Author Topic: Problematic Market fee structure on the UIA/BTS Market  (Read 7052 times)

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Offline monsterer

In your example, OKCoin would get up to 80% of the BTS fees IF they are responsible for registering and referring the account that placed the trade which generated those BTS fees.  In the case of an account that OKCoin did not register or refer, why should they collect fees on both sides of the trade when someone else referred/registered the account that generated the BTS fees?  Am I missing something?

The only thing you are missing is why okcoin has no incentive to join the BTS network. If they join bitshares, they have more costs and less revenue than if they just opened their own BTS/CNY market.
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Offline tbone

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I'm sorry, but I think you're pretty confused so your assessment is almost completely off base.  It seems the one legitimate point you have is that exchanges prefer a %-based fee whereas on OpenLedger they would get 80% of a flat network fee (at least in cases where the exchange is the registrar and referrer).  I would agree that's a problem and I hope it will change in the near future.

Consider the biggest external exchange, okcoin. Currently, they collect fees in CNY and BTC. If they came to bitshares, and opened a BTS/OKCOIN.CNY market using their OKCOIN.CNY IOU token, the would only collect fees in OKCOIN.CNY, not BTS.

I suppose they could create OKCOIN.BTS, but that's kind messy.

In your example, OKCoin would get up to 80% of the BTS fees IF they are responsible for registering and referring the account that placed the trade which generated those BTS fees.  In the case of an account that OKCoin did not register or refer, why should they collect fees on both sides of the trade when someone else referred/registered the account that generated the BTS fees?  Am I missing something?

Offline monsterer

I'm sorry, but I think you're pretty confused so your assessment is almost completely off base.  It seems the one legitimate point you have is that exchanges prefer a %-based fee whereas on OpenLedger they would get 80% of a flat network fee (at least in cases where the exchange is the registrar and referrer).  I would agree that's a problem and I hope it will change in the near future.

Consider the biggest external exchange, okcoin. Currently, they collect fees in CNY and BTC. If they came to bitshares, and opened a BTS/OKCOIN.CNY market using their OKCOIN.CNY IOU token, the would only collect fees in OKCOIN.CNY, not BTS.

I suppose they could create OKCOIN.BTS, but that's kind messy.
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Offline tbone

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I think you are talking about network fee for placing an order, while I'm talking about both network fee for placing order and market fee for a fill.

CCEDK OBITS/BTS Market
Centralized exchange will charge X% market fee from both the buyer and seller in the receiving asset. It looks like CCEDK has their market fee configured to 0.2%. So, if someone sells 100 OBITS, seller pays 4 BTS to CCEDK, and buyer pays 0.2 OBITS to CCEDK. If someone sells 10000 OBITS, seller pays 400 BTS to CCEDK and buyer pays 20 OBITS to CCEDK.

Openledger OBITS/BTS Market
Let's say that issuer of OBITS configures 0.2% market fee on Openledger. Let's also say that core exchange rate is set to 20BTS/OBITS. If someone sells 100 OBITS, seller pays "10BTS worth of OBITS" as network fee (that is 0.5 OBITS) when placing the order and no fee for a fill. Buyer pays "10BTS as network fee" when placing the order and on top of that, they will also pay 0.2 OBITS to the UIA issuer when order gets filled.

So, buyer of UIA pays two times, once when placing order and again when receiving the UIA.

Don't you think UIA seller should also pay two times, once when placing order and again when receiving BTS?

In the current system, the UIA issuer can only charge market fee to the buyer, but can only receive "10 BTS worth of OBITS" from the seller, and that is the limit.

On the centralized exchange, there is no limit because transaction fee is based on buyer's and seller's traded volume.

That means, centralized exchange has no incentives to do business with BitShares because they can collect more money if they use their own proprietary system.

I'm sorry, but I think you're pretty confused so your assessment is almost completely off base.  It seems the one legitimate point you have is that exchanges prefer a %-based fee whereas on OpenLedger they would get 80% of a flat network fee (at least in cases where the exchange is the registrar and referrer).  I would agree that's a problem and I hope it will change in the near future.   


Offline monsterer

That means, centralized exchange has no incentives to do business with BitShares because they can collect more money if they use their own proprietary system.

