Yes zero fees is great and it's definitely convenient to just leave your coins there and get interest.
But note that the convenience comes with risk.
With these centralization services, Binance is holding a major % of various coins making it a single point of potential failure. https://t.co/ChFrVPWSan
Wow... honestly they really want to get people keep their XTZ on their platform.. relying only on fees during buy and sells..
But it's totally against decentralization spirit because it will become the best baker in the market, so people could potentially go throught Binance to Bake and leave their current baker.
The only point thats make me keep my current baker is Security. I do not want to keep my tezzies on an exchange, even if the exchange is coinbase or binance. Sorry for this :) . So unless it's possible to delegate to their Adress without keeping XTZ on the exchange (for instance with Ledger or Galleon) , i will not move my tezzies to Binance. And even if its possible, i am not saying i will.
This is one of the worst news ever... How are we supposed to maintain decentralization if exchanges starts to propose 0% fee ? What's gonna happen with governance ? How bakers are gonna be able to maintain their bakeries ?
0% fee sounds more like a threat in tezos ecosystem right now than a good news.
Threat or not, this is bound to happen. I think a wait and see approach is called for. The news brings a few thoughts:
- existing bakers already retain very different amounts of their rewards which leads me to believe that this isn't the only consideration people have when they pick a baker.
- the difference between a baker that keeps 10% of its reward and one that keeps 0% is currently about 0.68% a year. It's not obvious that this makes up for the risk of custodying with an exchange.
- this has happened in PoW. Bitcoin.com tried (unsuccessfully) to run a mining pool see -10% fees, Ghash.io gave people such a simple way to mine that they temporarily reached 51% of the Bitcoin network before withering.
- if somehow these mitigating factors aren't sufficient to keep baking decentralized, and at that point, one might consider altering a bit the economics, for instance by making safety deposits a larger fraction of delegation (in the extreme, 100% = no delegation) and increasing the unlocking period. Trying to fiddle with that now is way too premature, but it's good to keep in mind there are options
I wouldn't call it the worst news. It's a test of the baking/governance model and depending on how the ecosystem reacts it may lead do several situations:
1. governance - I think a proposal involving having users override a baker's vote has been discussed. Should too much voting power concentrate under one baker something akin to this might be a solution.
2. baker economics - bakers may now be under pressure to lower their fees down to a level that is potentially unsustainable at current prices. however, should the price per xtz go up as a result of binance's need for bond funds, baking could retain sustainability. ie, there's no reason current baker fees should be set in stone. they should adapt to the market. of course, whether binance is or ends up using customer funds for their bond is important here.
I'm not going to say "this is good for tezos" but it was bound to happen sooner or later. Good thing we have the ability to amend the rules of the game.
Centralised voting is way worse than centralised baking. A short term measure i d propose is a blacklist of exchanges that lose voting rights. The list can be updated in existing governance until we have ST better.
Perhaps it shouldn’t be the bakers that vote but the delegators. If you don’t register your vote by the deadline your vote is forfeited to your baker.
This can already be implemented on a per baker level, but it could theoretically also be enforced on the protocol level, whereafter all wallets would have to be updated with a friendly front end.
> We should discuss how to counter.
We need to develop tools to make it easier to use small bakers.
People will just leave their XTZ on exchanges because it's super easy to do, but it's not safer. When it's just as easy to use a small baker as Binance, Narcbase, Kraken, etc. and it's significantly safer, then people will use smaller bakers. Binance will have to charge fees eventually, so other bakers can compete on price.
IMO a huge advantage to Tezos baking is that I can delegate my baking to a third party and they cannot lose my money. All they can do is screw up my profits in the worst case.
Using an exchange to bake means they can lose your money. This is an unacceptable risk for me.
This could also negatively impact the ecosystem long-term. Exchanges are self-interested. If a few players hold outsized influence we may have bigger problems. However, we don't really know how this will play out.