Author Topic: [Committee Member] - johnr's proposal to join the BitShares Committee  (Read 2118 times)

0 Members and 1 Guest are viewing this topic.

Online abit

  • Committee member
  • Hero Member
  • *
  • Posts: 3300
    • View Profile
    • Steemit Blog
  • BitShares: abit
  • GitHub: abitmore
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #15 on: July 07, 2018, 09:40:39 pm »
Thanks for your efforts. Voted.
BTS account: abit
BTS committee member: abit
BTS witness: in.abit

Offline JohnR

  • Committee member
  • Full Member
  • *
  • Posts: 53
    • View Profile
  • BitShares: johnr
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #16 on: July 09, 2018, 12:44:00 am »
Thank you abit.  That means a great deal coming from such a public and respected individual as yourself.
Active Committee
John Robert Conlin

Offline JohnR

  • Committee member
  • Full Member
  • *
  • Posts: 53
    • View Profile
  • BitShares: johnr
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #17 on: July 18, 2018, 03:41:31 am »
I would like to build on the solid research already published by Clockwork (https://steemit.com/bitshares/@clockwork/bitshares-fees-the-fee-schedule-and-dex-profitability) and Abit (https://steemit.com/bitshares/@abit/bitshares-block-chain-historical-data-search-analysis-and-visualization

I was interested with Clockwork’s observation that the BitShares reserve pool is running at a chronic deficit.  So far as the community desires fiscal balance and sustainability, it’s clear we must decrease expenses (witness/worker proposals) or increase income (revenue from fees).  Decreasing expenses significantly is short-sighted because BitShares has a lot of growth ahead and doing so would be akin to cutting the legs from under ourselves.  So naturally we should have a conversation about increasing network operations and or the fees associated with those operations.

I am against raising networks across the board before considering how the bitUSD/CNY variable fee can be used to support the health of the network (witness/worker proposals).  As shown below, fees are already rather high, even by centralized exchange standards.  For some of the more popular trading pairs, users face fees over 0.3% in total.  With only a small fraction of that actually going to support the core infrastructure of the platform.

Fees in context:
Hypothetical fees incurred on 100 bitUSD round-trip trade for BTC and back         
              BTS Network Fee  bitUSD Variable Fee     Private Gateway Fee
OpenLedger   0.01156           $0.10                  $0.20
GDEX            0.01156           $0.10                  $0.10
RuDex           0.01156           $0.10                  $0.05


The private gateway fees are off the table for this discussion.  What is immediately noticeable is how much greater the bitUSD variable fee is than the network fee.  Of course, the difference is less on smaller orders and greater on larger orders.  Still, considering bitUSD/CNY have shown robust trading activity this is a data point that the market can bear significantly higher fees than the flat network fee.

When the bitUSD/bitCNY variable fees were originally introduced I was against them.  Notwithstanding the results of the liquidity market operations (the explicit intention of the additional fee) I have come around to realize a much bigger point.  The demand for trading bitUSD has proven rather inelastic with respect to the transaction fees. 

Elasticity is a short-hand economics term meaning how much market participants will alter their behavior in response to a given change.  E.g. alcohol and cigarette taxes are considered the most efficient taxes because they do not alter behavior significantly – people who smoke will likely continue to smoke whether the cost of a pack amounts to two USD or three.  The upshot here is that bitUSD is a unique token and the market demand for trading remains robust despite the increased fee.  If we want to increase the reserve pool, we should consider tapping some of the current fees levied on bitUSD/CNY or increasing network fees slightly on those assets alone.

A second observation is the 20/80% referral vesting mechanism.  Even a strong increase in network activity/revenue will have a muted effect so long as only 1/5 of the revenues are actually returning to the reserve pool.  I understand the original reasoning for such lucrative referral structures.  I also think it’s worth having a discussion whether this structure has yielded the results the community feels is worthy of such a high price to pay.  This is the most immediate way to increase the force multiplier of network activity.  At the same time I recognize this may be a sensitive topic because people may have planned according to this current 20/80 program.