+5% This is extremely important to get right, otherwise you'll never onboard centralised exchanges.
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Offline gn1

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I think you are talking about network fee for placing an order, while I'm talking about both network fee for placing order and market fee for a fill.

CCEDK OBITS/BTS Market
Centralized exchange will charge X% market fee from both the buyer and seller in the receiving asset. It looks like CCEDK has their market fee configured to 0.2%. So, if someone sells 100 OBITS, seller pays 4 BTS to CCEDK, and buyer pays 0.2 OBITS to CCEDK. If someone sells 10000 OBITS, seller pays 400 BTS to CCEDK and buyer pays 20 OBITS to CCEDK.

Openledger OBITS/BTS Market
Let's say that issuer of OBITS configures 0.2% market fee on Openledger. Let's also say that core exchange rate is set to 20BTS/OBITS. If someone sells 100 OBITS, seller pays "10BTS worth of OBITS" as network fee (that is 0.5 OBITS) when placing the order and no fee for a fill. Buyer pays "10BTS as network fee" when placing the order and on top of that, they will also pay 0.2 OBITS to the UIA issuer when order gets filled.

So, buyer of UIA pays two times, once when placing order and again when receiving the UIA.

Don't you think UIA seller should also pay two times, once when placing order and again when receiving BTS?

In the current system, the UIA issuer can only charge market fee to the buyer, but can only receive "10 BTS worth of OBITS" from the seller, and that is the limit.

On the centralized exchange, there is no limit because transaction fee is based on buyer's and seller's traded volume.

That means, centralized exchange has no incentives to do business with BitShares because they can collect more money if they use their own proprietary system.
« Last Edit: December 06, 2015, 06:59:53 am by funnybear »
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Offline tbone

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It's not the same as the centralized exchange at all. I just explained the difference of design between CCEDK and Openledger in my previous response.

I'm surprised to see that the community doesn't see this as a problematic design.

You guys keep bringing up UIA/UIA pairs, but that's not my point.

I'm only talking about UIA/BTS pair and nothing else. I'm simply proposing that UIA issuer should be allowed to collect BTS when somebody sells your UIA for BTS.

As BTS is the key currency in BitShares, it shouldn't be treated the same way as other UIA/UIA pairs or UIA/Smartcoin pairs.

Look below.


CCEDK charges the seller 4 BTS when trying to sell 100 OBITS at price 20BTS/OBITS. You can't do this on Openledger. That's the problem.

If I sell OBITS on OpenLedger, OpenLedger will receive 80% of the fee I pay...as well as 100% of the fee paid by whomever bought the OBITS from me using BTS.  Unless I'm missing something, the only difference between this scenario and the one you demonstrated above is that the network gets 20% of the fee on the BTS side.  So what's wrong with that?

Offline gn1

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It's not the same as the centralized exchange at all. I just explained the difference of design between CCEDK and Openledger in my previous response.

I'm surprised to see that the community doesn't see this as a problematic design.

You guys keep bringing up UIA/UIA pairs, but that's not my point.

I'm only talking about UIA/BTS pair and nothing else. I'm simply proposing that UIA issuer should be allowed to collect BTS when somebody sells your UIA for BTS.

As BTS is the key currency in BitShares, it shouldn't be treated the same way as other UIA/UIA pairs or UIA/Smartcoin pairs.

Look below.


CCEDK charges the seller 4 BTS when trying to sell 100 OBITS at price 20BTS/OBITS. You can't do this on Openledger. That's the problem.
« Last Edit: December 06, 2015, 01:31:48 am by funnybear »
I'm a BitShares enthusiast in Japan, spreading BitShares daily to the Japanese people through https://genxnotes.com. Help us grow bitJPY together, so that bitUSD/bitJPY market pair will become the most popular market worldwide! Imagine what kind of world it will become when we execute this.

Offline bytemaster

For every seller there is a buyer which means you get your fee.

Well, central exchange gets to charge market fee from "both counterparty per trade", but what you are saying is that BitShares exchange will only allow to charge market fee from the buyer, which is only one side. So, yes. You will get your fee on a sell too, but it only adds up to half compared to centralized exchanges.

