token, rudecing its transfer fee to minimum will attract investors/traders.

some partners like to issue UIA/privated smartcoin, so they need to be flexible to define the fee, they may define 0 fee to attract user, or define some high fee to make profit when there product are attractive enough, they can also cooperate with referrers by set the x%.

BitAssets are used mainly for payment, so a tier fee structure is defined, referrers can focus on this area.

 

 

[abit]

Percentage based transfer fees are completely untenable. Every single other coin in the world has a low, fixed fee for any amount sent, bitshares would lose out to the competition and it would be a PR nightmare. Percentage based trade fees on the other hand, are acceptable.

If the fee is charged by IOU/Smart coin issuers then would be OK (in addition to basic network fee). Best if the issuers are able to define several thresholds and % of the fee. Under this condition the committee can control fee of transferring BTS to be low or higher (as demand). Maybe the ones who benefit by the reference program won't agree though.

to me a good idea is like this:
1. for BTS and BitAsset(or at least BTS) transfer charge a minimum fixed fee.(5-10BTS?)
2. for UIA and privated smartcoin issuers can define the transfer fee(percentage, fixed or percentage with a cap).
3. income referrers' income should be mainly from referrals' trading fees, not transfer fees.

high transfer fees is a big psychological hurdle for new comers to join and need to remove asap.

I remember someone else in this forum dislike that "trading fees go to referrals" thing very much. She/He is also an IOU issuer, but in different business.

[jakub]

No doubt it will not be easy and it has definite GUI requirements.

The only GUI requirement I can think of is adding three or four new parameters to the asset configuration panel:
- minimum & maximum transfer fee
- percentage-based transfer fee
- the referrer's share in the issuer's transfer fee profits (I think 80% should be the minimum here but there might also be a cap needed as abit suggested)

The rest is back-end stuff IMO, but it's hard for me judge how complex it would be.

[Thom]

The main point is to turn an asset into a joint enterprise between the issuer and the referrer (they take the risk and share the profits) and to remove the blockchain itself from the equation (the network just cares about covering its fixed costs).

I wonder what @bytemaster thinks of this.

  The crux of this idea is golden IMHO and I would love to hear BM's perspective, both on the concept and how much effort it would take to implement it. No doubt it will not be easy and it has definite GUI requirements. It doesn't strike me as a quick fix for the short term, but it does sound like a very promising idea to incentivize business and put more control into the hands of individuals, while at the same time normalizing the income stream for the network.

[Empirical1.2]

3. income referrers' income should be mainly from referrals' trading fees, not transfer fees.

This way we lose our big ally - online shops. They have no incentive to promote BitShares via the referral program.

High transfer fees is a big psychological hurdle for new comers to join and need to remove asap.

IMO, the problem is not the transfer fees being high.
The problem is that they are flat, i.e. completely detached from the perceived value of the service delivered.

If you transfer 10,000 CNY and pay 0.7 CNY for this (~ 0.007%) - would you really say it's such a bad deal?
But if you transfer 10 CNY and pay 0.7 CNY for this (~ 7%)  - I agree, it is expensive.

  Transfer fees should be more relatively sized.

Another problem is that BTS can offer a good deal to merchants once there is an offramp, however from the consumers perspective the prices may have increased, because the PayPal/credit card fee is often hidden. 

Unfortunately BTS would have a hard time distinguishing merchant from individual accounts & then charge the merchant accounts per transaction like PayPal and other payment processors do.

[jakub]

3. income referrers' income should be mainly from referrals' trading fees, not transfer fees.

This way we lose our big ally - online shops. They have no incentive to promote BitShares via the referral program.

High transfer fees is a big psychological hurdle for new comers to join and need to remove asap.

IMO, the problem is not the transfer fees being high.
The problem is that they are flat, i.e. completely detached from the perceived value of the service delivered.

If you transfer 10,000 CNY and pay 0.7 CNY for this (~ 0.007%) - would you really say it's such a bad deal?
But if you transfer 10 CNY and pay 0.7 CNY for this (~ 7%)  - I agree, it is expensive.

