I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?
And how do we deal with this...
How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.
Except that the fee will be different depending on the 'class' of user.
Yeah I also forgot to mention microloans, microinvesting, microtrading in developing nations.
Depending on the avg trade size 20 cents can be better or worse for traders. Typically Bitcoin exchanges charge 0.2% on each side and give a big discount for the maker. That means your avg trade size has to be $100 to equal the trading costs of an avg. Bitcoin exchange. At least the BitShares platform won't have counterparty risk.
Yeah but its even worse for market-makers. On external exchanges, there is zero cost for setting, cancelling and moving orders, only for fills. In comparison, based on my current understanding, moving a single pair of bid/offer spread orders 100 times per day (to adjust to movements in the fair price of the asset) would cost $16 per day (net of cash backs if you're a lifetime member). I'm concerned about the economics of this, especially for privatised bitAsset issuers that wish to support their tokens.
I also need to clarify what happens if a market-maker's wall is chewed at by lots of small orders (usually the case with market-making). Does that mean the market-maker experiences a fixed cost for each small fill? If so, this would give the market-maker a lot less control over cost than on external exchanges, and make it even less economic.
Since it's price takers that have the control over their trade size, and market-makers are providing the efficiency in the market, would it be better to always put the combined fee on the price-taker?
Also, allowing market-makers to place relative orders (that do not need constant changing on the network) would help a lot, though I know there have been past issues raised around the technical implementation of this.
As another consideration, could the following be considered:
- setting a percentage fee on market transactions, consistent with other exchanges
- setting a lower fee on market transactions compared to other token transfers
Apologies if I am misunderstanding the intended application of these higher fees in market exchanges, but the efficient operation of the markets is critical to the entire success of bitShares.
[Xeldal's comments also reflect the same concerns]