Why there is so little trading volume on the DEX

[bitsharesbrazil]

Bump for more input.

[Akado]

Bump. We have here someone who has experience giving valuable input, this cant be ignored.

We want to improve, we have People who know how stuff should be giving advice anf it gets ignored and buried

Who else do we want helping other than an experienced trader?

@noisy this can be useful for your tests! I suggest contacting him

[eagleeye]

I agree with lil_jay890 ideas

[Bhuz]

You are correct.  I meant trading fee's, not transfer fee's.  If trading fee's are left alone or increased, using the referral program to support MT4 implementation is still viable.

Do you see an FBA that take the revenues from the trading_fee and account_upgrade?
It may work.

I'm not sure if the committee members who wanted to lower the transfer fee's also wanted to lower the trading fee's.  I may have incorrectly assumed they wanted to reduce both sets of fee's.

At present, the % trading_fee is up to the issuer of the asset, so committee have no power outside bitassets.
Moreover, at present, the trading fee are not subject to the referral program (committee have nothing to do with this), but there are two proposed change about it:
-BSIP#4 "Distribute Market Fees on Core Asset to Referral Program" and
-BSIP#6"Market Maker Incentivization"

I still think we should also and mainly consider to have a global % trading fee that apply as  basic % trading fee that every issuer owe to the network. (it could be very low, since it apply to both side of every market)
(at the end of the day the platform allow the issuer to create his asset and manage all the trades, the platform gives him a trading engine, so imo make sense to have a global fee for it)

Anyway, with the last Fee Schedule, the committee actually would like to *activate* the % trading fee on bitassets (atm there is only a fee for create and cancel order, but not a % trading fee)
So the committee would like to do just the opposite of what you thought, I guess.

As far as your question of why someone who trades with thousands of dollars would only trade 3 times a day.  That's an average i'm taking based on my experience and the time I have spent with other traders in various trading groups.  There are people who trade millions of dollars and maybe only make 1 or 2 trades a week.  The amount of capital a trader has doesn't dictate the amount of trades a trader makes.

I see, I am not a trader so I just trust you on this point.

Maybe things are a little bit different for those who provides bot?

But at the end of the day, with % trading fee, is not really important the number of trades, but the volume actually.

The whole point of this thread was to talk about why there is a lack of liquidity on the DEX and how it could be addressed in a low risk way.  MT4 would drive much more liquidity to the bts platform, but the only way I can see it being implemented and profitable would be if the referral program could be used to generate income.

I would like to see a plugin for MT4 too.

Personally I would see the biggest revenue stream from the account_upgrade operation. Moreover if the shareholders like the idea of restricting some features only to LTM.

[lil_jay890]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

You are assuming that the supply and demand is linear.  It's not.  Those same traders don't care if they are paying $0.0035 or $0.10.  Demand is inelastic and logarithmic between these prices and probably up to $1.00.  This is hopefully in your econ 101 text book as well.

The real world isn't a linear supply and demand chart... those charts were designed to help students get an idea of how S/D works.

I'm wondering how can you confidently say that numbers. Why up to $1? Why don't care $0.1? Any reasons or just your intuition?

Based on 10 years of real world trading experience and a comparison of commissions charged be several brokers.   A trader isn't going to choose a 1 cent platform vs a 50 cent on price alone.  It's a nonfactor at those price points.  The only thing that will matter at sub $1.00 fees is ease of use, features and security.

Remember these guys are trading thousands of dollars in each trade... 1 dollar is miniscule in their P/L

Could you explain me why you expect heavy and specialized traders to do *transfers* on a platform heavy focused on *trading* like MT4?

Could you explain me why are you using the "transfer fee* to calculate revenue generated from *trading*?

Could you explain why the registrars of MT4 would care about and look for revenue from *transfers* if they are promoting an advanced platform for *trading*?

Do you know that currently the revenue from transfers fee is only a tiny portion of the whole network revenue? And openledger is not as much focused as MT4 on trading, so I would expect even less revenue from people registering through MT4. (transfer wise)

Could you explain me how the hell guys managing thousands of dollars per trade would end up doing only 6 trades a day?

Could you explain why in your opinion, is not feasible that a lower *transfer* fee could bring much more people in the whole system, generating traction and more liquidity, giving a reason to real traders to start using the platform? (that from their point of view it means trading, not transfering)

IMO you should realize that MT4 registrar should focus on temp their users to upgrade to LTM and not expect traders to do transfers around just because.