[bitcrab]

Percentage based transfer fees are completely untenable. Every single other coin in the world has a low, fixed fee for any amount sent, bitshares would lose out to the competition and it would be a PR nightmare. Percentage based trade fees on the other hand, are acceptable.

If the fee is charged by IOU/Smart coin issuers then would be OK (in addition to basic network fee). Best if the issuers are able to define several thresholds and % of the fee. Under this condition the committee can control fee of transferring BTS to be low or higher (as demand). Maybe the ones who benefit by the reference program won't agree though.

to me a good idea is like this:
1. for BTS and BitAsset(or at least BTS) transfer charge a minimum fixed fee.(5-10BTS?)
2. for UIA and privated smartcoin issuers can define the transfer fee(percentage, fixed or percentage with a cap).
3. income referrers' income should be mainly from referrals' trading fees, not transfer fees.

high transfer fees is a big psychological hurdle for new comers to join and need to remove asap.

[jakub]

The referral program plays a bad role in this scene.. transfer to myself & earn money from the issuers!

That's a good point.
To fix this vulnerability we would need to tie the referrer's income to the issuer's transfer fee income, not the blockchain's income as we have it now.

It would have to work like this:
- for each transfer made on the BitShares network the issuer pays 6 BTS (20% of 30 BTS) to the DAC and this is her/his fixed cost
- if the fee received for this transfer is less than 6 BTS, the issuer has to cover this loss and the referrer gets nothing
(EDIT: we could set the minimum transfer fee to 6 BTS so for payments below 2 bitUSD, which is the break-even point, the network can cover its costs but neither the issuer nor the referrer gets any income or loss - which I think is fine)
- if the fee received for this transfer is more than 6 BTS, the issuer gives 80% of the profit (i.e. the excess above 6 BTS) to the referrer and keeps the remaining 20%.

So if an issuer sets the CER wrongly and makes a loss in the long run, the referrer will get some compensation but it will probably be less than s/he has now.
But on the other hand, if the issuer makes a profit, 80% of it will be shared with the referrer.

EDIT: This will incentivize the referrer to attract users that usually make bigger transfers.

Good idea.
However if 80% of fees goes to referrer without a cap, issuers may have not enough incentives to promote. Perhaps add a cap like this?
* If the fee received for a transfer is more than 36 BTS, the issuer give (36-6)*80%=24BTS to the referrer and keeps the remaining.

I agree, there could be some kind of cap (or anything similar as long as it's simple enough) to establish a good balance between the interests of issuers and referrers.

The main point is to turn an asset into a joint enterprise between the issuer and the referrer (they take the risk and share the profits) and to remove the blockchain itself from the equation (the network just cares about covering its fixed costs).

I wonder what @bytemaster thinks of this.

[abit]

The referral program plays a bad role in this scene.. transfer to myself & earn money from the issuers!

That's a good point.
To fix this vulnerability we would need to tie the referrer's income to the issuer's transfer fee income, not the blockchain's income as we have it now.

It would have to work like this:
- for each transfer made on the BitShares network the issuer pays 6 BTS (20% of 30 BTS) to the DAC and this is her/his fixed cost
- if the fee received for this transfer is less than 6 BTS, the issuer has to cover this loss and the referrer gets nothing
(EDIT: we could set the minimum transfer fee to 6 BTS so for payments below 2 bitUSD, which is the break-even point, the network can cover its costs but neither the issuer nor the referrer gets any income or loss - which I think is fine)
- if the fee received for this transfer is more than 6 BTS, the issuer gives 80% of the profit (i.e. the excess above 6 BTS) to the referrer and keeps the remaining 20%.

So if an issuer sets the CER wrongly and makes a loss in the long run, the referrer will get some compensation but it will probably be less than s/he has now.
But on the other hand, if the issuer makes a profit, 80% of it will be shared with the referrer.

EDIT: This will incentivize the referrer to attract users that usually make bigger transfers.

