I got 2^256 problems, but a fee ain't one

We should clarify what we are trying to accomplish with the fee because that will drive the tradeoff decisions made. Charging a fee to provide short term operating cash flow (which likely means sacrificing user growth) will look different from creating a structure to maximize the long term value.

IE: Charging 30% with a transaction growth rate of 100%/yr will produce a smaller net present value than charging 0% in year 1-10, and 30% from year 10 onward with a transaction growth rate of 300%/yr.

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Great topic and discussion. I’m generally in favor of no fees, largely for the reasons outlined in OP. I see the revenue stream argument as well.

Let’s talk about this at Core Dev call on Monday: https://github.com/status-im/pm/issues/11

PS Speaking of sticker revenue and Line, I passed by a Line Friend event in Taipei, here’s what this looks like. What would the equivalent look like in a few years for Status? To what extent could it be community driven and profitable to token holders? DS

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Adding utility to SNT is a crucial target. The sticker market is perfect for that. I’d focus on making transacting in SNT as fun as possible and derive the design choices based on this ‘fun principle’. Ideally, the users of Status will love the stickers as much as transacting with SNT. How other platforms structure sticker markets, should not be the benchmark. The benchmark should be the joy which the users will experience while transacting on the Status platform. The fee should be structured to incentivise both the creators of the stickers and their users. While of course, it is essential to make the right design choices upfront, the fee structure may change over time, especially when a change brings satisfaction to all parties involved. With the vast Status Treasury, burning or recycling and the percentages taken or not taken do not matter much at this stage. From an economic standpoint, the number one concern should be to maximise the number of SNT transactions for the utility of SNT to unfold. In the long run, the volume of the SNT transactions is the key lever of the sustainability of Status.

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+1 to @j12b and @rachel’s comments here, where a small fee is charged for the maintanance of the project. We would likely want to do something similar in the Teller Network as well.

As discussed above, the fee’s can then be pooled, where the projects that get funded from that pool can be decided upon through SNT voting through the DAO. This would be similar to how 10% of block rewards in DASH are used for its future development.

Just playing devil’s advocate here, but probably there are others constraints too.

e.g. we could transfer 10 SNT to each user sending a sticker. I certainly would find that fun! And transaction volume would probably significantly increase too.

So, I thought I’d chime in here and elaborate on my position made in #312-janitors.

I am not a proponent of the idea for fee the way it’s being presented, why? Well it boils down to incentives, we need to pay people to use Status, in the sense that people need to be able to profit from participating in the network, that’s why network incentivization and user aquisition engine are so important.

The reason we’re not working on the User Aquisition Engine is because it’s network effects on steroids and Ethereum doesn’t scale yet, although we’ll implement it after the lesser SNT use-cases.

The mental model of rent extraction, is largely rooted in the gatekeeper business model which is predominant in Web 2.0. “I provide service, you have to go through me to get said service, I extract rent from you by taking a fee”. That’s what Uber does, they middle man a network, and they also prevent the network from voluntarily improving the network.

LINE is doing exactly the same thing. Users can’t improve the sticker market by contributing code, they have to have LINE’s approval (thereby censoring and distorting the marketplace) and LINE takes a massive cut. What a shit deal for users. Doing this we’re making more work for ourselves, by enshrining ourselves (Status GmbH) as the provider’s (and governers) of the solution, it’s incredibly inefficient.

Infact it’s common for web2.0 business models to waive the fee until they get large enough network effects and then shanghai their userbase by dumping a fee on them later, it’s very feudal.

I heavily considered typical business models when Ethereum first started and came to conclusion that they don’t work. why?

Aside from them being inefficient, Ethereum is weird, in decentralised application it’s very difficult to concentrate power as the middle-man, because we disintermediate them. That’s why Status is open source, to minimize the ability for us to centralize and work against the users in the event we attain real network effects.

Better business models revolve around making a market and then acting as a node within that market, or some kind of transactional layer that requires the token to function (which is why messaging incentivization is important for SNT and our real asset)

This allows people to buy into the network, and improve it with their self-interest to maximise their return. Token’s represent networks of belief, they believe in the idea the token represents, even if that’s as simple as expecting the value to appreciate.

