Help keep transfer fees to save the referral system and help Bitshares grow!

[clayop]

If we can implement percentage fee for each trade, and DEX has a high volume, revenue from trading fee will be much more than transfer fee.
In this case, why we have to keep transfer fee high and make customer's perception bad?

When you say "customer's perception" who is the customer? What kind of customer?  A trader? A merchant? Or an online consumer?
Each kind of them has a different business model and different incentives.
What's good for a merchant might be bad for a consumer and vice versa.

We need to be very specific and must not treat the customer concept as a big lump of people.

No customer dislikes lowering fees. Only shareholders care about it.

scenario:

merchant sells product 1 for 10 USD
thanks to the referral program and the fees he makes, he is able to offer 10% discount on said product.

Product 1 costs now $9

what would you like more? $0.20 TX fee or get discounts at many merchants?

we have to run a business here, many of you have to start thinking outside of the box ASAP.

If I were a merchant, I will charge $9.04 (9+0.2*20%) under the current fee system, and will charge $9.0001 under the new fee system.
A cost of fee is always included in merchants' price.

[jakub]

If we can implement percentage fee for each trade, and DEX has a high volume, revenue from trading fee will be much more than transfer fee.
In this case, why we have to keep transfer fee high and make customer's perception bad?

When you say "customer's perception" who is the customer? What kind of customer?  A trader? A merchant? Or an online consumer?
Each kind of them has a different business model and different incentives.
What's good for a merchant might be bad for a consumer and vice versa.

We need to be very specific and must not treat the customer concept as a big lump of people.

No customer dislikes lowering fees. Only shareholders care about it.

And your conclusion is?
I've asked a very simple question (who do you mean when you say "customer"?) and there seems to be no answer.

[fav]

If we can implement percentage fee for each trade, and DEX has a high volume, revenue from trading fee will be much more than transfer fee.
In this case, why we have to keep transfer fee high and make customer's perception bad?

When you say "customer's perception" who is the customer? What kind of customer?  A trader? A merchant? Or an online consumer?
Each kind of them has a different business model and different incentives.
What's good for a merchant might be bad for a consumer and vice versa.

We need to be very specific and must not treat the customer concept as a big lump of people.

No customer dislikes lowering fees. Only shareholders care about it.

scenario:

merchant sells product 1 for 10 USD
thanks to the referral program and the fees he makes, he is able to offer 10% discount on said product.

Product 1 costs now $9

what would you like more? $0.20 TX fee or get discounts at many merchants?

we have to run a business here, many of you have to start thinking outside of the box ASAP.

[clayop]

If we can implement percentage fee for each trade, and DEX has a high volume, revenue from trading fee will be much more than transfer fee.
In this case, why we have to keep transfer fee high and make customer's perception bad?

When you say "customer's perception" who is the customer? What kind of customer?  A trader? A merchant? Or an online consumer?
Each kind of them has a different business model and different incentives.
What's good for a merchant might be bad for a consumer and vice versa.

We need to be very specific and must not treat the customer concept as a big lump of people.

No customer dislikes lowering fees. Only shareholders care about it.

[jakub]

If we can implement percentage fee for each trade, and DEX has a high volume, revenue from trading fee will be much more than transfer fee.
In this case, why we have to keep transfer fee high and make customer's perception bad?

When you say "customer's perception" who is the customer? What kind of customer?  A trader? A merchant? Or an online consumer?
Each kind of them has a different business model and different incentives.
What's good for a merchant might be bad for a consumer and vice versa.

We need to be very specific and must not treat the customer concept as a big lump of people.

[jakub]

I don't think you'll receive a trivial result. Companies ask their customers these questions and it works even though you might think customers would respond with options that were too cheap. 

I did not say you will receive a trivial result.
What I said was you might receive a trivial result IF you don't do it in a professional way using quite advanced market research methods, e.g. the Conjoint Analysis.

