The issue I see with this is that later on in the game, market makers won't be incentivised enough to provide liquidity. You may think that at this point the asset will have reached "critical mass" and won't need liquidity, but I doubt that will be the case. Stocks, bonds, and forex all have market makers still and their volume is more than BTS may ever be able to dream about.
...
Is this limited to UIA's only, or can it be applied to MPA's PrivateMPA's andCurrent Smartcoins don't ask for a trading fee. But since the committee
Core asset BTS?
It seems like there will be opportunity to abuse this, at least in the
beginning, where few people are competing. The fee's payed trading with
yourself seem minuscule compared to the possible gain if that Asset ever becomes
popular. I guess that is a risk though, that it may not be popular.
I'm trying to envision what this competing will look like. Everyone trying to
trade with themselves without offering too good of a price and also trying to
avoid filling someone else's order.
If your own order is the cheapest available. Other than the fee, is there any
reason NOT to trade with yourself? If not shouldn't we expect every market to
completely saturate based on the perceived future volume of that market?
I think the conclusion I'm coming to is that these attempted "abuses" are
actually good for everyone. All participants will be taking their own risks,
and not participating costs you nothing. Its not a further complication because
not knowing about it doesn't hurt you. The more competition, the tighter the
spread and greater collected network fees. Whats to lose? +5%
I don`t think it is a good idea to make Market Maker as a base feather of block chain protocol levelThe market maker is NOT implemented on the block chain level ..
It seems complicated & commits BTS to an approach which might not work for an extended period of time.
https://github.com/cryptonomex/graphene/issues/475
This is the first of many new proposals that don't cost the BTS stakeholders much of anything to get powerful new features. In this case all the stakeholders must do is grant permission for a hardfork that implements a new feature. 100% of the new feature is self funded.
The result is a new investment opportunity for those who want to invest on a per-feature basis in assets that are not a SECURITY because they are not a liability.
Please read the issue for more details.
The issue I see with this is that later on in the game, market makers won't be incentivised enough to provide liquidity. You may think that at this point the asset will have reached "critical mass" and won't need liquidity, but I doubt that will be the case. Stocks, bonds, and forex all have market makers still and their volume is more than BTS may ever be able to dream about.
I like the idea of incentivising people to bootstrap liquidity for assets at the beginning, but there needs to be a provision for market makers in the future. I would suggest making vesting a part of the equation. If someone promises to keep providing liquidity by reinvesting their profits, they should be provided with more maker shares. Someone promising to provide guaranteed liquidity for 5 years is much more valuable than someone who will provide liquidity for 3 months. These shares could be cashed out early, but only with a penalty and distributing the penalized maker shares back into the reserve.
In the worker proposal, it says "If the proposal gets funded then it will be assumed that the required hardfork has been approved by stakeholders and development will compense."
What kind of rule is that? 100000BTS can be paid by one person, and a hard fork gets approved just like that by getting funded? That's so centralized.
95% of the people might not be even aware of this thread.
100k bts is the cost for implementing the feature.
It is NOT the votes needed to be approved.
I don`t think it is a good idea to make Market Maker as a base feather of block chain protocol levelThe market maker is NOT implemented on the block chain level ..
The proposal proposes a way to PAY market makers for their liquidity!
just posted some questions on https://github.com/cryptonomex/graphene/issues/475
My main concern is the effect on BTS profitability and referral income. Does it mean that 80% of fees will go to the maker and 20% of fees will go to cryptonomex? Is this only for new UIAs? Will this also be for current committee issued smartcoins?
How will BTS profitability and referral income be affected?I don`t think it is a good idea to make Market Maker as a base feather of block chain protocol levelThe market maker is NOT implemented on the block chain level ..
The proposal proposes a way to PAY market makers for their liquidity!