You can view Ethereum as a medium of pure free trade, more concretely anyone can take your smart contract code, your application code and ‘neuter’ the fee and re-deploy it, they can do this for less than $0.50 in 30 seconds or less. It’s basically piracy, they don’t have the overhead of creation of it.

This move undercuts your service and is more competitve than your service, and will win in the long run as your fee cannot compete with zero-margins.

So how do you prevent them from undercutting your service? Well, you look at the incentives.

The question isn’t “how do we recoup our development costs?” (which is insignificant in the scheme of things, and I understand that most people in Status haven’t experienced the appreciation of a token’s value)

Also don’t forget that the network participants paid for this, it’s not our money, they entrusted us with their money. We are working to reinforce their belief in us.

The question is "how do we make the bad behaviours unprofitable? or how do we make participation profitable?"

Remember, no one is going to use Status unless we (the network) pays them, unless they can earn from onboarding people into the network.

Also by virtue of you holding SNT, it’s very important to understand that you are part of the network, taking a fee isn’t going to make you richer, it’s probably going to make Carl and I richer and by our good graces we decide to put it back into the network (btw it’s not a charity, we’re SNT holders too and we want the value to go up for ourselves out of our own self-interest).

If you view every SNT holder as part of the organisation (think of them like shareholder, remember how I keep saying there is no us vs them, no internal vs external) then you want everyone in the organisation to profit, to prosper from what the network creates.

If we hold that idea in mind, and we want people to, then the ‘fee’ should be burning of the SNT. This is deflationary and therefore rebalances the value into the remaining SNT. Therefore everyone profits and the need to work against the network, to pirate the code is mitigated.

Because piracy of the code recognises value of the code, of the product - then by simple self-interest it’s better to participate in the network, buy more SNT and get more people buying stickers, which means getting more people to use Status to buy more stickers.

You want to capture that individuals interest, their enthusiasm and allow them to profit and contribute, thereby the entire network benefits and you’ll create stronger network effects.

All of our SNT use-cases should exist to create stronger network effects, by allowing everyone to earn more value by participating in the network. You want people working for the interest of the network and what it stands for, you don’t want to make them work against the network.

If you want to recoup development costs, then maybe it’s acceptable as an voluntary donation to the DAO in the UI.

Rent extraction that the network doesn’t profit from is short-sighted, alienates and works against our network. The very thing we’re trying to grow. This is bad.

Now if we do have a fee, there’s a big question of pricing it. I’m open to suggestions. Some ideas to explore are quorum based setting or some kind of difficulty-like adjustment.

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I created an exploratory notebook for sticker market here https://beta.observablehq.com/@bgits/status-sticker-market-utility-value-exploration

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Hey great thread, some really solid suggestions and ideas.

It’s not bulletproof but I created a general Poll just to gather quick feedback from the Status community. It may suit people who wish to have a say but don’t want to delve too deep. Of course it’s none binding but thought it may prove some value if only a little insight into people’s thinking.

https://ipfs.infura.io/ipfs/QmSmv5e5DYc2otwWcpUzuqmt389s3HHx651TbxDvKBFFue/#/titleScreen/18

It runs for 2 days
:hugs:

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I think we should consider getting away from calling them fees for the following reasons:

When the app store charges the creator fees those monies go to a corporation at which point the creator no longer has much say in how those funds are used, those funds are controlled by a different group of stakeholders (shareholders), who often have different interests from the creators and consumers.

In our case the monies go into the network to maintain and support it, which is in the long term interest of creators. If the funds go into a DAO, the creators have a direct say in how those funds should be allocated and they can choose to burn or invest in further building out the network. This concept has been elucidated in much greater detail by @ricardo3 with fee recycling and @vbuterin, Hitzig and Weyl in Liberal Radicalism (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3243656).

In my opinion, the value from burning is the hurdle rate and should be the option chosen when the potential value from other network improvement opportunities is lower. This is what markets naturally seem to gravitate towards, ie: Amazon choose not to buy back stock or pay dividends instead opting to start and grow AWS.

