[COMMITTEE INPUT REQ.] Fee Schedule for Shareholder Consultation

[bitcrab]

Also, we propose to implement this new fee schedule for LTM-only for a period of time, and offer it to basic members only later. This way, we effectively upgrade memberships into premium products. As more and more features are added to LTM, we may increase the account upgrading fee accordingly.

I think the fee schedule should be offered to all the members from the beginning, to make a distinction in offering time regarding core fee schedule will make the basic user feel even worse and is not good for attracting more new users.

Sorry I didn't get your point. Imo it's a good strategy that provide difference services to VIPs and normal users.

they are already offered different service in the proposed fee schedule, for transfer fee:
for LTM: $0.018, 80% cash back.
for basic user :$0.018 no cash back.
right?
what I said is no need to implement this in different time for LTM and basic user.

[cube]

I am mainly upset by the way this change is being introduced. Instead of starting with a forum thread "Let's revise the target/purpose of the referral program" to present arguments pro and con, the whole thing has been obfuscated and wrapped into a bigger package that required a lot of prior work done by you and other people. As a result, this strategy change is now entangled with other much less controversial stuff. The fact that you have put so much effort to revise every single fee, validates the purpose of this change in the eyes of many people here and allows you to have less solid arguments about the justification itself. I'm sure you are going to defend this by saying that all of this is interconnected and can only be viewed as a single package, but I disagree. I perceive this as an intentional measure, often used in politics.

I always appreciate your bright ideas and ability to articulate your points well.

As a third-party to the matter, if I may speak out on it.

It did not come across to me (and likely other committee members) that we were getting onto a topic of "Let's revise the target/purpose of the referral program" .  We were thinking of what can be done to enable both the trading/exchange and referral businesses to function well and to prosper together in the bts network.  When one side (trading/exchange) is asking for lower transfer fee, the other side AM/LTM and referral program can continue to be attractive and useful (with other kinds of fee revised).  xeroc has offerred to work on the fee schedule and we are thankful for his work.  In short, we were focusing on fees and their implications (and not just the referral program per se).  As a referrer, it is natural that the matter to you centres around the referral program and that your POV is therefore xeroc 'revise target of referral program'.  Consequently, a misunderstanding arised because of the difference in POV.

As for the transfer fee, the main thing to consider is why we expect users to make transfers in the first place. If a user does not have a good reason to do a transfer, she will not do it, no matter what the fee is. For me this is the main issue: most people currently do have any reason to move their funds around. And there is only one way to give people this badly needed reason: businesses building useful apps around BitShares. For this we need to patiently wait, like a good gardener waits for her plants to grow, and while waiting we must not change the rules.

I believe users do want to transact freely, be it to trade for BTC, to send some bts/bitassets to friends and/or family members, or some other reasons.  However, any transaction of value USD2 or below would mean a transfer fee of 5% -  (30bts or approx USD0.10) too costly and prohibitive. 

As a referrer, one may wait patiently for a potential future that some businesses would build on this fee structure and reap the benefits then.  As a user, one would not see the rationale to continue to suffer the prohibitive transfer fee and to wait for a future that may never come.

[xeroc]

I tend to agree with the assert operation and we can certainly reduce it but I have not seen a single practical use case for it. Could you give me a hint?

I have to admit I haven't checked what the assert operation can do. :-)
What I was thinking of is for example an arbitrage bot that places orders only if it can be sure that there will be existing orders to match his. Not sure if that can be done using assert.

If you want to have this, you can set the 'fill-or-kill flag' when creating
your order. This is already available but not exposed to the UI (@svk:
maybe we can have a checkbox for this in the GUI).

My hopes are that this reduces the sell pressure.

For workers and witnesses this should be much of a deal, is it?

IMO sell-pressure is a non-issue with those people who have vesting balances.

For a witness who withdraws his payments monthly $2 fees don't hurt. For a worker who typically might only withdraw once or twice it'd hurt even less.

I was really thinking of "small" referrers who have only a handful of referrals. Like PTS38Warrior (just guessing, haven't checked his numbers).

.. but would you really claim $2 already or wait until BTS goes up and
be surprised about what you have still in vesting?

I can see your point though.

[pc]

I tend to agree with the assert operation and we can certainly reduce it but I have not seen a single practical use case for it. Could you give me a hint?

I have to admit I haven't checked what the assert operation can do. :-)
What I was thinking of is for example an arbitrage bot that places orders only if it can be sure that there will be existing orders to match his. Not sure if that can be done using assert.

My hopes are that this reduces the sell pressure.

For workers and witnesses this should be much of a deal, is it?

IMO sell-pressure is a non-issue with those people who have vesting balances.

For a witness who withdraws his payments monthly $2 fees don't hurt. For a worker who typically might only withdraw once or twice it'd hurt even less.