While Market Making is not done at the blockchain level, incentivizing it is. It is a fair question of whether or not this extra feature is something we want.
just posted some questions on https://github.com/cryptonomex/graphene/issues/475
My main concern is the effect on BTS profitability and referral income. Does it mean that 80% of fees will go to the maker and 20% of fees will go to cryptonomex? Is this only for new UIAs? Will this also be for current committee issued smartcoins?
How will BTS profitability and referral income be affected?I don`t think it is a good idea to make Market Maker as a base feather of block chain protocol levelThe market maker is NOT implemented on the block chain level ..
The proposal proposes a way to PAY market makers for their liquidity!
While Market Making is not done at the blockchain level, incentivizing it is. It is a fair question of whether or not this extra feature is something we want.
Hardforks for the purpose of releasing FBA's will not be done more frequently than N times in a P period. BitShares will incorporate all other hardforks into the periodic hardfork schedule to the extent possible. Hardforks to address emergency issues will not be bound to a schedule but will be performed as necessary, with as much advance notice to all parties as possible.
just posted some questions on https://github.com/cryptonomex/graphene/issues/475
My main concern is the effect on BTS profitability and referral income. Does it mean that 80% of fees will go to the maker and 20% of fees will go to cryptonomex? Is this only for new UIAs? Will this also be for current committee issued smartcoins?
How will BTS profitability and referral income be affected?I don`t think it is a good idea to make Market Maker as a base feather of block chain protocol levelThe market maker is NOT implemented on the block chain level ..
The proposal proposes a way to PAY market makers for their liquidity!
While Market Making is not done at the blockchain level, incentivizing it is. It is a fair question of whether or not this extra feature is something we want.
If the market starts out small with $10K / 24hr volume, and then turns into a $30M 24/hr volume then the market fees of 0.2% will yield $30,000 per day, half of which would belong to the individual who provided a meer $10K of liquidity in the first year. Meanwhile those who provide $10K of liquidity once $30M of volume is reached will get a very small number of MSHARES
The percentage of market fees that are directed to repurchase MSHARES is a parameters that is set by the issuer. It may be increased, but never decreased.
For $300, let's just get it done.
I notice two pointI don`t think it is a good idea to make Market Maker as a base feather of block chain protocol levelThe market maker is NOT implemented on the block chain level ..
The proposal proposes a way to PAY market makers for their liquidity!
Me too :)For $300, let's just get it done.
Totally agree.
This is a simpler way to do the same thing.
- NEGATIVE_MAKER_FEE = cash in the pocket of makers
- MAKER_SHARES = more complexity and rules to accomplish the same result
I also think that liquidity would be helped by allowing orders to be placed relative to the price feed.
EDIT: Just to be clear, I'm saying that MAKER_SHARES aren't needed because a negative maker fee solves the same problem much more simply.
How is this proposal better than a negative 0.2% maker fee, which would also reward makers according to the volume they generate, and be much, much less complex?
And also make fees 0 to every maker and get the borrow cost to 0 too.
Would be interesting to see the fight for the first row of the book.
Cheers! lol
@clayop about the borrow fee, can I make something?
This is a simpler way to do the same thing.
- NEGATIVE_MAKER_FEE = cash in the pocket of makers
- MAKER_SHARES = more complexity and rules to accomplish the same result
I also think that liquidity would be helped by allowing orders to be placed relative to the price feed.
EDIT: Just to be clear, I'm saying that MAKER_SHARES aren't needed because a negative maker fee solves the same problem much more simply.How is this proposal better than a negative 0.2% maker fee, which would also reward makers according to the volume they generate, and be much, much less complex?
Nobody has commented on Chorons's idea to achieve the same goal but in a simpler way.
Is there any flaw in his reasoning?
Paying a negative fee immediately from the buyer who pays a positive fee is nothing more than shifting the price. It is a meaningless change.Taker pays the fee to both maker and the network. It's more than shifting price because it encourages makers thus improving the liquidity.