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Just going to chime in with something here, not sure if it was considered. If you’re building a platform which is charging for X, and X ends up being popular but the charging ends up being a barrier, and the platform is open source, it’s only a matter of time before someone forks a “Status-libre” repo and distributes that instead, especially if both apps share the rest of the functionality.

If one could run a fully fledged iOS App store with 0% fees that’s more popular than the official ones and all one needed was a jailbroken iPhone, I imagine that ecosystem would quickly become self-encouraging.

I think any kind of fee system that goes beyond curating the stickers would be a gun aimed at the proverbial foot.

I don’t think history validates the “it’s only a matter of time” thinking. There are many paid products that have free competitors and have not been displaced, probably because the free products could not invest in improving the product while the paid ones could.

Even so, if our sticker market inspires someone to build a Status client which users love then the Status network not only grows but becomes more decentralized which is a net positive.

I vote for burning the fee (reasonable % of under 15%).

I’d say this is because the products comparatively suck. All Photoshop alternatives can’t hold a candle to the original. Same for Illustrator, MS office (gods, Libreoffice is the worst), etc. What’s more, most of those apps are not compatible with their libre versions (any MS Word document will break in alternatives even to this very day, and vice versa), so it doesn’t apply. If Photoshop was open source and it was optional to pay for it, I don’t think there’d be many people who don’t compile it on their own to get it for free, if they get the same functionality without paying. Same here with the sticker market - the fact that the “libre” version would be functionally identical to the feed one is what would tilt the scales.

Oh no doubt, I’m just trying to point out the flaw I see in reasoning for a non-curating fee in the sticker market. Seems like a shame to put that much work into it if someone just ends up forking it out and replacing it with a free one.

What about a staking mechanism for sticker sellers. Similar to the license for the teller market- x amount required in an address to enable selling(and receiving of their sales income). And maybe if the seller decides to leave the network/selling, then charge a small burn fee from removing the stake? This incentivizes hodl.

A couple of these comments triggered the idea-> https://twitter.com/tokenstate/status/1095782534624018432?s=19

I think Binance really has done a great job with their token model.

I guess I don’t see how a small fee is in any way a barrier to artists. I know your line of thinking extends beyond this, but… in the case of stickers, it’s status quo, and as much as crypto economies are about breaking status quo, I find it hard to imagine someone forking the market because they’re angry about 10% of sales being sent to the DAO/Status or burned.

@barry valid point that artists should know fees are taken in service of the network. What do you think is better terminology?

To prepare for any situation, Ricardo’s written logic into the contract that allows us to send a percentage of sales to Status or burn it. This percentage is set initially to 0.

10% is a very different story from the original notion of 30%. I agree 10% is far from an amount that would warrant a fork.

I feel the same about 30%. Only if the artist earns less than they are accustomed to would I think the fee might discourage people from entering the market, but this is just me conjecturing.

Sound like a good question for marketing & UX. Perhaps contribution?

Perhaps the DAO mechanism can satisfy all types of creators. I think the Moloch DAO design might help here.

When a sticker gets sold (10% or whatever the DAO sets it to) of the fee goes into the DAO, if the creator doesn’t want to be a part of the DAO anymore they can call the Rage Quit function at anytime and get back their prorata share of the funds in the DAO.

I think sticker designers will be willing to be charged to some extent because the sticker market help them make a profit from selling their content. They all know that there is some maintenance cost and would like to express their gratitude to Status for providing them with the incentivising Web3 platform.

However, because Status is community’s eventually, I think it is better to create a poll on this topic.

For example,

  • No fee
  • 0~5%
  • 5%~10%
  • 10%~15%
  • 15%~20%
  • 20%~25%
  • 25%~30%
  • More than 30%

Just a thought on democracy :slight_smile:

Hey :wave:t2:

Results are in :partying_face: from the recent Poll on Sticker Market Fees.

Thanks to the 7 other people who voted :raised_hands:t2: Not all heroes wear capes :kissing_heart:.

Please see attached pics for a breakdown!
Not to be taken too seriously :hugs:image image image

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