I was really thinking of "small" referrers who have only a handful of referrals. Like PTS38Warrior (just guessing, haven't checked his numbers).

[jakub]

@xeroc ,

I started to reply to your replies but I when I finished, I felt sick and I erased all this, as I realized I don't want to do that any more.
We are wasting our time in those endless discussions.

My point is only this: manipulating with the fees should be the last thing on our list, to be considered only after a serious attempt has been made to bootstrap liquidity.

I've shown BitShares to many people, there were many different questions and concerns, but none of those concerns was ever related to fees.
This makes me think that most probably fees are *not* our issue.

But I cannot prove that, just as you cannot prove the opposite.

I have a feeling I must apologize to you, I may have been a little harsh with my last reply to you.
In the end, I don't know what is best for BitShares. All I know is that our customers are complaining about A and our business partners want B and shareholders want C.
I further fully agree that we should be manipulating fees, but the current situation was this:
- we had a predefined (from genesis) set of fees denoted in BTS
- BTS is volatile so are the fees
- some businesses approached me and complained about these volatile fees and why there are not pegged to USD/EUR or whatever.

Then I actually started to write a script to track the USD value of the fees and ended up with .. well .. strange fees simply because BTS went somewhere different after genesis.
I took the time to go through every fee and think of it and tried to pick more rational fees. Yes, the proposal is most created by me alone with many inputs from committee members.
So if people are unhappy with this and feel that the proposal is bad for BTS, please remove your stake from either my worker, my proxy, or the my committee member. That will at least
show me that I was wrong in taking the time to think about the fees.

My intentions where to offer more incentive for people to enter BitShares and the only thing that we can do is give it more utility and cheaper fees.

Interestingly, with the newest development about zero-fee option for operations, no one complained about the consequences for the referral program, but people see the marketing buzz it could have. So why don't we start with that buzz already and give them yet another incentive to join once we have 0-fees implemented?

@xeroc , I feel I owe you an apology as well, as I was quite harsh too.

I am mainly upset by the way this change is being introduced. Instead of starting with a forum thread "Let's revise the target/purpose of the referral program" to present arguments pro and con, the whole thing has been obfuscated and wrapped into a bigger package that required a lot of prior work done by you and other people. As a result, this strategy change is now entangled with other much less controversial stuff. The fact that you have put so much effort to revise every single fee, validates the purpose of this change in the eyes of many people here and allows you to have less solid arguments about the justification itself. I'm sure you are going to defend this by saying that all of this is interconnected and can only be viewed as a single package, but I disagree. I perceive this as an intentional measure, often used in politics.

As for the transfer fee, the main thing to consider is why we expect users to make transfers in the first place. If a user does not have a good reason to do a transfer, she will not do it, no matter what the fee is. For me this is the main issue: most people currently do have any reason to move their funds around. And there is only one way to give people this badly needed reason: businesses building useful apps around BitShares. For this we need to patiently wait, like a good gardener waits for her plants to grow, and while waiting we must not change the rules.

[abit]

Also, we propose to implement this new fee schedule for LTM-only for a period of time, and offer it to basic members only later. This way, we effectively upgrade memberships into premium products. As more and more features are added to LTM, we may increase the account upgrading fee accordingly.

I think the fee schedule should be offered to all the members from the beginning, to make a distinction in offering time regarding core fee schedule will make the basic user feel even worse and is not good for attracting more new users.

Sorry I didn't get your point. Imo it's a good strategy that provide difference services to VIPs and normal users.

[bitcrab]

Also, we propose to implement this new fee schedule for LTM-only for a period of time, and offer it to basic members only later. This way, we effectively upgrade memberships into premium products. As more and more features are added to LTM, we may increase the account upgrading fee accordingly.

I think the fee schedule should be offered to all the members from the beginning, to make a distinction in offering time regarding core fee schedule will make the basic user feel even worse and is not good for attracting more new users.

[abit]

There is no extra cost for brokers to do larger trades today... that's why you don't see fee's associated with doing large trade sizes.  In bts there is also nothing different between trading 5bts vs 50,000,000bts.  The work required is the same.  Attempting to charge exorbitant fees for large transactions will be seen as a tax and it will drive traders away.  Their needs to be a ceiling on trading fee's if % based fees are implemented.  I have said before though that traders do not care if the fee is 1 cent or 1 dollar, that amount is minuscule and won't effect demand.  The problem arises when the fees start approach the triple digit mark for large trades and the double digit mark for smaller ones.

To Cubes question:  I could put a trade on in forex for 100 lots ($10,000 per lot = $1million) and not be charged any commision.  I would pay a decent amount for the spread (probably around $3000), but still no fee or maybe a very small commission.  I could also do this with only $50K as collateral, but lending is a story for another day.

