BSIP 86: Share market fees to the network

[abitmore]

BSIP: 0086
Title: Share market fees to the network
Author: Abit More <https://github.com/abitmore>
Status: Draft
Type: Protocol
Created: 2019-11-29
Discussion: https://github.com/bitshares/bsips/issues/194
Worker: TBD

Abstract

This BSIP proposes a protocol change: when every trade happens, if there are
market fees generated, a portion (E.G. 5% or 10%) of the market fees goes to
the network.

Motivation

The network needs more tools to generate income to support its development.

Rationale

A major activity in the network is trading assets. The asset owners make
profits in the form of market trading fees. Currently, the main tools for the
network to generate income from asset trading activities are order creation
fee and order cancellation fee. It seems reasonable that the asset owners
share some profits (a part of market fees) to the network to support its
development.

The cut of market fees can go to committee-account's vesting balances.
As a supporting measure, committee-account should be exempted from
white-listing restrictions, so that it is able to claim the vesting balances
and sell them for core token or other tokens to pay for development later.

Specifications

Protocol upgrade

A time will need to be scheduled for applying the change. In this document,
terms "before the protocol upgrade", "at the protocol upgrade" and "after
the protocol upgrade" may or may not be used to indicate things happen before
the scheduled time, at the scheduled time and after the scheduled time.

New global parameter

Add a new global parameter market_fee_network_percent which can be updated
by the committee only after the protocol upgrade.
Initial value of that parameter is 0.
Valid range of that parameter is [0, 100%].

When processing market fees

After the protocol upgrade, when splitting a non-zero market fee, firstly
split amount * market_fee_network_percent (round down) to committee-account,
then process the remainder as before. The amount split to committee-account
should go to the vesting balance object whose type is market_fee_sharing.

When checking asset authorities

After the protocol upgrade, when checking authorities (E.G. white-lists) of an
asset on an account, if the account is committee-account, let it pass.

Discussion

• Other than the "coin-days as market fees" proposal which applies
  a discount to market fees to benefit core token holders directly, this BSIP
  seeks for a mechanism to increase the network's income and benefit core token
  holders indirectly.

• Adjusting the fee schedule and network percent in the referral program is
  another option to increase the network's income, and is probably sufficient
  for funding development.

• In the original design, the purpose of market fees is to reward asset
  issuers for their work (e.g. gateway providers, or businesses built around
  PMs), while operation fees (limit_order_create/cancel in particular) reward
  the network for performing its work. The separation of market/operation fees
  matches the separation of roles. Changing this may damage existing businesses.
  Thus this BSIP could be a bad idea from this perspective. Also note that the
  network can profit from market fees by setting them on committee-owned tokens.

• This would be another motivation for businesses building on top of BitShares
  to get involved in the parameter governance process. The percentage can be
  0 if it's more appropriate.

• Asset owners can specify a zero market fee percentage to get around the
  "tax", while still profiting by setting a higher deposit/withdrawal fee.
  It is uncommon nowadays probably because it's less convenient or attractive
  for their customers.

• Another strategy is to charge a network market fee globally, independent of
  what the asset owner decides. It essentially removes the option to not set
  a fee from asset owners, which kills some freedom and would hinder non-profit
  use of the platform.

• It's possible that committe-account would accumulate a lot of tokens with no
  value and tokens which are unable or hard to be used to pay for development.
  It's a side effect. Hopefully there will be quite some usable tokens.
  The committee will have to do some work to manage the tokens anyway.

Non-Technical Summary

This BSIP adds a tool for the committee to impose a tax on market trading
fees for all assets which enabled market trading fee, thus would potentially
increase income for the network to support its development. It may probably
damage businesses relying on market fees if the committee-decided tax is high.
The committee may need some efforts to manage the income.

Copyright

This document is placed in the public domain.

See Also

• BSIP 86: Share market fees to the network #194

[pmconrad]

In my understanding, the purpose of market fees is to reward asset issuers for their work (e. g. gateway providers, or businesses built around PMs).

In contrast to this, operation fees (limit_order_create/cancel in particular) reward the network for performing its work. Network effort is independent from the size of an order and therefore fixes.

IMO the existing separation of market/operation fees matches the separation of roles perfectly. Changing this might damage existing businesses. I think this is a bad idea.

(Note that the network can profit from market fees by setting them on committee-owned tokens.)

[bitcrab]

I agree with pc.

[abitmore]

I can understand that @bitcrab as owner of an exchange running on top of BitShares, he doesn't want to reduce income of his own exchange. But I don't understand where @pmconrad stands. Besides of the near-zero operation fees, the network can always earn more income to support funding for more workers which would add more value.

The network does earn some market fees for the network via committee-owned assets at this moment, but it doesn't mean the income is sufficient nor forever.

[shulthz]

Like Apple Store App, en，how much fees is suitable? not harm the owner of the exchange.

[Inmortak]

Hello guys,

Where can I see the current distribution and kinds of fees?

[froooze]

Like Apple Store App, en，how much fees is suitable? not harm the owner of the exchange.

flat 0.01% on all trades
or 5-10% of the trading fees

[pmconrad]

But I don't understand where @pmconrad stands.

I don't have a personal interest in this subject. I have stated my reasoning above.

[shulthz]

Like Apple Store App, en，how much fees is suitable? not harm the owner of the exchange.

flat 0.01% on all trades
or 5-10% of the trading fees

en, that's reasonable.
As we only have little income now, can't support anyting.

[froooze]

Like Apple Store App, en，how much fees is suitable? not harm the owner of the exchange.

flat 0.01% on all trades
or 5-10% of the trading fees

en, that's reasonable.
As we only have little income now, can't support anyting.

I suggested some numbers, but I am not convinced this is the right thing.

[shulthz]

Like Apple Store App, en，how much fees is suitable? not harm the owner of the exchange.

flat 0.01% on all trades
or 5-10% of the trading fees

en, that's reasonable.
As we only have little income now, can't support anyting.

I suggested some numbers, but I am not convinced this is the right thing.

DEX service is not free, if want more better service, it need more reasonable income to support.

[froooze]

DEX service is not free, if want more better service, it need more reasonable income to support.

I agree here, but we can also increase the fee for BURN ASSET!

[shulthz]

DEX service is not free, if want more better service, it need more reasonable income to support.

I agree here, but we can also increase the fee for BURN ASSET!

The income should be diversified，shouldn't be single.

[sschiessl-bcp]

In my understanding, the purpose of market fees is to reward asset issuers for their work (e. g. gateway providers, or businesses built around PMs).

In contrast to this, operation fees (limit_order_create/cancel in particular) reward the network for performing its work. Network effort is independent from the size of an order and therefore fixes.

IMO the existing separation of market/operation fees matches the separation of roles perfectly. Changing this might damage existing businesses. I think this is a bad idea.

(Note that the network can profit from market fees by setting them on committee-owned tokens.)

I agree with the sentiment, if the expectation is met that the current network fee is sufficient to support the network or gateways contribute back to the community. History shows that most gateways are not interested in that, such that I agree that imposing a tax on their profits seems reasonable. This also goes hand in hand with the current voters sentiment that the network needs to fund its own development more outside of worker proposals.

Either way, having the option to impose a percent network fee on the market fees sounds reasonable to me, even if it blurs the distinction Peter has laid out. That parameter could still be 0. This would be another motivation for businesses building ontop of BitShares to get involved in the parameter governance process.

It might also be sufficient to adjust the fee schedule and network percent though. Either or should happen as its the voters expressed opinion at the moment IMO.

[abitmore]

@ryanRfox please assign a number to this. Thanks.

BTW quote from an old post in forum:

... 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)