In this case the community are not only customers but also shareholders, so they should be able to take into account all the factors and if anything they will over-estimate what someone is willing to pay because they think BitShares is better than it really is.

I don't agree. I think the effect I described is much stronger. But it's hard to prove - it's just my opinion against yours.

Do you have any information on potential merchants?

Pure logic on my side. Merchants mostly receive payments so in most cases they are not the ones who pay the transfer fees.


*********************************
I'll shut up now. As I said before I think this whole transfer fee debate is counterproductive and we cannot afford it anymore.
All I care about at this stage, is to make these 3 groups of stakeholders happy:
- the traders
- the merchants
- and the referral program businesses
If you represent any them and can logically prove that high transfer fees are hurting them - I will listen.
If you represent the online consumers point of view - I just don't care (at this stage).

[clayop]

If we can implement percentage fee for each trade, and DEX has a high volume, revenue from trading fee will be much more than transfer fee.
In this case, why we have to keep transfer fee high and make customer's perception bad?

[jakub]

I still am a bit confused why trading fees were not part of the referral program as it stands now, that was a bit surprising to find out yesterday since I read these pages and no where got the impression that trading fees are not considered 'transaction fees'.

https://bitshares.org/technology/referral-rewards-program/
https://bitshares.org/referral-program/
https://bitshares.org/referral-program-terms-and-conditions/

The total trading volume in BTS is about $100K  (recently) meaning the network could be earning $150 per day or $54,000 per year just by moving all BTS trading on chain.   
If we can get the daily volume on the exchange up to $1,000,000  (something BTS has achieved in the past) and simply sustain it then the network would be earning $540,000 per year  (6% yield) on current valuations. 
That is just the trading volume of BTS.   Throw in the trading volume of all the other assets on the BTS chain and the total volume of the exchange will be much higher.

Under the current referral program none of that money would be going to referrers.   Under the new referral program 80% of that money would be going to referrers. 

So which is going to generate more referral income?  Trading or Transfers?   To generate 540,000 per year from transfers would require a sustained 5 transfers per minute on the network.

What use case do you want to support, an exchange or a currency?

You have to keep your words if you want to build confidence in your product. No idea why trading fees are not in the ref program

I also agree. And I was also unaware of this "feature".

@bytemaster,  this is yet another example of quite terrible communication with your own community.
I understand you might not have time now to write proper documentation of your own code but a simple (unofficial) list of all major features like this one would greatly alleviate the problem.

How do you expect us to build businesses based on the referral program if this kind of information is not available to us?
And how can we treat the BTS blockchain as a manifestation of community consensus if we are not aware what's inside this black box?
First we had the margin call rules surprise and now we discover this.

[fav]

I still am a bit confused why trading fees were not part of the referral program as it stands now, that was a bit surprising to find out yesterday since I read these pages and no where got the impression that trading fees are not considered 'transaction fees'.

https://bitshares.org/technology/referral-rewards-program/
https://bitshares.org/referral-program/
https://bitshares.org/referral-program-terms-and-conditions/

The total trading volume in BTS is about $100K  (recently) meaning the network could be earning $150 per day or $54,000 per year just by moving all BTS trading on chain.   
If we can get the daily volume on the exchange up to $1,000,000  (something BTS has achieved in the past) and simply sustain it then the network would be earning $540,000 per year  (6% yield) on current valuations. 
That is just the trading volume of BTS.   Throw in the trading volume of all the other assets on the BTS chain and the total volume of the exchange will be much higher.

Under the current referral program none of that money would be going to referrers.   Under the new referral program 80% of that money would be going to referrers. 

So which is going to generate more referral income?  Trading or Transfers?   To generate 540,000 per year from transfers would require a sustained 5 transfers per minute on the network.

What use case do you want to support, an exchange or a currency?

