Increase BTC trading fee to 1% of trade amount

[MwithM]

Rationale

Getting BSQ to pay trading fees has very little friction since BSQ swaps were implemented.
Bisq needs to increase the use of BSQ. Currentlly, only around 30% of trading fees come from BSQ. BSQ is essential for a decentralized distribution of Bisq's revenue.
From January comptroller's data, Bisq collected 0.66% of total trade revenue, which seems ok but not very high. Current BTC trading fee is 0.8%.

The main goal of this proposal is to increase the rate of trading fees paid in BSQ vs paid in BTC to a 50-60% of total volume in the next 3 cycles. If traders keep using BTC to pay their trading fees, total trade revenue will be higher than current 0.66%.
I don't think there is a big risk of traders stop using Bisq due to high trading fees, since swapping BSQ to pay their trading fees is a simple and cheap option.

Proposal

I propose to increase BTC trading fees to 1% total.
Maker trading fee paid in BTC per 1 BTC traded: 0.0012 (0.12%)
Taker trading fee paid in BTC per 1 BTC traded: 0.0088 (0.88%)

This is how the table at the wiki would look like:

Trading fees per 1 BTC

	BTC	BSQ
Maker	0,0012	16,8
Taker	0,0088	123,2

For BSQ, current price is considered: 43000 USD/BTC and 30D WMA is 1.23 USD/BTC.

Paying trading fees in BSQ would suppose a 60% discount, instead of the current 50% as BSQ trading fees would remain at 0.4%.

[pazza83]

Thanks for creating this proposal.

I am in support of this as it aims to both incentivize more users to use BSQ and increase revenue for DAO from users that use BTC to pay fees.

[chimp1984]

The BSQ fees are not increases? I think both should increase so that Bisq gets an average fee of 0.8% instead of the current 0.66%. I think a fee increase of about 20% for bith BTC and BSQ would bring it closer to the target.

[pazza83]

I did the sums for Jan 2022 with the trade fees above.

Assuming 1% BTC trade fee:

BSQ X% discount trade fees would increase from 0.66% ​to X%

• 60% discount = 0.76% average trade fees
• 55% discount = 0.80% average trade fees
• 50% discount = 0.84% average trade fees

[chimp1984]

Why not stick with the 50% discount? With higher BTC fees some traders might move over to BSQ which would lower the overall fees, so a slight "overshoot" might compensate that tendency, as well as compensate to the past 'undershoot' of our target.

[MwithM]

If 50% of trades were paid with BSQ, the total income from trading fees would be 0.7% of total volume. If 60% of trading fees were paid with BSQ, total trading fees would be 0.64% of total trading volume.
I think that at that point is when Bisq should evaluate to increase the BSQ trading fee to 0.5%.

[chimp1984]

FYI my comment on an older discussion re 15% cap: #333 (comment)

I think we should try to get asap to the 0.4% per trader (0.8% total) fee revenue target. How to get there in details I dont care so much, but that we have been so long below that target was not intentional but from our lack of accounting/checking business numbers.
So I think we should adjust each cycle to hit that 0.8%.

[MwithM]

I agree with removing the self-imposed maximum allowed 15% raise in BSQ trading fee update.
@jmacxx Do you agree with removing it for good? If the 60% discount target is accepted for this cycle, I would update the BSQ trading fee when BSQ discount is not within the 55-65% range, to restore the 60% target.

I might accept that Bisq should head towards a higher trading fees. 0.8% seems a nice target, but I think it's better that this changes are done gradually and slowly. I am going to edit the top post to review the trading fees every 3 cycles instead of 6, probably a new raise will be proposed then.

[flix1]

Agree that fees should be raised for BTC.

Agree that changes should be gradual and incremental over several cycles, that should allow users to react and/or complain. Surprise, unilateral changes in economic conditions can cause a lot of anger, especially if they were not previously discussed. Gradual changes also allow for measurement.

We need to test the hypothesis that "higher BTC fees --> higher % BSQ use".

Maybe the key component is the discount... and what we should do is increase that in parallel with fees so that BSQ fee is only 25% of BTC fee.

I would be OK with an eventual fee pressure of 1.6% in BTC and 0.4% in BSQ as long as the adjustment is over several cycles.

If 60% of users continue to pay in BTC and 40% in BSQ, that would lead to an average revenue of
(0.6 x 0.016) + (0.4 x 0.004) = 0.0096 + 0.0016 = 0.0112 = 1.12% of volume.

Of course my preferred strategy to increase revenue would not be to increase fees, but to increase volume. Double the volume, double the revenue... but that will probably not happen over the next 3 months.

[MwithM]

I have sent to DAO voting the Bitcoin trading fee change parameter proposals:

• For maker, the TXID is: c3a9445a2c2e6f2a6e9edbad2a32694366ee44dc3b1c472649ade30ed07d5dbd
• For taker, the TXID is: a503475acd1f55866f9edd8757ce6e435835bde468401a453760f09a86774e11

I consider the secondary proposal to remove the self imposed 15% cap for increasing BSQ trading fees as accepted, I am updating the wiki to reflect that limit removal and will update the changes needed when the above proposals are accepted on the DAO.
I am calculating the new BSQ trading fees assuming that this proposal will be accepted.