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[Taler] Proposal For GNU Taler System That Pays Merchants in Liquidity T
[Taler] Proposal For GNU Taler System That Pays Merchants in Liquidity Tokens
Tue, 24 Aug 2021 01:01:15 +0200 (CEST)
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- - -Hello GNU Taler Mailing List,
I would like to thank Dr. Grothoff for responding and informing me of the Taler
Gateway API. I will certainly take a close look at it when writing code
inspired by GNU Taler. You mentioned the real challenge is convincing
users to trust the exchange's payment system. For an exchange, this
will include clients wishing to trade coins as well as merchants that
must accept the species of payment. I have attended cryptocurrency
meetups in person, specifically the Crypto Mondays LA Meetup:
At this in-person meetup, people made clear that see cryptocurrency
as an investment asset, less so a currency for daily merchandise.
I believe it is wisest to offer cryptocurrencies of some form to users
rather than attempting to invent a digital currency completely from
scratch. Cryptocurrency trading clearly has an established market
that is here to stay for the forseeable future. The reason why is
what I learned at the meetup.
People I met at the meetup hyperlinked above informed me they care
much more about making lots of money by cryptotrading than they
care about their privacy. And they prefer cryptotrading over stock
trading since cryptocurrency is more resistant to inflation.
For the average person, using an exchange for the sake of conventional
cryptotrading is best. It would be easier for a layperson to make money
by wisely exchanging coins based on price fluctuations in cryptocurrency
than invest in liquidity pools. Investing in liquidity pools require depositing
large sums of money before significant earnings in dividends can be made.
But for merchants, who can potentially amass a diverse set of payments
under the GNU Taler System, the best form of payment would arguably be
liquidity pool tokens, such as the Uniswap tokens.
Allow me to explain.
According to Glen Goodman, a successful cryptotrader that literally earned
enough dividends from cryptotrading to live off of it, simply holding onto
a diverse array of cryptocurrencies will lead to a loss in value.
He demonstrated this by example in his notable work on Cryptotrading
- - --The Crypto Trader--that merely diversifying one's crypto asset
portfolio without taking into account of price volatilities will inevitably
lead to significant loss in profit (The Crypto Trader p. 195-8).
It is technically possible for a merchant to buy and sell cryptocurrencies
they receive from customers as payment to avoid this and optimize
the appreciation in value of their crypto assets, but this is very
cumbersome and there are no widespread cryptotrading algorithms
that are guranteed to work in the long-term yet.
A second problem is that since cryptocurrency prices fluctuate,
what a customer pays in cryptocurrency to a merchant may fall
in value until the merchant loses the profit they were supposed
to make. Liquidity pools are much more resistant to price
crashes in the cryptocurrency market. If one cryptocurrency's
price falls, people will more frequently exchange said cryptocurrency
for the other in the liquidity pool. And the liquidity pool investor
earns dividends from the exchange fees regardless.
A third problem liquidity pools resolve is allowing a user of a
liquidity pool to exchange any amount of cryptocurrency,
whatever the price is. In an exchange not conducted by
an automated market maker, an order book is made where
people offer various prices for the cryptocurrency, and the
average is often chosen ( The Crypto Trader -- Glen Goodman
p. 79 - 81).
Despite all these benefits, one must choose liquidity pools wisely.
Good liquidity pools are the Liquidity pool involving 50% of
ETH and 50% WBTC and the Liquidity pool involving
50% of ETH and 50% of cSAI:
A merchant that does this will be able to earn a good monthly
percentage yield of ~15%-20% monthly on top of the monthly
profits the merchant earns. This monthly percentage yield
is an incentive to encourage merchants to accept the GNU Taler
System as payment.
When a client wishes to pay a merchant, they can use whatever
digitized coin, or even fiat money, they wish. However, the merchant
may setup a payment plan with GNU Taler where the client's money
is automatically exchanged for liquidity tokens of the merchant's
choosing. This will allow the merchant to not only earn the expected
monthly profit from sales, but also a monthly percentage yield
from holding onto liquidity tokens belonging to liquidity pools.
This is my idea on how to convince merchants to adopt the GNU
Taler payment system. Please let me know what you think of
this concept Professor Grothoff.
P.S.: You can find my PGP public key and all other keys in my Web of Trust
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