So my calls for discussion are:
1) What do you think of augmenting the fee structure on bitCNY/USD to increase the flow to the reserve pool from the trading of those assets? 
2) What do you think of slightly modifying the ratio between referrer vesting and reserve pool income?
« Last Edit: July 18, 2018, 03:27:36 pm by JohnR »
Active Committee
John Robert Conlin

Offline clockwork

  • Committee member
  • Full Member
  • *
  • Posts: 127
    • View Profile
  • BitShares: clockwork
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #18 on: July 18, 2018, 07:03:29 am »
1) Changing network fess on SPECIFIC assets would require a HF (and not sure if even possible)

Network fees are way too low across the board.. Might as well increase them overall like I suggest.

2) Would be ideal but unsure how the community will react.

Interesting to note your thoughts on USD/CNY market fees. Demand for those assets is indeed exceptionally high (which is the reasoning behind the fees + operation worker in the first place)

Offline JohnR

  • Committee member
  • Full Member
  • *
  • Posts: 53
    • View Profile
  • BitShares: johnr
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #19 on: July 18, 2018, 12:01:16 pm »
Clockwork,

The equivalent result could be had by apportioning some of the 0.1% variable fee from committee trading to reserve pool.  I agree that network fees are very low.  At the same time I would like to see trading across many assets and not concentrated in a few UIA gateways.  My concern is crowding out some of the more obscure/low volume tokens when we are already charging more than 10x the network fee on a couple trading pairs.  Does that make sense?

If you disagree, or think that's too complex I understand.  It sits a little strange with me to debate raising network fees when net fees are already rather high on our most prized trading pairs.

Regarding 2, yes I know some accounts have a lot at stake there so I would like to see a community discussion.
Active Committee
John Robert Conlin

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12636
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #20 on: July 18, 2018, 01:15:25 pm »
1) I aggree that trading fees might be the easierst to "earn" some solid money. The only hesitation that comes to my mind is the risk of users going somewhere else (including centralized exchanges). We are not in the position of risking those few traders over trading fee. Also trading is only one aspect of the blockchain

2) I would very much rather change the network fee percentage. Although I am biased here as the operator of BitShares Europe which earns its income there, I do belive that a) the blockchain should benefit more from the transactions fees and b) changing this very publicly might actually bring some people to look into the referral program that didn't know about it already. So, I personally think we could as well raise it to 50%
Give BitShares a try! Use the http://testnet.bitshares.eu provided by http://bitshares.eu powered by ChainSquad GmbH

Offline paliboy

Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #21 on: July 18, 2018, 01:38:54 pm »
1) I agree with asset fees on USD/CNY, I would rather use these fund directly to fund worker than to trade
2) totally agree that the network should get bigger share, probably gradually adjusted (e.g. 10 per cent points with every hard fork, target being something between 50% and 80% for network)

I'll copy my Steemit reply to clockwork's post here:

Since account creation and asset creation brings most of the fees, why not to leverage that first?

1. let's start with assets, switch to pricing model similar to domain names... asset creation fee pays it for e.g. 1 year, then you need to renew, assets are being create mainly by businesses so it wouldn't annoy ordinary users; some safety measures would be necessary so that e.g. you cannot "steal" an asset name that issuer forgot to renew; what to do with prefixed assets etc.
2. decouple private keys and account names... similar to first point, human-readable account name is a service that you need to renew annually; users need to be able to get their funds back after their name expires

Offline JohnR

  • Committee member
  • Full Member
  • *
  • Posts: 53
    • View Profile
  • BitShares: johnr
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #22 on: July 19, 2018, 12:53:16 am »
Xeroc I think 50/50 makes sense as a starting point.  That would more than double the income from network fees and referrers still retain a strong incentive to splash their ref links and bring on new users.

Your point of concern about trading fees I think is on everyone's mind here.  That's why I suggest leveraging some of the current asset variable fee towards maintaining the network.  I understand the original intent of the asset fee was to increase liquidity on those two asset in a neutral way, managed by committee.  That's a good objective.  But is it worth 10x the capital flow than accrues to the network?  Put more simply: is committee offered liquidity on two bitassets worth ten times more than all witness and worker proposal pay which power the entire platform?  To me it is clearly not worth the discrepancy.