Also, the present value of future fees is much greater than the value of current fees. We therefore transfer value from the future into the present. Future liquidity incentive requirements are less than initial requirements.Maker% and taker% can be set as parameters. This can be addressed by tuning the parameters as time goes and can even be set both to positive values when we don't need to encourage makers.
Those that have proposed simply paying interest to the first order on the book start to get the idea. The question is, where does the interest come from, who funds it? If you want to do more than simply shift the price, then you will need to bring in outside funding. I am bringing in the outside funding from future fees in the same market. You all are suggesting bringing in that funding by diluting current BTS holders. Furthermore, that solution does little to help out UIA issuers which want to improve their own liquidity and raise money to do so. My monetizing future fees it helps UIA issuers to fund their liquidity without actually issuing a security.If the taker is the buyer of BTS on BTS/USD, he pays the fee using BTS by getting less received BTS.
Paying a negative fee immediately from the buyer who pays a positive fee is nothing more than shifting the price. It is a meaningless change.I disagree that it is meaningless. It rewards makers, which rewards providing liquidity (by definition). Liquidity is orders on the books. The 0.2% taker fee penalizes order taking, which also helps liquidity (by definition, taking orders will reduce liquidity).
QuotePaying a negative fee immediately from the buyer who pays a positive fee is nothing more than shifting the price. It is a meaningless change.Taker pays the fee to both maker and the network. It's more than shifting price because it encourages makers thus improving the liquidity.
Fascinating. Bytemaster is right.
And why is this proposal lesser priority than stealth transactions????
Should I pay 45K for this to becomes reality?
Ohh wait I already did... but BM and co decided to not cash it and preferred the money I paid to go down 4 times...
OK new offer - how much should I pay to move this in front of the stealth. No direct benefit for me from such rotation, just the price for putting something that makes sense for everyone in front of a feature that makes almost no sense for everyone [sadly enough for the sponsor the most]?
So I just want to let everyone know, Cryptonomex is investing money aside from the Worker Proposals and improving BitShares. But when we put prices on the various Worker Proposals, part of it is to help everyone else prioritize. If there isn’t a price associated with it we don’t have an estimate of the complexity and how it’s going to impact scheduling...
First of all our plans are directly tied to what people are willing to pay for, prioritization wise.
One of the major things that was discussed this week was a new way to raise money to build features. I think that it’s worthwhile to discuss that in this Mumble session. There’s a lot of debate about what we should prioritize and how it should be funded and how much we should pay for things.
bytemaster: Well how everything works in life, we do things for profit. We prioritize mostly based on profitability. The highest most profitable actions get our highest priority.
And why is this proposal lesser priority than stealth transactions????
Should I pay 45K for this to becomes reality?
Ohh wait I already did... but BM and co decided to not cash it and preferred the money I paid to go down 4 times...
OK new offer - how much should I pay to move this in front of the stealth. No direct benefit for me from such rotation, just the price for putting something that makes sense for everyone in front of a feature that makes almost no sense for everyone [sadly enough for the sponsor the most]?Quote from: Dan Larimer http://bitsharesnews.info/post/133782110978/beyond-bitcoin-bitshares-dev-hangout-withSo I just want to let everyone know, Cryptonomex is investing money aside from the Worker Proposals and improving BitShares. But when we put prices on the various Worker Proposals, part of it is to help everyone else prioritize. If there isn’t a price associated with it we don’t have an estimate of the complexity and how it’s going to impact scheduling...
First of all our plans are directly tied to what people are willing to pay for, prioritization wise.Quote from: http://bitsharesnews.info/post/134067878598/beyond-bitcoin-bitshares-dev-hangout-withOne of the major things that was discussed this week was a new way to raise money to build features. I think that it’s worthwhile to discuss that in this Mumble session. There’s a lot of debate about what we should prioritize and how it should be funded and how much we should pay for things.
So yes, I do expect offers:
- just for this proposal to be moved in front of stealth proposal.