You have to keep your words if you want to build confidence in your product. No idea why trading fees are not in the ref program

[mint chocolate chip]

I still am a bit confused why trading fees were not part of the referral program as it stands now, that was a bit surprising to find out yesterday since I read these pages and no where got the impression that trading fees are not considered 'transaction fees'.

https://bitshares.org/technology/referral-rewards-program/
https://bitshares.org/referral-program/
https://bitshares.org/referral-program-terms-and-conditions/

The total trading volume in BTS is about $100K  (recently) meaning the network could be earning $150 per day or $54,000 per year just by moving all BTS trading on chain.   
If we can get the daily volume on the exchange up to $1,000,000  (something BTS has achieved in the past) and simply sustain it then the network would be earning $540,000 per year  (6% yield) on current valuations. 
That is just the trading volume of BTS.   Throw in the trading volume of all the other assets on the BTS chain and the total volume of the exchange will be much higher.

Under the current referral program none of that money would be going to referrers.   Under the new referral program 80% of that money would be going to referrers. 

So which is going to generate more referral income?  Trading or Transfers?   To generate 540,000 per year from transfers would require a sustained 5 transfers per minute on the network.

What use case do you want to support, an exchange or a currency?

[Empirical1.2]

So we just do a forum survey and ask members to say what transfer fee is 'too cheap', 'a bargain', 'expensive' and 'too expensive'. This survey works well with regular customers to find the 'optimal pricing space'. Given we are shareholders and will also be taking into account the referral programme and the impact on the value of their shares, with a decent sample size, the results should be fairly accurate.

Even if you take the approach of keeping high fees for a while, it may be useful to do this survey and see if we end up settling on a price predicted anyway. If so we may consider using it to help price other products and services in the future.

I'm all in favor of such market research approach.

But we need to take into account two important factors:
(1) You need to be smart about the way you ask the question. Because if you do it in a straight-forward way you'll receive a trivial result - it's obvious that users will want lower prices if they are given the choice. The tricky part is to determine how much they are still willing to pay before they start considering the product to be too overpriced to be worth buying.
(2) If we do the survey among this community the result will be very biased because almost all of us have a long position on BTS which means we perceive BTS value much higher than its actual market value. So a transfer fee of 40 BTS means for us much more than $0.15 - probably something like $0.50 or even $1.00. Whereas outside the community 40 BTS is just $0.15, nothing more.

I don't think you'll receive a trivial result. Companies ask their customers these questions and it works even though you might think customers would respond with options that were too cheap. 

In this case the community are not only customers but also shareholders, so they should be able to take into account all the factors and if anything they will over-estimate what someone is willing to pay because they think BitShares is better than it really is.

The only thing I think could be an issue is that we will price it optimally for the crypto-currency space but lower than outsiders might be willing to pay once we have comparable products and services.

(2) Merchants - not sensitive to transfer fees, very sensitive to the referral program working (and the referral program to work requires a perceivable difference between pay-as-you-go fees and LTM fees)

Do you have any information on potential merchants?

I see payment processor Coinify seems to be expanding and also accepts 16 blockchain currencies including TetherUSD and NuBits.
https://news.coinify.com/coinify-merchants-can-now-accept-16-blockchain-currencies/

[Tuck Fheman]

Where a crypto-company will make it's money is on the products, services & purchases. (Even PayPal doesn't charge for basic transfers)

they do.

No fee to transfer to family & friends with PayPal.

[jakub]

So we just do a forum survey and ask members to say what transfer fee is 'too cheap', 'a bargain', 'expensive' and 'too expensive'. This survey works well with regular customers to find the 'optimal pricing space'. Given we are shareholders and will also be taking into account the referral programme and the impact on the value of their shares, with a decent sample size, the results should be fairly accurate.

Even if you take the approach of keeping high fees for a while, it may be useful to do this survey and see if we end up settling on a price predicted anyway. If so we may consider using it to help price other products and services in the future.

I'm all in favor of such market research approach.