Paliboy, are you suggesting unwinding prior accounts or making account names renewable on a going-forward basis?
Active Committee
John Robert Conlin


Offline clockwork

  • Committee member
  • Full Member
  • *
  • Posts: 127
    • View Profile
  • BitShares: clockwork
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #24 on: July 19, 2018, 07:56:20 am »
Xeroc I think 50/50 makes sense as a starting point.  That would more than double the income from network fees and referrers still retain a strong incentive to splash their ref links and bring on new users.

Your point of concern about trading fees I think is on everyone's mind here.  That's why I suggest leveraging some of the current asset variable fee towards maintaining the network.  I understand the original intent of the asset fee was to increase liquidity on those two asset in a neutral way, managed by committee.  That's a good objective.  But is it worth 10x the capital flow than accrues to the network?  Put more simply: is committee offered liquidity on two bitassets worth ten times more than all witness and worker proposal pay which power the entire platform?  To me it is clearly not worth the discrepancy.

Paliboy, are you suggesting unwinding prior accounts or making account names renewable on a going-forward basis?

Increasing the network's cut is my ideal starting point too. I believe 20% is way too low. At the same time , I believe it will be difficult for the community to accept (especially those that invested in LTM accounts on the premise of 80% cashback) hence why I focused on base fees first.

As far as trading fees are concerned. Network fees for trading are WAY too low. Market fees (on gateway assets as well as bitAssets) are too high.

Ignoring bitUSD/bitCNY for a moment which I also would like to see market fees reduced for since it's a "community" owned asset through the committee (which blurs the lines a bit...it might be so but it's not really equivalent to reserve profits), the rest of the gateway assets are business owned.

Are we seriously suggesting that the network should charge ridiculously low fees so that someone else's for-profit business remains competitive? I'm sorry but I don't see why *I* or xeroc or any other committee member should spend hours studying fee schedules and operation breakdowns etc. trying to "fix" stuff just so that a gateway can make more profit (or incur less loss). If they can't figure out a way to increase their userbase & stay competitive , I really don't see why the network should bail them out by charging less than 1/8th of a cent so they can charge 0.1-0.2%

(This is also the point where I remind you that committee work is unpaid :P)


As far as paliboy's suggestions are concerned.

Committee asset fee income != reserve pool. I will gladly entertain the suggestion that escrow workers come to an agreement with the committee so that they can always trade worker pay BTS to bitUSD or bitCNY at a fair price if the market doesn't provide enough liquidity. I will not accept treating fee income as part of the reserve pool though.

It's not asset creation that brings in a lot of funds but rather asset issuance (as gateways transfer UIA IOUs in and out). That is a fee that should probably be not raised (or even lowered) as it should not be such a big part of the reserve pool income and it is also a large cost gateways need to cover (by setting higher market fees). So I would gladly lower their costs there if that means agreeing to lower market fees.

I don't think we should be touching accounts. They work fine as they are. Just increase fees there because people make more accounts than they need (>1.1m accounts created for 30k active users). Faucet improvements in account creation would help. Large number of accounts also puts unneeded strain on the chain.

Large account creation income does not mean it's a profitable operation. It means that the ratio of fees / op is wrong and that other ops are much cheaper than they should be.

Offline paliboy

Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #25 on: July 19, 2018, 10:44:21 am »
Paliboy, are you suggesting unwinding prior accounts or making account names renewable on a going-forward basis?

It should be as non-destructive as possible, we can't just take account names from people.

I don't think we should be touching accounts. They work fine as they are. Just increase fees there because people make more accounts than they need (>1.1m accounts created for 30k active users). Faucet improvements in account creation would help. Large number of accounts also puts unneeded strain on the chain.

Large account creation income does not mean it's a profitable operation. It means that the ratio of fees / op is wrong and that other ops are much cheaper than they should be.

I completely agree that we shouldn't touch accounts as long as there are other ideas to increase income.

Committee asset fee income != reserve pool. I will gladly entertain the suggestion that escrow workers come to an agreement with the committee so that they can always trade worker pay BTS to bitUSD or bitCNY at a fair price if the market doesn't provide enough liquidity. I will not accept treating fee income as part of the reserve pool though.

What do you suggest to do with this income if committee doesn't agree with escrow workers on fair price?

It's not asset creation that brings in a lot of funds but rather asset issuance (as gateways transfer UIA IOUs in and out). That is a fee that should probably be not raised (or even lowered) as it should not be such a big part of the reserve pool income and it is also a large cost gateways need to cover (by setting higher market fees). So I would gladly lower their costs there if that means agreeing to lower market fees.