Good idea.
However if 80% of fees goes to referrer without a cap, issuers may have not enough incentives to promote. Perhaps add a cap like this?
* If the fee received for a transfer is more than 36 BTS, the issuer give (36-6)*80%=24BTS to the referrer and keeps the remaining.

[jakub]

The referral program plays a bad role in this scene.. transfer to myself & earn money from the issuers!

That's a good point.
To fix this vulnerability we would need to tie the referrer's income to the issuer's transfer fee income, not the blockchain's income as we have it now.

It would have to work like this:
- for each transfer made on the BitShares network the issuer pays 6 BTS (20% of 30 BTS) to the DAC and this is her/his fixed cost
- if the fee received for this transfer is less than 6 BTS, the issuer has to cover this loss and the referrer gets nothing
(EDIT: we could set the minimum transfer fee to 6 BTS so for payments below 2 bitUSD, which is the break-even point, the network can cover its costs but neither the issuer nor the referrer gets any income or loss - which I think is fine)
- if the fee received for this transfer is more than 6 BTS, the issuer gives 80% of the profit (i.e. the excess above 6 BTS) to the referrer and keeps the remaining 20%.

So if an issuer decides to forgo profits and instead promote cheap transfers, the referrer will get some compensation but it will probably be less than s/he has now.
But on the other hand, if the issuer makes a profit on transfer fees, 80% of this profit will be passed to the referrer.

EDIT: This will incentivize the referrer to attract users that usually make bigger transfers.

[abit]

I have another idea, possibly better than the tier-based system.
This idea assumes that each asset (be it SmartCoin, private bit-asset, UIA, FBA) is a financially independent business entity run by the asset's issuer and operating within the BitShares DAC.

An asset issuer has her/his costs and incomes:

The costs
The BitShares DAC charges the issuer 30 BTS per transfer. So the issuer has a fixed cost of 30 BTS s/he needs to pay to the DAC for each transfer made by a user.

The income
The transfer fee policy is entirely up to the issuer. S/he can charge the users whatever s/he finds suitable. And this is what we have now - an asset's issuer sets the actual transfer fee by adjusting the CER parameter (Core Exchange Rate).


But what if we went one step further and allowed the transfer fee to have a minimum and maximum value but generally be percentage-based?
This way the only concern of an issuer would be to set the CER in such a way that the average transfer fee is at least 30 BTS (so that the issuer can cover her/his costs in the long run).

E.g. for bitUSD the issuer (i.e. the committee account) could do the following:
- set the minimum transfer fee to $0.01 (~ 3 BTS)
- set the maximum transfer fee to $1 (~ 300 BTS)
- set a percentage-based transfer fee expressed in bitUSD and defined as 1% of the amount being transferred (the BTS value of the transfer is irrelevant, all that counts is the bitUSD amount)

This way the issuer is happy as long as the average transfer fee paid by the users is equal or above $0.1 (~ 30 BTS) because this is the actual cost s/he has to pay to the DAC.
The blockchain itself is happy because it receives a fixed income.
The user is happy because the transfer fee is related to the perceived value of the service received.

The referral program plays a bad role in this scene.. transfer to myself & earn money from the issuers!

[jakub]

I have another idea, possibly better than the tier-based system.
This idea assumes that each asset (be it SmartCoin, private bit-asset, UIA, FBA) is a financially independent business entity run by the asset's issuer and operating within the BitShares DAC.

An asset issuer has her/his costs and incomes:

The costs
The BitShares DAC charges the issuer 30 BTS per transfer. So the issuer has a fixed cost of 30 BTS s/he needs to pay to the DAC for each transfer made by a user.

The income
The transfer fee policy is entirely up to the issuer. S/he can charge the users whatever s/he finds suitable. And this is what we have now - an asset's issuer sets the actual transfer fee by adjusting the CER parameter (Core Exchange Rate).


But what if we went one step further and allowed the transfer fee to have a minimum and maximum value but generally be percentage-based?
This way the only concern of an issuer would be to set the CER in such a way that the average transfer fee is at least 30 BTS (so that the issuer can cover her/his costs in the long run).