Long story short:  Percentage based fee's may be helpful for low volume traders, but they are the death of the liquidity providers we desperately need.  A fee cap is absolutely essential.

I see you are referring to forex trading while I was talking about stock trading.

It makes sense for forex traders who typically trade more than $100,000 USD, not to mind a 1USD fee.  1USD for a 100K trade is after all a 0.001% fee.  I do not think they would not mind a 1USD fee if the trade is say $10.

I think it is important that we identify which market bts should go after - the forex trading market, the stock market or the crypto-trading market.  These markets have different attributes and fee structures.

I'm now very encouraged to make a per-asset or per-market fee schedule.
Bond markets need to have different fee structure than normal markets.
CFD markets have different fee schedule.
Margin trading charges different fee.
Stock market.
etc.

We'll evolve as time goes by.

[abit]

EXCELLENT work!

The only point where I strongly disagree with your analysis is the assert operation. I say make it cheap (it doesn't permanently consume resources) and let the users figure out what to do with it.

Good point. So let's reduce it.

I also disagree with the withdraw_vesting fee (but less strongly). This seriously impacts smaller referral businesses that don't earn lots of fees. It also doesn't permanently consume resources and cannot be used for spamming. (Disclaimer: as a witness I'm biased here.)

Good point too. It's a tax anyway. Imo setting it to some value around 0.1$ would make sense.
Wish more feed back from other people though.

[abit]

The trading fee's portion of this proposal is terrible.

Percentage based fees or commissions are non existent in current trading.  Doing large orders is already a disadvantage, because much of the order book has to be chewed through to fill the order.  So the effective spread that the trader is experiencing is larger than what may be quoted.  Add on top of that a tax for doing a large order and I guarantee you we will attract 0 traders.

Also, by not having the trading fee's part of the referral program or making them so low that they add 0 value, any third party platform like mt4 will never be implemented.  There is no way to get the development money back from everything I can tell.  Much less have any money left over to do maintenance on the system.  The only way it may work would be by manipulating the spread in the client terminal wide enough that mt4 can turn a profit.  This effectively screws the trader twice though.

I don't understand why people here think we need to emulate current crypto exchanges.  Crypto exchanges are tiny and professional (bank, hedgefund) traders would never trade on those platforms.  The most popular platforms use a flat fee or commission.  This proposal is going to set bitshares back massively in terms of adoption by traders.

Attracting traders should be the priority of bitshares.  It will shrink spreads, increase volume, and make money for the blockchain.  Doing a percentage based fee will only drive them away.  You are effectively driving away liquidity by charging more money to trade larger orders.  Plus it doesn't cost anymore resource wise to process large trades vs small trades.

Personally I agree with your opinion at some level.
I'd like to introduce a percentage-based "fill order fee" with a cap and a bottom for trading, which will perfectly solve the issue you described. In additional, if combines it with the 0 fee proposal, we'll have a ultimate product.

[xeroc]

The problem is you have to pay for a LTM membership.  I can sign up with
dozens of forex and stock brokers right now, get better tools and better
trade reporting, without having to pay a dime.

As far as your comment about how poloniex and btc38 have good volume...
You could take all the volume of every crypto traded today and it is
less than 0.002% of the daily forex market.  There are bank traders that
individually do multiples of what the entire crypto market does daily.
Those guys are not using percentage based fee's and neither are the guys
trading much lower amounts.  If you charge 0.1% on the forex market, the
daily fee's would be $6 billion dollars.  That number would never be
attained because the fee's would eliminate the volume.  The lowered
volume would then eliminate much of the liquidity that is seen today.

There is no extra cost for brokers to do larger trades today... that's
why you don't see fee's associated with doing large trade sizes.  In bts
there is also nothing different between trading 5bts vs 50,000,000bts.
The work required is the same.  Attempting to charge exorbitant fees for
large transactions will be seen as a tax and it will drive traders away.
Their needs to be a ceiling on trading fee's if % based fees are
implemented.  I have said before though that traders do not care if the
fee is 1 cent or 1 dollar, that amount is minuscule and won't effect
demand.  The problem arises when the fees start approach the triple
digit mark for large trades and the double digit mark for smaller ones.

To Cubes question:  I could put a trade on in forex for 100 lots
($10,000 per lot = $1million) and not be charged any commision.  I would
pay a decent amount for the spread (probably around $3000), but still no
fee or maybe a very small commission.  I could also do this with only
$50K as collateral, but lending is a story for another day.

Long story short:  Percentage based fee's may be helpful for low volume
traders, but they are the death of the liquidity providers we
desperately need.  A fee cap is absolutely essential.

Very valiable input here . Thank you very much. I think a cap can be
implemented and we should propose such a change. But in the meantime, we
need to attract some more poeple from the crypto space first since they
know the tech already and we should make live easier for FOREX traders
to enter the platform.

