From c8587eb45ff2c9c5a9729ef658212d3798db950c Mon Sep 17 00:00:00 2001 From: Fabian Schuh Date: Wed, 16 Dec 2015 11:37:49 +0100 Subject: [PATCH] BSIP-0002 --- bsip-0002.md | 81 ++++++++++++++++++++++++++++++++++++++++++++++++++++ 1 file changed, 81 insertions(+) create mode 100644 bsip-0002.md diff --git a/bsip-0002.md b/bsip-0002.md new file mode 100644 index 0000000..c71f78d --- /dev/null +++ b/bsip-0002.md @@ -0,0 +1,81 @@ + BSIP: 0002 + Title: Refund Create Order Fees on Cancel + Authors: Daniel Larimer + Fabian Schuh + Status: Draft + Type: Protocol + Created: 2015-12-16 + Discussion: + + Worker: 1.14.7 + +# Abstract + +To make the BitShares decentralized exchanges more similar to other exchanges +there should be no fee for creating orders that do not get filled. +Unfortunately, to prevent abuse, a minimum fee is still necessary. + +# Specifications + +This proposal will charge the minimum order fee at the time the order is +created. It will be refunded if the order is canceled before any part of the +order is filled. A small fee will be charged to cancel orders. This order +cancellation fee will be just enough to prevent spam (equivalent of a fraction +of a Dollar cent). + +If the fee is paid in something other than BTS, it will be converted to BTS via +the fee pool at the time the order is placed. If the order is canceled, BTS will +be refunded to the user's account. + +Recommended Order Creation Fee: $0.20 for normal users $0.04 for LTM Recommended +Order Cancelation Fee: $0.01 for normal users, $0.002 for LTM + +As a result, the minimum market fees for normal users will be less than those of +centralized exchanges for orders greater than $100. For lifetime members, orders +above $20 will be cheaper than the 0.2% fee charged by normal exchanges. + +# Discussion + +## Fees payed in BTS + +Paying fees in BTS is the cheapest way to pay fees because the +core-exchange-rate for UIA usually charge a slight premium to handle market +risk. This means that the next order you place will use the BTS to pay the fee +rather than the user asset. Think about it as getting a refund in "store +credit". If you place an order, cancel an order and then decide you don't want +to do any more business with BitShares then you will have to sell the BTS (which +will require placing an order) or "transferring". + +Stated another way, for trading bots it doesn't matter that the refund is in a +different asset. For users it doesn't matter either. It will only impact those +who attempt to flood with a lot of orders, then cancel all of them. They will +end up converting their UIA to BTS at poor exchange rates and then having to +sell the BTS. + +Bottom line, we presume someone placing an order will eventually want it filled. +By refunding them in BTS they can eventually get it filled and end up with 0 +BTS. + +## Discouraging of Makers when not Refunding Partially Filled Orders + +A concern is that the rule may encourage taker but discourage maker, as if an +order is partly filled, the creation fee will not be refunded, and obviously +taker can be more easily to make sure his order is fully, not partly filled. + +## Anti-Spam considerations + +Furthermore, a fee has to be charged for anti-spam. Orders create objects which +must be kept in memory which imposes a resource cost on every node on the +network (plus more cost for storage / bandwidth for the transaction). Cancelling +an order frees up memory, which can be viewed as a negative resource cost, +represented by the refunded fee. + +Ultimately, this reflects a tension between the economic value of liquidity +(market makers should be encouraged because a bigger book is better) and its +cost (every order consumes memory). If we make the fee equal to cost, someone +deciding whether to place an order can determine whether the cost exceeds the +value, and the tension is resolved in a decentralized market-based way. + +# Copyright + +This document is placed in the public domain.