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RE: Fee Structure Changes Coming to Hive-Engine
What happens with liquidity when a stock exchange with say a competitive 0.1% stock trading commission gets hit with a 0.15% sales tax by the country it resides in?
Penalizing transactions doesn't normally create incentive for liquidity to grow. It normally does the exact opposite.
So, how does proposing it helps liquidity in this case even start to make sense in the slightest?
AFAICS, these are exactly the type of weird back of a napkin theory mid-game rule changes that Steemit Inc used to pull on us, and the type of weird back of a napkin theory mid-game rule changes that nuked two of my projects back in STEEM days.
Please explain to me how I'm wrong?
0E-8 BEE
I think "Penalizing transactions" is a silly way to interpret this, because in a low liquidity pool a large trade is going to have much more than 0.25% price impact to begin with, and outside of the pools the trading margins are high from lack of liquidity as well.
So if low liquidity is the problem, you might wonder 'why' and I'll tell you exactly how that works - many of the pools currently have zero incentives for adding liquidity, so while a few people or hive engine itself might provide liquidity out of the kindness of their heart, nobody else is going too far out of their way to bring in funds from outside the ecosystem. However, as soon as I read this post, I already began to assess how much more I can bring in, and what pools I will put that value into. That is already going to amount to many thousands of dollars added to pools liquidity before the fees are even paid, from me alone, and even without upfront additions like this, the fees accumulate over time into higher liquidity which reduces price impact on future swaps, which saves more than the 0.25% for the people swapping (even if they never actually appreciate it)
does it make sense?