BSQ trading fee update on Cycle 21

[MwithM]

This is a Bisq Network proposal. Please familiarize yourself with the submission and review process.

This proposal keeps a record of the process to keep the BSQ trading fee at 50% discount to BTC trading fee. It will remain open until we need to update BSQ trading fees again.

Last cycle voting failed. #291 could not be approved. Last valid vote was #284

Cycle 20

Parameters (see issue)

• USD/BTC price: 33400
• USD/BSQ price: 2.22
• Current BSQ discount: 33.2%

It's necessary to update BSQ trading fee on Cycle 20.

[30D Average screenshot required]

New BSQ trading fees

A change parameter request for BSQ trading fees will be submitted to DAO voting:
New BSQ maker fee: 7.53
New BSQ taker fee: 52.68

There's no cap to reduce BSQ trading fees.
This is the first time when BSQ trading fee needed to be lower because of BSQ increased value drastically during last cycle. It made some traders stop using BSQ to pay trading fees.

[MwithM]

New maker BSQ trading fee TXID: 8e20e5b6cd6f87bb5019aa7d51f622c8a8825dff42cfa8c99875315f44fa1f6e
New maker BSQ trading fee TXID: 28f394b94d2538205acf18080c4974905158d7b88aa5c298137e7caa495bc0b3

[pazza83]

Hi @MwithM

I am not completely aware of the history to the economics of BSQ or why certain things like caps were introduced but thought I would share some thoughts.

Would it make sense to align all the BSQ fee rate updates?

• BSQ Trade fees rate
• BSQ Compensation rates
• DAO refund request rates
• Even proposals like Refund agent buys BTC from burningman with 30 day average

As the price is pretty volatile I think aligning prices, and updating them each cycle, could be of benefit.

I also think having differing caps could cause problems in the future. Aligning prices and removing caps (or standardizing them across the above) might introduce volatility problems but it would also ensure these are at least made fair when compared within the ecosystem of Bisq.

[MwithM]

The cap to raise BSQ trading fees is because we prefer to give a higher discount than a big raise (over 15% monthly) in the amount of BSQ fee paid per cycle. Furthermore, bigger discount should incentive users to burn more BSQ paying trading fees, so market should self adjust. For Cycle 20, BSQ trading fee discount was going to be over 60% and I wanted to take the opportunity to promote the use of BSQ. Vote failed while the BSQ price increased drastically, so that was not possible.
Traders won't comply when the BSQ trading fees are suddenly reduced so there is no cap to reduce trading fees, they just go back to 50% related to BTC.
The parameters to determinate the trading fees are well known: 30 day average for BSQ price and daily price at the moment the fees are calculated, which is 3 days before the end of proposal phase.
In my opinion, this has worked particularly well. If I had to change something, maybe I would use 30 day average for BTC price as well or increase the cap to raise BSQ fees to 20%, but it's not urgent.

BSQ compensation rate is the 90 day average 7 days before end of proposal phase. I would go back to the previous way where we used the 90 day average at the beginning of the cycle, as the issue with the outliers seems to be solved and there is not much discussion about the rates to use for compensation.

The biggest difficulty is for reimbursements. They use 30 day average at the day they make the request. They should not change it, no matter what the BSQ price does. Arbitrator uses the price of lower sell offer with BM (and made the #294 issue to change it) and I suppose traders use the same rate as arbitrator.
BSQ from compensation can only be sold at market, burnt to pay trading fees or held as an investment. Reimbursements can also be sold to BM. As the reimbursements can be higher than compensation amounts, we need to have a clear policy about it.

Contributors use a longer average price as a way to indicate their commitment to Bisq on the long term, while for reimbursements, I don't find that necessary.

[pazza83]

Thanks for the helpful explanation.

Seems that the prices for each has been given lots of thought and discussion.

I still think price controls / caps could lead to problems in the future but can see why they can also be positive.

I think long term the goal should be to remove the price controls and standardize prices of all the above.

[MwithM]

Proposals were accepted and the wiki has been updated.

[Conza88]

I still think price controls / caps could lead to problems in the future but can see why they can also be positive.

I think long term the goal should be to remove the price controls and standardize prices of all the above.

Definitely agree.

[MwithM]

Closing as approved through DAO voting.