# Discussion about the transaction fees

As NuBits trading volume had an average of 10% of the total market cap while the No. of transactions has an average of 18-20 transaction every day, is it the time to discuss changing the transaction fees scheme?

If we decided to adopt a variable and proportional transaction fees, what should it be like?
Would 0.1% with minimum 0.01NBT be fine? or should we use more complex formula proportional to the transaction volume ?

What do you think?

I once thought about a model similar to pow, where the transaction fees are distributed to the block finder.

What kind of free distribution are you thinking of?

I am thinking about the amount of transaction fee, not the distribution system, destroying the fee is the best option in my opinion.

What i want to discuss here is the transaction fee amount?

• Should it be a fixed 0.01NBT per transaction?

• Some fixed percentage like 1% of every transactionâ€™s amount of NuBits?

• Or a variable stepped percentage according to the transaction volume category e.g:
1-1000 : 1% , 1000-1000,000 0.1% ?

• Or even better a smooth formula like : Txn Fee = 0.01+(V*log(V,10)/3/100)
As V=volume of transaction

Amount (NBT) ----------- Fee(NBT) --------------- Fee(%)

1 â€¦ 0.01 â€¦ 0.0 %
10 â€¦ 0.04 â€¦ 0.03 %
100 â€¦ 0.67 â€¦ 0.66 %
1K â€¦ 10.01 â€¦ 1.00 %
10K â€¦ 133.34 â€¦ 1.33 %
100K â€¦ 1666.67 â€¦ 1.66 %
1M â€¦ 20000.01 â€¦ 2.00 %

Okay, I get that now. Sorry

Do you have a transaction size related fee (like the current fee structure) in mind?

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Weâ€™re already changing to a variable transaction fee that NuShares holders can vote on. This means that the fee could be lowered to 0 as well. It was passed in the following motion

Yes but could we vote on a Formula, or just a fixed amount of NuBits destroyed for every transaction?
Or at least voting on transaction volume intervals like in the park rate duration ? e.g :
1- 100 ------------> 0.5 %
100 - 10K -------> 1.5 %
10K - 1M --------> 2.0 %

I care more about the transaction monetary volume not the data size, the transaction size related fee is an anti-spam structure not a business model.

It will be a fixed amount of NBT. It will not be possible to adjust it based on the size of the transaction. That is a worthwhile discussion to have, and I believe Iâ€™ve seen it mentioned elsewhere.

the amount depentent fee has the downside to split a large amount into a lot of smaller ones when you want to send lets say 1M nubits. this will have a spam-like result!
i think ppc has a correct anti-spam fee

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You can reverse the curve right? so it will be much more efficient anti-spam fee than the fixed 0.01NBT.

But lets for now stick with the constant Relative fee (With a minimum 0.01NBT) and keep it as low as possible to have the competitive edge.

We currently have about 20 transaction daily and average 600K NBT daily trade volume, so lets compare the two schemes assuming this pattern will continue:

``````    Daily destroyed NuBits (NBT)     ||        Fixed Fee (NBT)    ||      Relative Fee (%)

0.2                                                         0.01                             3.33E-005
25.6                                                        1.28                             0.0042
204.8                                                     10.24                             0.0341
819.2                                                     40.96                             0.136
6553.6                                                  327.68                             1.0
52428.8                                                2621.44                             8.7
``````

As you can see achieving the same amount of profitability with fixed fee is Impossible.
We need to vote on 40 NBT to have the same profits of as little percentage as 0.14%!

Even if this pattern radically changed i doubt that the Fixed fee profitability could ever get close to the Relative fee.

May be i am wrong about this comparison, but it all depends on how NuBits would be mainly used as;

Main Usage â€¦ Profit model

Stable store of value â€¦ Small inflation or Reverse parking rate
Arbitrage facilitator â€¦ Percentage fee
Digital transactions facilitator â€¦ Fixed fee per transaction

In this Article it seems that Paypal have about 7M daily transaction, while having about 300M daily transaction volume.

If NuBits acted like a money transfer facilator and managed to achieve paypal level, then a Fixed fee of 0.1 NBT will be enough to make Nu very profitable as a Percentage fee of 0.1% could do, and i donâ€™t think that 0.1 NBT will have a significant effect on Nubits effeciency at all.

I hope Nu the best.

i am in favor of the fixed fee. is there a motion about it to vote?

Iâ€™d like to reopen a discussion about fixed fee versus variable fee. I think @Raythmaâ€™s point is valid that a fixed fee is not useful as a revenue source, while a variable fee is.

Also, as fiat is normally something like 3% fees, we are easily still competitive with even 0.5% fees.

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Continuing the discussion from the last post @Creon made here: Another paid article about BitShares?

I donâ€™t expect 7.5% monthly to be competitive in the long-term. Your excellent work pioneering liquidity pools is helping to ensure that new entrants will soon begin providing liquidity at cheaper rates if they are able to.