Yes, unless you trade OPEN.DOGE for OPEN.BTC in which case it is the same as a centralized exchange.   You only get to charge 50% when you are only providing 50% of the service.   Your asset gets to be used in MORE markets than it would otherwise.   
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Offline gn1

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For every seller there is a buyer which means you get your fee.

Well, central exchange gets to charge market fee from "both counterparty per trade", but what you are saying is that BitShares exchange will only allow to charge market fee from the buyer, which is only one side. So, yes. You will get your fee on a sell too, but it only adds up to half compared to centralized exchanges.
« Last Edit: December 05, 2015, 03:46:15 pm by funnybear »
I'm a BitShares enthusiast in Japan, spreading BitShares daily to the Japanese people through https://genxnotes.com. Help us grow bitJPY together, so that bitUSD/bitJPY market pair will become the most popular market worldwide! Imagine what kind of world it will become when we execute this.

Offline sittingduck

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For every seller there is a buyer which means you get your fee. 

Offline gn1

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@bytemaster ,
After reading your comment on the other thread (https://bitsharestalk.org/index.php/topic,20411.0.html) and your mention about OPEN.BTC vs TRADE.BTC, I think I know what you are trying to say.

I think you are trying to say that you as a UIA issuer only deserves to charge market fee when somebody tries to "buy" YourUIA, and since BTS is not your personal asset, you don't have the right to charge market fee in BTS even when somebody tries to "sell" YourUIA for BTS.

If that is what you are trying to say, I would like to disagree to that.

I think that if the trading pair is YourUIA/BTS, and only when the trading pair is YourUIA against BTS, you as an UIA Issuer should be allowed to charge BTS as a market fee for someone selling YourUIA for BTS, because BTS is the "key currency" in BItShares and should be treated different from trading YourUIA versus smartcoins or another UIA.

Think like this. Somebody is dumping YourUIA for BTS, trying to lower the value of YourUIA. Don't you think it's legitimate for UIA issuer to charge a market fee in BTS when they do that?
« Last Edit: December 05, 2015, 06:41:17 am by funnybear »
I'm a BitShares enthusiast in Japan, spreading BitShares daily to the Japanese people through https://genxnotes.com. Help us grow bitJPY together, so that bitUSD/bitJPY market pair will become the most popular market worldwide! Imagine what kind of world it will become when we execute this.

Offline gn1

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It isn't faulty.   Imagine trading OPEN.BTC vs TRADE.BTC who should get the fees when those two assets trade?

bytemaster,
Actually, I'm asking that very question in another thread below so please save that for the other thread.
https://bitsharestalk.org/index.php/topic,20411.0.html
---------------------------------
Here, I am talking about UIA/BTS market, not the UIA/UIA market.
I think I should bring up an example, which should make it more clear.

CCEDK has a trading pair OBITS/BTS on its exchange.
https://www.ccedk.com/obits-bts
If you trade through CCEDK, you pay a market fee in "OBITS" when buying "OBITS." When you sell OBITS for BTS, you pay a market fee in "BTS." So CCEDK gets to charge market fee for both buyers and sellers.

However, in Openledger, it doesn't work that way.
Although the market fee for OBITS is currently set to 0% at this time, let's say market fee is configured for the sake of this argument.
In BitShares UIA, I found out that one only pays the market fee when buying OBITS, but one does NOT need to pay the market fee when selling OBITS for BTS. Why is BitShares designed in such a way? This design simply makes BitShares inferior compared to the centralized exchanges because the UIA issuer can only charge the buyers.

Maybe I shouldn't have used the word "faulty", but at least this design makes BitShares much less competitive. What is your intention behind this design?
« Last Edit: December 04, 2015, 06:53:22 pm by funnybear »
I'm a BitShares enthusiast in Japan, spreading BitShares daily to the Japanese people through https://genxnotes.com. Help us grow bitJPY together, so that bitUSD/bitJPY market pair will become the most popular market worldwide! Imagine what kind of world it will become when we execute this.

Offline bytemaster

It isn't faulty.   Imagine trading OPEN.BTC vs TRADE.BTC who should get the fees when those two assets trade?
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Offline monsterer

If exchanges use exchange.bts/exchange.fiat pairs then should be no problem.

Not currently possible, though. Smartcoins do not represent the underlying well enough - they are separate currencies.
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