82 lines
3.6 KiB
Markdown
82 lines
3.6 KiB
Markdown
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BSIP: 0002
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Title: Refund Create Order Fees on Cancel
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Authors: Daniel Larimer <dan@cryptonomex.com>
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Fabian Schuh <Fabian@BitShares.org>
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Status: Draft
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Type: Protocol
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Created: 2015-12-16
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Discussion: <https://github.com/cryptonomex/graphene/issues/445>
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<https://bitsharestalk.org/index.php/topic,20107.0.html>
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Worker: 1.14.7
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# Abstract
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To make the BitShares decentralized exchanges more similar to other exchanges
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there should be no fee for creating orders that do not get filled.
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Unfortunately, to prevent abuse, a minimum fee is still necessary.
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# Specifications
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This proposal will charge the minimum order fee at the time the order is
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created. It will be refunded if the order is canceled before any part of the
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order is filled. A small fee will be charged to cancel orders. This order
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cancellation fee will be just enough to prevent spam (equivalent of a fraction
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of a Dollar cent).
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If the fee is paid in something other than BTS, it will be converted to BTS via
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the fee pool at the time the order is placed. If the order is canceled, BTS will
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be refunded to the user's account.
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Recommended Order Creation Fee: $0.20 for normal users $0.04 for LTM Recommended
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Order Cancelation Fee: $0.01 for normal users, $0.002 for LTM
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As a result, the minimum market fees for normal users will be less than those of
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centralized exchanges for orders greater than $100. For lifetime members, orders
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above $20 will be cheaper than the 0.2% fee charged by normal exchanges.
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# Discussion
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## Fees payed in BTS
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Paying fees in BTS is the cheapest way to pay fees because the
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core-exchange-rate for UIA usually charge a slight premium to handle market
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risk. This means that the next order you place will use the BTS to pay the fee
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rather than the user asset. Think about it as getting a refund in "store
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credit". If you place an order, cancel an order and then decide you don't want
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to do any more business with BitShares then you will have to sell the BTS (which
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will require placing an order) or "transferring".
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Stated another way, for trading bots it doesn't matter that the refund is in a
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different asset. For users it doesn't matter either. It will only impact those
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who attempt to flood with a lot of orders, then cancel all of them. They will
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end up converting their UIA to BTS at poor exchange rates and then having to
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sell the BTS.
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Bottom line, we presume someone placing an order will eventually want it filled.
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By refunding them in BTS they can eventually get it filled and end up with 0
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BTS.
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## Discouraging of Makers when not Refunding Partially Filled Orders
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A concern is that the rule may encourage taker but discourage maker, as if an
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order is partly filled, the creation fee will not be refunded, and obviously
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taker can be more easily to make sure his order is fully, not partly filled.
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## Anti-Spam considerations
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Furthermore, a fee has to be charged for anti-spam. Orders create objects which
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must be kept in memory which imposes a resource cost on every node on the
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network (plus more cost for storage / bandwidth for the transaction). Cancelling
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an order frees up memory, which can be viewed as a negative resource cost,
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represented by the refunded fee.
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Ultimately, this reflects a tension between the economic value of liquidity
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(market makers should be encouraged because a bigger book is better) and its
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cost (every order consumes memory). If we make the fee equal to cost, someone
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deciding whether to place an order can determine whether the cost exceeds the
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value, and the tension is resolved in a decentralized market-based way.
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# Copyright
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This document is placed in the public domain.
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