- me paying for 0-100% of it and receiving 0-20% of all the Maker asset.
Fascinating. Bytemaster is right. Negative maker fees really do just shift the price, technically speaking. The psychological effect may be to increase liquidity, as makers feel that they are getting a bonus, but it's not mathematically provable as I first thought.
I'm not quite comfortable with the idea of issuing this Maker asset, I rather dilute and issue BTS instead. I understand that dilution is not a popular topic because push the price down and in this way we can bootstrap now ant pay later, but my points are:
1 - Security issued by a security - This just seems strange, BTS is a kind of security, teorecally owes to holders and plan to pay by burning, if BTS network issue another token on a promise to payback with some fees seems to be excluding BTS holders of the "rights" of the fees in the future which could be expensive, and also could be a start of a spiral of debt that we already see in mainstream finance.
2 - Low relative cost - If we find a way to fairly compensate just the best order(s) that stay in the book and get filled, I think as cheap as $100 a day per asset could work, let's say we put gold, silver, cny, usd and eur on; that's $15000 a month. a tiny amount for a $9 million dollar company.
3 - Poor value - With hundreds of valueless tokens floating around, without any base price, immediate liquidity, use, or insurance of future liquidity this token may not have the appealing necessary for the people outside of our community.
I would say let's dilute for 1 month and see how it goes.
Great ideas btw BM as always, a little more patience and we get there.
So just leave the taker fee as-is, and instead have the network discount the maker fee.Unfortunately, I don't think this can work, because the network can't detect self-trades to collect the network bonus. If completing a trade creates free BTS, everybody in town will be gaming the system.
So just leave the taker fee as-is, and instead have the network discount the maker fee.Unfortunately, I don't think this can work, because the network can't detect self-trades to collect the network bonus. If completing a trade creates free BTS, everybody in town will be gaming the system.
Hence the negative maker fee encourages users to wait (which is the opposite of liquidity).
financing stealth, instead of core features is taking value from BTS, just by the mere fact of prioritizing non-essential features over essential and much needed one.
Hence the negative maker fee encourages users to wait (which is the opposite of liquidity).
There are two factors at work here, liquidity, which is the depth of the orderbook and traded volume, which is makers and takers coming together. Having an orderbook 100M USD deep with no trades would still have huge liquidity.
I fear this is argument is another straw man: If you keep the overall trading fee the same as it is now but divert a fraction of it to the makers, how can you possibly change the taker's behaviour?
What about going with option 1 for a set period of time, and if it doesn't work (as you think it won't), then go with your OP?
Suppose we had Bitcoin level inflation (10% per year)... and we put that toward the referral system... at today's valuation that would buy 30,000 users per year... at the valuation it would quickly grow to $600,000,000 it could buy 300,000 users per year....
Yes... this would be game changing... yes... inflation in this case would yield a net gain for shareholders.
:o
It is our belief that the cost of implementing a feature must be less than the present value of a feature. It is the belief of Cryptonomex that this particular feature is worth much more than the cost to implement it and therefore Cryptonomex will be implementing it speculatively in exchange for a cut of all MSHARES for all assets that use this feature to improve their liquidity.
I think it's worth remembering this passage from the OP proposal:QuoteIt is our belief that the cost of implementing a feature must be less than the present value of a feature. It is the belief of Cryptonomex that this particular feature is worth much more than the cost to implement it and therefore Cryptonomex will be implementing it speculatively in exchange for a cut of all MSHARES for all assets that use this feature to improve their liquidity.
The OP is very complicated, so cryptonomix gets rewarded for implementing it by taking a cut of the MSHARES. Fair enough, but is this clouding their ability to judge the counter proposal objectively?
CNX only gets 20% of what is paid to Market Makers.
I have updated the example to state that MAKER owners would receive 10% rather than saying that Cryptonomex will receive 10% of all future market fees.
