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.