E.g. for bitUSD the issuer (i.e. the committee account) could do the following:
- set the minimum transfer fee to $0.01 (~ 3 BTS)
- set the maximum transfer fee to $1 (~ 300 BTS)
- set a percentage-based transfer fee expressed in bitUSD and defined as 1% of the amount being transferred (the BTS value of the transfer is irrelevant, all that counts is the bitUSD amount)

This way the issuer is happy as long as the average transfer fee paid by the users is equal or above $0.1 (~ 30 BTS) because this is the actual cost s/he has to pay to the DAC.
The blockchain itself is happy because it receives a fixed income.
The user is happy because the transfer fee is related to the perceived value of the service received.

[Empirical1.2]

We have a fixed cost of maintaining the network regardless of the number of transactions that go through it.

Oh contrair Pe'are.

Sure there is a minimal expense for 1 to N TPS, but your assertion isn't true. At some point it will take higher end hardware to support an increased volume of transactions. You could even argue the existing capacity of the system did not come at zero cost either, it took time to develop and it's still in development if you look at it in terms of what we now have is apparently not acceptable to the market to gain adoption and thus increase our marketcap.

I do agree with your point regarding the untapped profit potential in some form of tiered pricing structure, but that assumes there is a demand for it. It can be seen as a chicken / egg problem of marketing too. Will in fact dropping the price of BItAssets significantly increase their adoption and improve liquidity? What hard empirical data can you show? We think it will, but that is just our speculation.

There is no real point in continuing this line of discussion, I'm merely playing devil's advocate and pointing out issues in your blanket statements.

To be fair, his statement obviously meant that we have a fixed cost for maintaining the network at it's current capacity so not too make better use of current capacity is waste.

I'm not saying we should emulate the following but regards whether reducing fees improve BitAsset adoption. A centralized BitAsset competitor that started after BTS BitAssets, Uphold (formerly BitReserve) is supposedly the fastest growing money platform in the world & their BitAsset TX fee is free. https://uphold.com


Personally I've always been a fan of the referral programme, but I was under the impression BitAssets 2.0 would be more liquid by design. Without that liquidity you don't have a strong product & one referrers can easily sell. So personally, I'm in favour of lower fees where possible and liquidity incentives till that's achieved at which point you'll have a product that can be monetised more.

[jakub]

At some point it will take higher end hardware to support an increased volume of transactions.

Yes, but we are quite far from this point right now.
And when we get there it will be a good opportunity to raise the fees and compensate the witnesses for the extra hardware investment.
But I think we agree anyway 

[Thom]

We have a fixed cost of maintaining the network regardless of the number of transactions that go through it.

Oh contrair Pe'are.

Sure there is a minimal expense for 1 to N TPS, but your assertion isn't true. At some point it will take higher end hardware to support an increased volume of transactions. You could even argue the existing capacity of the system did not come at zero cost either, it took time to develop and it's still in development if you look at it in terms of what we now have is apparently not acceptable to the market to gain adoption and thus increase our marketcap.

I do agree with your point regarding the untapped profit potential in some form of tiered pricing structure, but that assumes there is a demand for it. It can be seen as a chicken / egg problem of marketing too. Will in fact dropping the price of BItAssets significantly increase their adoption and improve liquidity? What hard empirical data can you show? We think it will, but that is just our speculation.

There is no real point in continuing this line of discussion, I'm merely playing devil's advocate and pointing out issues in your blanket statements. In general we agree that a simple 2 tiered fee schedule for BItAssets is worth a try assuming the cost to implement the chages required are not too high. I might not fully agree with your rationale on all points, but I'm belaboring the issue now.

Your idea has merit and "seems" like a good idea to me.

