[Taler] Proposal For GNU Taler System That Pays Merchants in Liquidity Tokens

[taler]

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- - -Hello GNU Taler Mailing List,




I would like to thank Dr. Grothoff for responding and informing me of the Taler 
Wire




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:




https://www.meetup.com/Crypto-Mondays-L-A/events/mncvhsycclbfc/




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:




https://zumzoom.github.io/analytics/uniswap/roi/








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.




Sincerely,




Tanveer Salim


P.S.: You can find my PGP public key and all other keys in my Web of Trust




at: https://raiderhacks.com/gpg
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