The level of transaction fees can certainly be debated, but I absolutely believe 0.10 NBT per transaction would be a competitive transaction rate at this point in time. NBT are not yet being used for microtransactions or purchasing \$0.50 US bags of candy in department stores. It appears to mainly be used for hedging large amounts of USD against Bitcoin trading. The value that NBT is providing these users is (I believe) far in excess of what we are charging them to use our product.

Analysis of the average NBT transaction size would give us a better indication of what an appropriate fixed rate should be if percentage-based fees are technically infeasible.

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So youâ€™re saying that for now it might be best to charge a higher transaction fee, since the majority of people are currently using NuBits to transfer larger sums of money. Therefore, they wouldnâ€™t even notice the \$0.10 cent fee in comparison to the amount of money theyâ€™re putting into their transactions?

If that is true, it would buy us some time to develop other services or ways of earning profit for the network. As our liquidity operations become sustained more and more through these other income sources, we could continuously lower the transaction fee until the point where weâ€™re competitive with other cryptos for microtransactions. Is this what you have in mind @tomjoad?

Its more 20 cent we are talking about than 10 cent. This is already quite a sum and would bite me if I see it on the bill of my \$1.10 coffee order. On the other hand, the current design wonâ€™t ever allow such microtransactions with Nu, so maybe we also should try to target other groups like @Sentinelrv suggests, i.e. people who want to store value in a decentralized way with a stable value and only to transfer it in â€śexceptionalâ€ť cases. A bit like a savings account.

For those people 20 cent per transaction are surely fine. The problem however is, that I made my calculations with the current transaction volume. What effect would a 20x tx fee have on this? And if sending NBT around is our revenue, how do we encourage that? The daytrader who keeps all NBT on the exchange will never pay this fee.

More accurate data is probably required, which I am not able to produce right now. How long will it probably take until we have the tx fee as voting parameter? Since this involves a hard fork, I assume it needs to wait for the other protocol changes to be implemented as wellâ€¦

I wasnâ€™t suggesting anything. I was only trying to interpret what @tomjoad was saying. I believe he means our current user base is using NuBits to transfer larger sums and that these people wouldnâ€™t mind the larger transaction fee. They would only mind the larger fee if they were trying to transfer smaller sums of money, purchase a cup of coffee, or perform microtransactions.

I was trying to say that targeting people that transfer larger sums with a higher transaction fee would tide us over for a while, but it should only be a temporary rise in fee, not a permanent one. We should develop services and other ways of earning income for the network, which we could then use to pay liquidity costs. With the money to pay for liquidity coming from other sources of income, we could then gradually lower the transaction fee to the point where weâ€™re once again targeting people who transfer smaller sums of money.

In order to continually lower the transaction fee back to normal, we would need to find enough alternate sources of income to completely cover our liquidity costs. The higher fee would not be needed anymore at this point.

Why not percentage fees, I really donâ€™t understand.

In my opinion the .01 NBT is fine for a minimum fee to prevent blockchain spam. For the staking system, however, we should be voting on percentages not flat fees.

A fixed relative rate will discourage large transactions just as a fixed absolute rate discourages small transactions. I donâ€™t see how the rate table shown by @Raythma, which is a similar approach like in parking, can be applied here. If Nu charges 5% for 100k but only 2.5% for 50k, well, then I just send two times 50k. Not sure why anyone would pay the larger fee if you can just split your transaction.

The current approach isnâ€™t bad in my opinion. Note that the transaction fee we are voting on is not the fee someone has to pay for each transaction, but is a scaling factor of the size of the transaction. If you are sending large sums then it is very likely that you will need many UTXOâ€™s for this transaction and therefore you will also pay a larger fee, even right now.

My question is more what a good value what look like. I think we kind of agree here that 0.01 NBT is too small. The very rough calculation showed that 0.20 NBT could be sufficient, but thatâ€™s a lot. So what is the best trade-off?

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I agree he gave a bad example. What if itâ€™s a smaller % for a bigger volume? Like 1% for 1 NBT, .5% for 10 NBT, .25% for 100 NBT, .125% for 1000NBT, and so on. .01 NBT for any transactions smaller than 1 NBT.

Honestly, I donâ€™t think this needs to be variable, I think we just need to pick a good curve. The equation for this example, by the way, is:
Fee = 1% / [log(Volume)+1]

Tx Volume (NBT) â€¦Fee(NBT)â€¦ Fee(%)

``````    0.01............... 0.01.............100%
0.1................ 0.01.............10%
1.0................ 0.01.............1%
10................. 0.05.............0.5%
100................ 0.25.............0.25%
1,000.............. 1.25.............0.125%
10,000............. 6.25.............0.0625%
100,000........... 31.25.............0.03125%
1,000,000........ 156.25.............0.015625%``````
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