MT4 should offers advanced trading features to LTM only to tempt traders to upgrade, as our Dex should.

IMO all your logic on mixing up transfers and trades make no sense at all.

You are correct.  I meant trading fee's, not transfer fee's.  If trading fee's are left alone or increased, using the referral program to support MT4 implementation is still viable.  I'm not sure if the committee members who wanted to lower the transfer fee's also wanted to lower the trading fee's.  I may have incorrectly assumed they wanted to reduce both sets of fee's.

As far as your question of why someone who trades with thousands of dollars would only trade 3 times a day.  That's an average i'm taking based on my experience and the time I have spent with other traders in various trading groups.  There are people who trade millions of dollars and maybe only make 1 or 2 trades a week.  The amount of capital a trader has doesn't dictate the amount of trades a trader makes.

The whole point of this thread was to talk about why there is a lack of liquidity on the DEX and how it could be addressed in a low risk way.  MT4 would drive much more liquidity to the bts platform, but the only way I can see it being implemented and profitable would be if the referral program could be used to generate income.

[Bhuz]

Could you explain why in your opinion, is not feasible that a lower *transfer* fee could bring much more people in the whole system, generating traction and more liquidity, giving a reason to real traders to start using the platform? (that from their point of view it means trading, not transfering)

@Bhuz , it's you who want to change the exiting rules, not lil_jay890.
So logically it's up to you to prove that "lower transfer fee could bring much more people in the whole system" and give us an estimate of the magnitude of this change.

We've had this discussion for 3 months now, but the fact is none of you has brought a single piece of evidence supporting your assumptions.
We are going in circles.

I agree that the current level of the transfer fee is quite arbitrary, there was not much research done when it was set initially by BM.

But whatever it is, it gives some sort of badly needed stability to the business environment. This stability is not sacred but it's very important and if we want to dismantle this stability, we need to have a good reason for that. If the reason is your "gut feeling", then this is not a good reason for many people and you get a lot of resistance.

On the other hand, asking you to come up with a "good" reason is a tall order. That's why I've been trying like mad to come up with a solution that will allow you to test your gut feeling predictions on your own customers, while other businesses can continue to enjoy the current stability. This thread is my latest attempt.

The point here, in this thread, is that lil_jay890 is using transfer fee to calculate trading revenue.

He is saying that a change in transfer fee will affect a business based on a trading platform with a userbase focused on heavy traders.

This is just non sense and illogical.

Stick to the discussion here.

[jakub]

Could you explain why in your opinion, is not feasible that a lower *transfer* fee could bring much more people in the whole system, generating traction and more liquidity, giving a reason to real traders to start using the platform? (that from their point of view it means trading, not transfering)

@Bhuz , it's you who want to change the exiting rules, not lil_jay890.
So logically it's up to you to prove that "lower transfer fee could bring much more people in the whole system" and give us an estimate of the magnitude of this change.

We've had this discussion for 3 months now, but the fact is none of you has brought a single piece of evidence supporting your assumptions.
We are going in circles.

I agree that the current level of the transfer fee is quite arbitrary, there was not much research done when it was set initially by BM.

But whatever it is, it gives some sort of badly needed stability to the business environment. This stability is not sacred but it's very important and if we want to dismantle this stability, we need to have a good reason for that. If the reason is your "gut feeling", then this is not a good reason for many people and you get a lot of resistance.

On the other hand, asking you to come up with a "good" reason is a tall order. That's why I've been trying like mad to come up with a solution that will allow you to test your gut feeling predictions on your own customers, while other businesses can continue to enjoy the current stability. This thread is my latest attempt.

[tbone]

You really wan't me to explain how lowering the transfer fee's to 1 bts kills the referall program??

Ok... say mt4 integration cost $100k.  Profit from this is based on referrals from people who create a wallet that is used in the mt4 terminal.  Right now there are approximately 100k retail trading account in the US.  Lets just say on average a trader makes 3 round trip trades a day.  Say bts captures 1% of this market.  1,000 traders making 6 trades a day = 6,000 trades.  6,000 * 1bts = $21/day... The time to pay off the 100k dollar debt to implement mt4 would take 4,761 days or 13 years.  This makes mt4 integration a non-starter as maintenance costs would probably add another 6 years onto the time it takes to get profitable.

Now lets say that the trader generates 30bts... take 80% of that (24bts) as the return for a trade.  6,000 * 24bts = $504/day.  Time to pay off the debt is 198 days.  Investors are back in the black in less than 10% of the time all while squishing spreads, adding liquidity and generating real profit for the blockchain.  The transfer fee is $0.10, substantially less than what traders currently pay.  Why have a race to 0 fee's when there is no reason to do it???