[jakub]

I agree with your second point, but I can't agree with any of the above. The analogy is not good. Anybody can easily and intuitively understand the cost of travel (moving physical stuff around) is proportional to the distance traveled. Energy is not free and it takes more energy to travel farther. However, that is not true of pushing electrons around the planet. Sure the rule of physics is basically the same, but the difference in the amount of energy required to transfer the number 1 vs. the number 1,000,000 is not even close to proportional to the value of the number.

People outside the cryptoworld are used to the fact that transferring $10,000 needs to cost more than transferring $10. This is true in the legacy systems: the bigger the amount the more risk is involved in terms of fraud.
And this is also consistent with the perceived utility - if I ask you to transfer safely $10,000 for me, you would do me a much bigger favor than transferring $10.

So my point is - if we aim to be a profitable business why don't we take advantage of this? Just because other crypto-currrencies don't do that?
Let's lower our transfer fees for small amounts and make them a bit higher for bigger amounts. This is what non-crypto people are used to and it makes perfect sense to them.

Perhaps "micropayments" can become sustainable, perhaps not. Without a detailed analysis of costs and benefits I think it's a rather big gamble.

What does it cost us to transfer a micropayment? Nothing.
We have a fixed cost of maintaining the network regardless of the number of transactions that go through it.
IMO the "detailed analysis" is dead simple: up to some point we should process as many payments as we possibly can to maximize our revenue.

[Thom]

Saying it's absurd is a bit strong, don't you think?

It's absurd because we got stuck in the crypto mentality instead of taking a healthy business approach:
(1) From the user perspective - it's similar to having the same train ticket price no matter if you travel just a few miles or several hundred

I agree with your second point, but I can't agree with any of the above. The analogy is not good. Anybody can easily and intuitively understand the cost of travel (moving physical stuff around) is proportional to the distance traveled. Energy is not free and it takes more energy to travel farther. However, that is not true of pushing electrons around the planet. Sure the rule of physics is basically the same, but the difference in the amount of energy required to transfer the number 1 vs. the number 1,000,000 is not even close to proportional to the value of the number.

Labeling are marketing mistakes as a "crypto mentality" clouds the issue. I have argued before that  micropayments without taking into account the network costs to support them is not a healthy business approach. it's the cost of providing a crypto service that inspired BM to come up with a better model to pay for security than Bitcoin. PoW is terribly inefficient. If you can't sell an item at more than it costs to provide it you don't have a sustainable business.

That is the simple truth. Now factor in marketing and strategies to capture a market (i.e. subsidize some of the costs in the short term to get a sustainable market working) and it becomes a matter of risk evaluation and speculation. Perhaps "micropayments" can become sustainable, perhaps not. Without a detailed analysis of costs and benefits I think it's a rather big gamble.

[jakub]

Saying it's absurd is a bit strong, don't you think?

It's absurd because we got stuck in the crypto mentality instead of taking a healthy business approach:
(1) From the user perspective - it's similar to having the same train ticket price no matter if you travel just a few miles or several hundred miles.
(2) From the business perspective - in most cases we are either overpricing or forgoing the revenue customers would be willing to pay.
The customer does not care about our production costs - all s/he cares for is how useful a given service is.

I thinks it's best to try this out on bitAssets first before implementing it elsewhere.

I fully agree. We should just apply it to bitAssets controlled by the committee.
My point is - let us not try to solve 100% of the problem. Let's just solve most of it, especially if we can do it so easily.

[Thom]

Having the same fee for transferring both 1 USD and 10,000 USD is absurd - it is obvious that for the user these two transfers have extremely different levels of usefulness.

Saying it's absurd is a bit strong, don't you think?

It costs the network no more to transfer 1 BTS than it does 1,000,000 and that holds true for all assets.

However, the price of an item is not only related to what it costs to produce it. It raises the issue of what profit margin is reasonable, or better stated, what profit margin can be obtained from the market. It's a matter of demand, and right now demand is low on all fronts of this ecosystem.

In general I think there is merit in a 2 tiered approach as you describe here, and basing it on the asset itself rather than in terms of the equivalent BTS value is an excellent way to simplify the determination of which fee rate the transaction falls within.

