[COMMITTEE INPUT REQ.] Fee Schedule for Shareholder Consultation

[cube]

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.

[lil_jay890]

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.

Registrar for MT4 could earn a lot from LTM-fee...much more than what he could earn on trading fee. IMO.
So there would actually be a way to get the development money back etc.

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.

Probably because we can see a lot of exchange working with % trading fee, and we se a lot of volume in those exchange. Right now:
Poloniex, only on eth/btc, has 28k btc volume.
Btc38 only on cny/btc has 500 btc volume.
They seem to work quite well, and poloniex has 0.2% trading fee per side iirc.

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.

We thought that charging only 0.01% would still make the dex cheaper than the majority of other exchanges.
Would you suggest to have no % trading fee at all until we have more volume?

If you are going to do the %based fee's, there needs to be a ceiling involved.  My back of the napkin sweetspot would be %based fee's up to $20... $20 is half the price that many ECN brokers charge to do larger forex orders.

Having a ceiling is a good idea imo, but it would need development tho.
Thanks for your suggestion.

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.

[cube]

I can assure you forex, stock, option, futures traders do take fee's seriously... but only if the fee's are exorbant.

They will not care if a fee is 1 cent or $1.  What they will care about is when they see they could execute a $100,000 trade on ETrade and pay $7 in commissions, but then try to do that same trade in bitshares and pay $100.  Then imagine if people start using leverage with bond market... multiply their costs by 10.

If you are going to do the %based fee's, there needs to be a ceiling involved.  My back of the napkin sweetspot would be %based fee's up to $20... $20 is half the price that many ECN brokers charge to do larger forex orders.

Is that what ETrade charge for a $100K trade?  Wow, that is low. 

I know stock exchanges' brokers go by a percentage of trade for commission.  The percent can go lower if the volume gets high enough.  There is no commission cap that I know of.

[Bhuz]

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.

Registrar for MT4 could earn a lot from LTM-fee...much more than what he could earn on trading fee. IMO.
So there would actually be a way to get the development money back etc.

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.

Probably because we can see a lot of exchange working with % trading fee, and we se a lot of volume in those exchange. Right now:
Poloniex, only on eth/btc, has 28k btc volume.
Btc38 only on cny/btc has 500 btc volume.
They seem to work quite well, and poloniex has 0.2% trading fee per side iirc.

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.

We thought that charging only 0.01% would still make the dex cheaper than the majority of other exchanges.
Would you suggest to have no % trading fee at all until we have more volume?

If you are going to do the %based fee's, there needs to be a ceiling involved.  My back of the napkin sweetspot would be %based fee's up to $20... $20 is half the price that many ECN brokers charge to do larger forex orders.

Having a ceiling is a good idea imo, but it would need development tho.
Thanks for your suggestion.

[lil_jay890]

I will say it is very well laid out and very well detailed.  The transparency is very good.

[roadscape]

This is a well thought-out proposal and the most professional work I've seen from committee members.. well done!!

I've briefly scanned the rationale for operations and I'll provide some feedback shortly. Great job documenting this so thoroughly.. https://github.com/BitShares-Committee/Instructions/blob/master/usd-denominated-fees/fee-schedule-proposed-by-xeroc.py very impressive

[pc]

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.)

[clayop]

I can assure you forex, stock, option, futures traders do take fee's seriously... but only if the fee's are exorbant.

They will not care if a fee is 1 cent or $1.  What they will care about is when they see they could execute a $100,000 trade on ETrade and pay $7 in commissions, but then try to do that same trade in bitshares and pay $100.  Then imagine if people start using leverage with bond market... multiply their costs by 10.

If you are going to do the %based fee's, there needs to be a ceiling involved.  My back of the napkin sweetspot would be %based fee's up to $20... $20 is half the price that many ECN brokers charge to do larger forex orders.

Wow I cannot believe you're complaining about high fee...

[lil_jay890]

I can assure you forex, stock, option, futures traders do take fee's seriously... but only if the fee's are exorbant.

They will not care if a fee is 1 cent or $1.  What they will care about is when they see they could execute a $100,000 trade on ETrade and pay $7 in commissions, but then try to do that same trade in bitshares and pay $100.  Then imagine if people start using leverage with bond market... multiply their costs by 10.

If you are going to do the %based fee's, there needs to be a ceiling involved.  My back of the napkin sweetspot would be %based fee's up to $20... $20 is half the price that many ECN brokers charge to do larger forex orders.

[BunkerChainLabs-DataSecurityNode]

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.

Ok.. can you make a proposal for what those fees should be as you see it?

[clayop]

@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.

Because the people were not customers/users, they might not care about fees IMO.
There already is an example from bitcrab's customers. Fees are already an issue.

[lil_jay890]

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.

[BunkerChainLabs-DataSecurityNode]

@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.

You are welcome to make suggestions and analysis of specific fees. Speaking in generalities of all or nothing only leads to inaction. If you want to make a case for specific items now is the time to do so.

The rest of the community has decided that manipulating the fees is higher priority than you think it should be. You can buy more BTS and try and change the balance of power though.

I am curious to know what you consider a 'serious attempt' though at liquidity. We been at this 4 months going on 5... what is your definition on this? Why hasn't it taken place since 2.0 began?

Perhaps in your part of the world the fees are nothing to be concerned with. However being a global distributed network in a world of inequalities of economies, there has to be a happy medium. Remember this is about life, liberty, and property for all.. not just the folks in advanced economies of the world.

Anyhow.. we have almost two weeks to get into specific items that people want to reconsider. I am just curious about your comments about serious attempts not being made and how that might look in lieu of fee changes.

[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.

[BunkerChainLabs-DataSecurityNode]

I think I should translate it Chinese.. or ask someone to do it.

//Update:
Due to the new year holidays, Chinese people would be busying visiting families and/or traveling these days (1-3 weeks). It's likely that most people will go to places where is no good Internet connection. And most people may have no much time to spend on BitShares. So I suggest that we postpone the deadline of decision making (read: voting) and give more time to Chinese community. Thanks.

What would you recommend? An additional week perhaps? So 14 days for discussion and feedback instead of 7?

Yes I think that's better.

By the way, I saw "a low 0.1% trading fee for committee owned assets such as bitUSD" in the non-tech summary, but haven't found related command/code in the technical summary. Am I missing something?

I have edited the introduction to this thread to reflect the new timeline.