Is it just me, or are you failing to grasp the difference between transfer fees and trading fees?   

[Bhuz]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

You are assuming that the supply and demand is linear.  It's not.  Those same traders don't care if they are paying $0.0035 or $0.10.  Demand is inelastic and logarithmic between these prices and probably up to $1.00.  This is hopefully in your econ 101 text book as well.

The real world isn't a linear supply and demand chart... those charts were designed to help students get an idea of how S/D works.

I'm wondering how can you confidently say that numbers. Why up to $1? Why don't care $0.1? Any reasons or just your intuition?

Based on 10 years of real world trading experience and a comparison of commissions charged be several brokers.   A trader isn't going to choose a 1 cent platform vs a 50 cent on price alone.  It's a nonfactor at those price points.  The only thing that will matter at sub $1.00 fees is ease of use, features and security.

Remember these guys are trading thousands of dollars in each trade... 1 dollar is miniscule in their P/L

Could you explain me why you expect heavy and specialized traders to do *transfers* on a platform heavy focused on *trading* like MT4?

Could you explain me why are you using the "transfer fee* to calculate revenue generated from *trading*?

Could you explain why the registrars of MT4 would care about and look for revenue from *transfers* if they are promoting an advanced platform for *trading*?

Do you know that currently the revenue from transfers fee is only a tiny portion of the whole network revenue? And openledger is not as much focused as MT4 on trading, so I would expect even less revenue from people registering through MT4. (transfer wise)

Could you explain me how the hell guys managing thousands of dollars per trade would end up doing only 6 trades a day?

Could you explain why in your opinion, is not feasible that a lower *transfer* fee could bring much more people in the whole system, generating traction and more liquidity, giving a reason to real traders to start using the platform? (that from their point of view it means trading, not transfering)

IMO you should realize that MT4 registrar should focus on temp their users to upgrade to LTM and not expect traders to do transfers around just because.

MT4 should offers advanced trading features to LTM only to tempt traders to upgrade, as our Dex should.

IMO all your logic on mixing up transfers and trades make no sense at all.

[lil_jay890]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

You are assuming that the supply and demand is linear.  It's not.  Those same traders don't care if they are paying $0.0035 or $0.10.  Demand is inelastic and logarithmic between these prices and probably up to $1.00.  This is hopefully in your econ 101 text book as well.

The real world isn't a linear supply and demand chart... those charts were designed to help students get an idea of how S/D works.

I'm wondering how can you confidently say that numbers. Why up to $1? Why don't care $0.1? Any reasons or just your intuition?

Based on 10 years of real world trading experience and a comparison of commissions charged be several brokers.   A trader isn't going to choose a 1 cent platform vs a 50 cent on price alone.  It's a nonfactor at those price points.  The only thing that will matter at sub $1.00 fees is ease of use, features and security.

Remember these guys are trading thousands of dollars in each trade... 1 dollar is miniscule in their P/L

[clayop]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

You are assuming that the supply and demand is linear.  It's not.  Those same traders don't care if they are paying $0.0035 or $0.10.  Demand is inelastic and logarithmic between these prices and probably up to $1.00.  This is hopefully in your econ 101 text book as well.

The real world isn't a linear supply and demand chart... those charts were designed to help students get an idea of how S/D works.

I'm wondering how can you confidently say that numbers. Why up to $1? Why don't care $0.1? Any reasons or just your intuition?

[lil_jay890]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

You are assuming that the supply and demand is linear.  It's not.  Those same traders don't care if they are paying $0.0035 or $0.10.  Demand is inelastic and logarithmic between these prices and probably up to $1.00.  This is hopefully in your econ 101 text book as well.

The real world isn't a linear supply and demand chart... those charts were designed to help students get an idea of how S/D works.

[Riverhead]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

Price is driven by demand. What the market will bear.

[clayop]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.

I see. But according to economics 101, demand is determined by price. So 24x is not a realistic number. If we have 1000 BTS fee, he cannot recoup the cost 30x faster.
The point is, you cannot judge which fee is "killing referral" or which other is not. It also depends with demand and your business model.

[Akado]

6000 fixed or not, the point is, with one model you get to pay MT4 24x faster while at the same time providing MT4 users way lower fees than they're used to (I'm not sure about this part because I believe most would be crypto traders used to low fees maybe). I think that was his point.