This same approach might also work for other assets transfers, but b/c of how UIAs are created the approach isn't necessarily as clean. Even if it was allowed for UIAs, even to the extent of allowing the threshhold to be set by the UIA creator, the effort required to implement it may not be worth the benefit to the ecosystem. For bitAssets no GUI effort is required. The threshhold value could be just another set of parameters set by the committee.

I thinks it's best to try this out on bitAssets first before implementing it elsewhere.

[abit]

Imo 10 BTS is still too high for a common Chinese user.

10 BTS transfer fee for payments below 10 bitCNY is still a significant reduction over the current 30 BTS.
It cannot be too low because it will encourage people to game the system by splitting their payments into several smaller parts.

It's a bit high for individuals, however maybe merchants don't think it's high?

[Empirical1.2]

Edit: There may be some value in an intermediate tier.

I think 3 tiers is the maximum. I'd start with 2 and see how it goes.
Having more tiers will make it too complex for the user and it will also weaken the referral program too much.
(or maybe we should introduce 3 tiers but make the transfer fee significantly higher than 30 BTS for the last tier - this would compensate the referral program businesses)

But I think we definitely need it.
Having the same fee for transferring both 1 USD and 10,000 USD is absurd - it is obvious that for the user these two transfers have extremely different levels of usefulness.
As we have it now, we either overprice people for small payments or forgo the revenue we could potentially have for bigger payments - it's just stupid business-wise.

   I agree. I also agree 3 may be the maximum for a tiered approach & that the last tier could be higher that 30 BTS.

[jakub]

Edit: There may be some value in an intermediate tier.

I think 3 tiers is the maximum. I'd start with 2 and see how it goes.
Having more tiers will make it too complex for the user and it will also weaken the referral program too much.
(or maybe we should introduce 3 tiers but make the transfer fee significantly higher than 30 BTS for the last tier - this would compensate the referral program businesses)

But I think we definitely need it.
Having the same fee for transferring both 1 USD and 10,000 USD is absurd - it is obvious that for the user these two transfers have extremely different levels of usefulness.
As we have it now, we either overprice people for small payments or forgo the revenue we could potentially have for bigger payments - it's just stupid business-wise.

[Empirical1.2]

Imo 10 BTS is still too high for a common Chinese user.

10 BTS transfer fee for payments below 10 bitCNY is still a significant reduction over the current 30 BTS.
It cannot be too low because it will encourage people to game the system by splitting their payments into several smaller parts.

That might not be a bad thing. Those who don't care about $0.1, which according to BM is most people, wouldn't bother splitting their payments, whereas those for who a few cents mattered could split their slightly larger payments into smaller sizes.

Edit: There may be some value in an intermediate tier.

It seems a TX fee of $0.05 would be more appropriate in the sub $30 range too. (This would still be 0.2%)

Having said that $0.2 USD transfer fees make some project unviable.

Im pushing Bitshares for a joint effort of two NGOs and the local crypto community which one the objectives is to provide entrepreneurs from marginal economies with a way to use digital cash. (Its a bigger project ex-Worldbank, ex-UN people working on it)
 
Basically they will be moving an IOU, but $3.2 ARS is too much for the average size of that transactions. ($30-$50)

are we competing with "every single other coin" or the legacy systems?

I think one of our main competitors is uphold (BitReserve), who offer centralized BitAssets, they are supposedly the fastest growing money platform in the world & they are 'free' for any amount. https://uphold.com/

I'm not suggesting we should/can be free, but we do have stiff competition among customers that don't value decentralization.

[jakub]

Imo 10 BTS is still too high for a common Chinese user.

10 BTS transfer fee for payments below 10 bitCNY is still a significant reduction over the current 30 BTS.
It cannot be too low because it will encourage people to game the system by splitting their payments into several smaller parts.

[abit]

I like that your solution attempts to balance the needs of the referral programme with the need to be able facilitate, if not micro, at least smaller size transactions, like for example tipping. It is also simpler to implement that percentage based fees. Definitely worth considering.