If we assume that the asset issuer only allocates 50% of trading fees to the incentive program then, the MAKER asset would receive 10% of all trading fees.
Is this just for UIAs or smartcoins also?
now I understand why bytemaster was feedup n told a f######### you all.....people can not understand things that will.shift our game for for a couple. a few bucks......even tbis way bytemaster could have part of his job funded n with some expectations.for.the future if it grows.....QuoteQuotePaying a negative fee immediately from the buyer who pays a positive fee is nothing more than shifting the price. It is a meaningless change.Taker pays the fee to both maker and the network. It's more than shifting price because it encourages makers thus improving the liquidity.
Sometimes it helps me to imagine an extreme case to get a better feel for what is happening on the smaller scales. So what follows is my own thought experiment.
Lets try the experiment with a 20% taker fee just to be outrageous. Lets have the maker fee be -20%. Under such a market, those who demand liquidity take a 20% loss and those who provide it get a 20% gain. The trader would view such a market similar to a market with a 20% spread. They would be hesitant to buy such an asset because they know they will take an instant 36% loss if they are the taker on both sides. (.8 in and .8 out). This means that someone looking to get in-or-out of such a market with the least loss would have to be a maker for one of the two trades in which case they take a 4% loss (.8*1.2=.96). Those who are willing to "wait" on both sides of the trade can profit by 44% (1.2*1.2). Hence the negative maker fee encourages users to wait (which is the opposite of liquidity). You create "lines" on both side of the order book of people who want to exit their position. I suspect you would see very narrow spreads with steep walls. This market would have the appearance of good liquidity, but the underlying reality is that 'day traders' view it as a market with a 20% spread.
So in this extreme case the takers (aka traders) end up paying for their liquidity TODAY the same way they would pay for their liquidity without the 20/-20 maker/taker rule: via a large spread. Market makers end up making the same profits they would if they had a 20% spread between their buy and sell walls. The only thing the negative maker fee is doing under this model is enforcing a minimal spread that makers can provide, in other words price-fixing the market maker fee. Instead of market makers competing to reduce spread, they are competing to be the first in line of a "virtual" 0 spread. Because no value is moving through time all this price fixing is doing is creating shortages (of takers) and gas lines (those waiting to exit on both sides of the book).
So it is clear that if we set the maker/taker fees to be greater than the natural spreads that things break down. Our real goal is to reduce spreads, not enforce a minimum spread with steep cliffs of liquidity on either side of that minimum spread.
So this means that we want to maximize maker rewards without increasing the cost to the taker. So lets look at another extreme market:
1. Suppose that takers paid a 0.1% fee
2. Suppose that makers earned 20% bonus from someone else (ie: the network).
In this market there would be huge walls of liquidity as people compete to get a 44% return every time they turn over. This 44% return completely eliminates almost all market volatility risk. Traders/takers see an effective spread of just 0.1% which means they feel very comfortable buying the asset because they know they can turn around and sell it instantly with only a 0.2% loss. Assuming there was no limit on the 20% bonus, then people would start trading against themselves. Obviously you would have to mitigate this self trading by making the reward based upon how long the order was on the books before getting filled. This is the situation we really want to create.
So the question becomes how do you compensate makers today without making todays traders (takers) pay for it. My proposal has tomorrows takers pay today's makers by paying for market making today, but not tomorrow.
The proposal here says you give them 0.1% today + a cut of the net present value of all future fees.
The cost of providing liquidity on early on is much more expensive than the cost of providing the same liquidity in a mature market.
Under this model you gain more liquidity from makers early on (when it costs the most) without actually decreasing liquidity available in the future (when it costs less). If you set the decay curve properly you can end up with "constant liquidity" equal to the average liquidity over the entire life of the market. Over a long enough time horizon this means that you should get almost as much liquidity in year 1 as you do in year 30 if market makers believe in the future of a given market.u
So when people suggest "simple" rules they are not really getting the result they want.