But we need to take into account two important factors:
(1) You need to be smart about the way you ask the question. Because if you do it in a straight-forward way you'll receive a trivial result - it's obvious that users will want lower prices if they are given the choice. The tricky part is to determine how much they are still willing to pay before they start considering the product to be too overpriced to be worth buying.
(2) If we do the survey among this community the result will be very biased because almost all of us have a long position on BTS which means we perceive BTS value much higher than its actual market value. So a transfer fee of 40 BTS means for us much more than $0.15 - probably something like $0.50 or even $1.00. Whereas outside the community 40 BTS is just $0.15, nothing more.

[Empirical1.2]

We've already had the discussion where lowering transfer fees doesn't mean necessarily mean less income.

If only 10% of Chinese users will pay $0.2 but 80% will pay $0.04 then $0.4 will earn the blockchain a lot more money. Also when the fee is in the 'acceptable range' people might make a lot more transfers, more frequently and so end up spending a similar amount as a higher fee would have generated anyway.

Well, this might be a valid argument. There must be a point where the optimal fee value is but to figure it out we need to know the price sensitivity curve. As BM rightly said a few days ago, in order to find out the price sensitivity of our users we need to experience high fees for some time and then lower them and observe how the transaction volume changes. I am not aware of a different way to do it.

That approach takes time and may not show statistically significant results.

I think I'm in favour of an approach that is apparently called the Van Westendorp price sensitivity monitor.

Respondents are asked four questions to determine what prices are too cheap, where a price is a bargain, when a price is expensive and where a price is too expensive. By plotting the cumulative curves for each of the four prices, the crossing points are deemed to be optimum points - for instance where the expensive and bargain price curves cross The resultant price "space" helps to determine the range of acceptable prices - and so pricing tactics - available.

http://www.dobney.com/Research/pricing_research.htm




So we just do a forum survey and ask members to say what transfer fee is 'too cheap', 'a bargain', 'expensive' and 'too expensive'. This survey works well with regular customers to find the 'optimal pricing space'. Given we are shareholders and will also be taking into account the referral programme and the impact on the value of their shares, with a decent sample size, the results should be fairly accurate.

Even if you take the approach of keeping high fees for a while, it may be useful to do this survey and see if we end up settling on a price predicted anyway. If so we may consider using it to help price other products and services in the future. 

[Xeldal]

Well I'll take it that you concede to a degree traders may be sensitive to transfer fees, given Yunbi's actions and current exchange standards.

Regards paying for witnesses and worker proposals.

I think many worker proposals like the prediction market should be crowd-funded & also possibly need to be run separately (Similar to Augur on Ethereum.) 

We've already had the discussion where lowering transfer fees doesn't mean necessarily mean less income.

If only 10% of Chinese users will pay $0.2 but 80% will pay $0.04 then $0.4 will earn the blockchain a lot more money. Also when the fee is in the 'acceptable range' people might make a lot more transfers, more frequently and so end up spending a similar amount as a higher fee would have generated anyway.

Also you can see Yunbi lowered the withdrawal fee, so obviously they feel they make more $ per customer & attract more customers by keeping the transfer fee as low as possible. So crypto-exchange comparable trading fees plus lower transfer fees could equal higher income.

So to finance costs, I suggest following the exchange model who presumably make the vast majority of their revenue from filled order fees.

I would also be in favour of adding anything that's simple, low cost and generates high transactions. eg. Blockchain dice. (Which I know is an issue.)

Edit: At the early stages while liquidity is an issue like you mentioned, I still think lower transfer fees could potentially generate comparable income as higher transfer fees for reasons stated above.

  Good stuff.  I agree

The demo net may be a good example case for drastic increased activity leading to wider adoption, showcasing games like dice or BM Bingo. 

Lower fees may not directly result in more transactions but having lower transfer fees might allow certain products to exist and flourish, bringing more users as well as more transactions, where they might otherwise have been impossible or unattractive, even if only psychologically.