I'm sure we can find some common ground and arrive at a simple solution that:
- respects both tipping/micro-payments and the referral program
- is simple for the users to remember and the devs to implement
- prevents spamming

The solution I proposed also enables some pseudo-regional customization, i.e. we could set the fee thresholds like this:
- for bitCNY: 10 bitCNY (~1.5 USD)
- for bitEUR: 1 bitEUR (~1.1 USD)
- for bitUSD: 1 bitUSD
And this way the Chinese users will get a bit of preferential treatment but without any real temptation to game the system.

Imo 10 BTS is still too high for a common Chinese user.

[jakub]

I like that your solution attempts to balance the needs of the referral programme with the need to be able facilitate, if not micro, at least smaller size transactions, like for example tipping. It is also simpler to implement that percentage based fees. Definitely worth considering.

I'm sure we can find some common ground and arrive at a simple solution that:
- respects both tipping/micro-payments and the referral program
- is simple for the users to remember and the devs to implement
- prevents spamming

The solution I proposed also enables some pseudo-regional customization, i.e. we could set the fee thresholds like this:
- for bitCNY: 10 bitCNY (~1.5 USD)
- for bitEUR: 1 bitEUR (~1.1 USD)
- for bitUSD: 1 bitUSD
And this way the Chinese users will get a bit of preferential treatment but without any real temptation to game the system.

[Empirical1.2]

I like that your solution attempts to balance the needs of the referral programme with the need to be able facilitate, if not micro, at least smaller size transactions, like for example tipping. It is also simpler to implement that percentage based fees. Definitely worth considering.

[jakub]

Percentage based transfer fees are completely untenable. Every single other coin in the world has a low, fixed fee for any amount sent, bitshares would lose out to the competition and it would be a PR nightmare. Percentage based trade fees on the other hand, are acceptable.

But are we competing with "every single other coin" or the legacy systems?

Anyway, if you read the OP I'm not advocating percentage-based transfer fees (because it's too hard to implement).
What I propose is a two-tier transfer fee schedule to address the problem of micro-payments.
If we don't do micro-payments somebody else will.

[abit]

Percentage based transfer fees are completely untenable. Every single other coin in the world has a low, fixed fee for any amount sent, bitshares would lose out to the competition and it would be a PR nightmare. Percentage based trade fees on the other hand, are acceptable.

If the fee is charged by IOU/Smart coin issuers then would be OK (in addition to basic network fee). Best if the issuers are able to define several thresholds and % of the fee. Under this condition the committee can control fee of transferring BTS to be low or higher (as demand). Maybe the ones who benefit by the reference program won't agree though.

[monsterer]

Percentage based transfer fees are completely untenable. Every single other coin in the world has a low, fixed fee for any amount sent, bitshares would lose out to the competition and it would be a PR nightmare. Percentage based trade fees on the other hand, are acceptable.

[jakub]

In the last Mumble @bytemaster mentioned that percentage-based transfer fees are a complex subject, mainly because of these two reasons:
- it's hard to reliably determine the exact BTS value of an asset at any given point of time
- for stealth transfers the amount is not available

The current transfer fee policy (30 BTS or $0.10 per transfer no matter what the amount is) effectively kills businesses based on small tips.

So if percentage-based fees are such a headache, why don't we apply a simple tier-based solution:
For each SmartCoin let's introduce a threshold expressed not in BTS value but in terms of the asset itself, so that e.g.:
- if you transfer less than 1 bitUSD you pay the equivalent of 10 BTS
- if you transfer more than 1 bitUSD you pay the equivalent of 30 BTS
And this would only be applied to SmartCoins and normal transfers (i.e. stealth mode excluded).

It will not be perfect but relatively straight-forward and easy (?) to implement.
And it will address most of the problem without hurting the referral program in any significant way.
But most importantly, it will open up huge opportunities for businesses relying on micro-payments.

Is there any flaw in this approach?

EDIT: I think I've come up with a better idea described this new thread:
https://bitsharestalk.org/index.php/topic,20789.0.html