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BSIP: 0086
Title: Share market fees to the network
Author: Abit More <https://github.com/abitmore>
Status: Approved
Type: Protocol
Created: 2019-11-29
Discussion: https://github.com/bitshares/bsips/issues/194
Worker: 1.14.245

Abstract

This BSIP proposes a protocol change: Every time a trade is executed (limit order is filled) and if there are market fees generated, a portion of the market fees goes to the network.

Example: The network percent of market fees is set to 50%, and 0.2% of trading volume is the set as market fee. Then 0.1% of trading volume 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 is more appropriate.

  • Asset owners can specify a zero market fee percentage to get around the fee sharing, while still profiting by setting a higher deposit/withdrawal fee. It is uncommon nowadays probably because it is 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 is possible that committee-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 is a side effect. Hopefully there will be quite some usable tokens. The committee will have to do some work to manage the tokens anyway.

  • The committee will be accumulating tokens which could potentially be used or not used for any purpose. In other words, this BSIP as currently written does not stipulate how those tokens will or will not be used by the committee.

Non-Technical Summary

This BSIP adds a tool for the committee to impose a fee on market trading fees for all assets which enabled market trading fee, thus it can increase income for the network to support its development. It may hinder businesses relying on market fees if the committee-decided fee is high. The committee may need some efforts to decide on an appropriate value of the parameter and manage the income.

Copyright

This document is placed in the public domain.

See Also

Voting outcome

Approved since January 2020. image