I misunderstood this income. I agree that asset issuance fees should stay low.

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12636
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #26 on: July 19, 2018, 12:14:05 pm »
One cool thing about increasing the network's cut on transaction fees is .... wait for it ... the users are not affected. They pay 100% anyways. The only ones impacted are basically
* openledger, who claimed that referral fees are not their business
* cryptobridge, who seems to make money by listing fees and trading
* other frontends that may come with their own assets just like OL and CB
* bitshares europe, which sofar only has referral fees as income (as it's owner, I would rather see BitShares grow than hold back rational business decisions out of pure and stupid greed)
Give BitShares a try! Use the http://testnet.bitshares.eu provided by http://bitshares.eu powered by ChainSquad GmbH

Offline JohnR

  • Committee member
  • Full Member
  • *
  • Posts: 53
    • View Profile
  • BitShares: johnr
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #27 on: July 19, 2018, 12:41:29 pm »

As far as trading fees are concerned. Network fees for trading are WAY too low. Market fees (on gateway assets as well as bitAssets) are too high.


I agree with this completely.  The main point I'm trying to get across is that bts:bitUSD & bts:bitCNY are by FAR the most actively traded pairs.  If we want to a have an impact we should focus on variable/marginal fees there.  Since there is already a market fee, already within committee (community) control it seems intuitive to me to start there.  Note the network fee is a flat fee, and since the overwhelming majority of exchange trading pairs have low order creation I'm not sure it will have a huge impact.  Clockwork has a lot of experience here (not to mention put a lot of energy/thought into the matter) so I do support raising network fees while we consider how best to use bitasset market fees.  I can understand not wanting to formally apply some of the current market fee to network integrity (reserve pool).  I'm indifferent between that and simply raising network fees/lowering bitasset fees. 

I do not want to subsidize private gateways either.  I don't immediately see how charging low network fees is bailing out private gateways.  They are basically CEXs leveraging the BTS infrastructure.  In that sense I do see your point - although 'free-riding' is probably the more accurate term.  Probably a longer conversation about how we can better align the incentives there.

One cool thing about increasing the network's cut on transaction fees is .... wait for it ... the users are not affected. They pay 100% anyways. The only ones impacted are basically
* openledger, who claimed that referral fees are not their business
* cryptobridge, who seems to make money by listing fees and trading
* other frontends that may come with their own assets just like OL and CB
* bitshares europe, which sofar only has referral fees as income (as it's owner, I would rather see BitShares grow than hold back rational business decisions out of pure and stupid greed)

I am glad we all seem to agree on this.  A more equitable split between the network and the referrer will make all of our efforts more effective.
Active Committee
John Robert Conlin

Offline clockwork

  • Committee member
  • Full Member
  • *
  • Posts: 127
    • View Profile
  • BitShares: clockwork
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #28 on: July 19, 2018, 01:27:11 pm »
One cool thing about increasing the network's cut on transaction fees is .... wait for it ... the users are not affected. They pay 100% anyways. The only ones impacted are basically
* openledger, who claimed that referral fees are not their business
* cryptobridge, who seems to make money by listing fees and trading
* other frontends that may come with their own assets just like OL and CB
* bitshares europe, which sofar only has referral fees as income (as it's owner, I would rather see BitShares grow than hold back rational business decisions out of pure and stupid greed)

LTM Users too, they'll only get 50% instead of 80% cashback.

Not sure how many bots are depending on that for their profit margin.

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12636
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
Re: [Committee Member] - johnr's proposal to join the BitShares Committee
« Reply #29 on: July 20, 2018, 05:50:48 am »
LTM Users too, they'll only get 50% instead of 80% cashback.
Right .. that's somewhat of a show stopper assuming LTM upgrades were made with the expectation to spare 80% of the fees .. :-/
I'd say, the most fair approach, if committee chooses to change network percentage was to have it changed independent of the other fees and have a proposal expire after 4 weeks. That at least gives everyone sufficient time to do their math ..
Give BitShares a try! Use the http://testnet.bitshares.eu provided by http://bitshares.eu powered by ChainSquad GmbH