[xeroc]

EXCELLENT work!

The only point where I strongly disagree with your analysis is the assert operation. I say make it cheap (it doesn't permanently consume resources) and let the users figure out what to do with it.

I also disagree with the withdraw_vesting fee (but less strongly). This seriously impacts smaller referral businesses that don't earn lots of fees. It also doesn't permanently consume resources and cannot be used for spamming. (Disclaimer: as a witness I'm biased here.)

I tend to agree with the assert operation and we can certainly reduce it but I have not seen a single practical use case for it. Could you give me a hint?

As for withraw_vesting, we thought quite a bit about this particular fee as well and my initial proposal was actually $5, until other committee members made me aware of this operation to be used by the referral program as well. The idea to have it relatively high is to discourage people to take out everything they can as quickly as they can to sell it on the market. You can think of this $2 fee as an incentive to have the fees not on the sell side of order books. My hopes are that this reduces the sell pressure.

For workers and witnesses this should be much of a deal, is it?

[xeroc]

The trading fee's portion of this proposal is terrible.

Percentage based fees or commissions are non existent in current trading.  Doing large orders is already a disadvantage, because much of the order book has to be chewed through to fill the order.  So the effective spread that the trader is experiencing is larger than what may be quoted.  Add on top of that a tax for doing a large order and I guarantee you we will attract 0 traders.

Also, by not having the trading fee's part of the referral program or making them so low that they add 0 value, any third party platform like mt4 will never be implemented.  There is no way to get the development money back from everything I can tell.  Much less have any money left over to do maintenance on the system.  The only way it may work would be by manipulating the spread in the client terminal wide enough that mt4 can turn a profit.  This effectively screws the trader twice though.

I don't understand why people here think we need to emulate current crypto exchanges.  Crypto exchanges are tiny and professional (bank, hedgefund) traders would never trade on those platforms.  The most popular platforms use a flat fee or commission.  This proposal is going to set bitshares back massively in terms of adoption by traders.

Attracting traders should be the priority of bitshares.  It will shrink spreads, increase volume, and make money for the blockchain.  Doing a percentage based fee will only drive them away.  You are effectively driving away liquidity by charging more money to trade larger orders.  Plus it doesn't cost anymore resource wise to process large trades vs small trades.

Thank you very much for this valuable input. We can certainly need this kind of data when changing the fees in 6-12 months. However, since the crypto currency ecosystem as a total does not have many of these higher-order traders and many exchanges are quite successful with percentage market fees, I think we should go that route first, bootstrap liquidity and only later re-evaluate if a higher flat fee is a good or a bad thing for the customers we will have in the future. Would this work for you?

[xeroc]

@xeroc ,

I started to reply to your replies but I when I finished, I felt sick and I erased all this, as I realized I don't want to do that any more.
We are wasting our time in those endless discussions.

My point is only this: manipulating with the fees should be the last thing on our list, to be considered only after a serious attempt has been made to bootstrap liquidity.

I've shown BitShares to many people, there were many different questions and concerns, but none of those concerns was ever related to fees.
This makes me think that most probably fees are *not* our issue.

But I cannot prove that, just as you cannot prove the opposite.

I have a feeling I must apologize to you, I may have been a little harsh with my last reply to you.
In the end, I don't know what is best for BitShares. All I know is that our customers are complaining about A and our business partners want B and shareholders want C.
I further fully agree that we should be manipulating fees, but the current situation was this:
- we had a predefined (from genesis) set of fees denoted in BTS
- BTS is volatile so are the fees
- some businesses approached me and complained about these volatile fees and why there are not pegged to USD/EUR or whatever.

Then I actually started to write a script to track the USD value of the fees and ended up with .. well .. strange fees simply because BTS went somewhere different after genesis.
I took the time to go through every fee and think of it and tried to pick more rational fees. Yes, the proposal is most created by me alone with many inputs from committee members.
So if people are unhappy with this and feel that the proposal is bad for BTS, please remove your stake from either my worker, my proxy, or the my committee member. That will at least
show me that I was wrong in taking the time to think about the fees.

My intentions where to offer more incentive for people to enter BitShares and the only thing that we can do is give it more utility and cheaper fees.

Interestingly, with the newest development about zero-fee option for operations, no one complained about the consequences for the referral program, but people see the marketing buzz it could have. So why don't we start with that buzz already and give them yet another incentive to join once we have 0-fees implemented?

[BunkerChainLabs-DataSecurityNode]

I think it is important that we identify which market bts should go after - the forex trading market, the stock market or the crypto-trading market.  These markets have different attributes and fee structures.

What if we created some kind of 'silos' that adjusted the rates and structures that each of these markets require so that as a platform we can direct our strengths to each one appropriately?