Just thinking about Lunie sun-setting their service and really bothered me that we don’t provide a sustainable path for wallet providers. So much was invested in Lunie and they created an amazing product with a very nice UX/UI.
Right now my thinking is that without incentives the whole space is loosing. Lots of talk about UX/UI preventing blockchain adoption but at the same time there needs to be a sustainable plan for who ever wants to tackle this problem. I also believe that might help with token appreciation which is not only a function of scarcity but amount of transactions (liquidity, etc). It has to be a win-win to everyone involved in the pipeline.
Looking at the issue about "Incentivize Wallet Providers", it seems it got closed and lost momentum because it needed to be a governance proposal ? Hard to believe that this was never made into a governance proposal. We should consider creating such a governance proposal. This is crucial for long term sustainability and avoid wallets looking for alternative sources of revenue (e.g. selling analytics data about transactions that can compromise privacy), not to mention that this would allow them to invest in better UX/UI to increase user adoption and to continue to invest/expand into other domains (e.g. mobile).
It seems to me that only validators/miners are rewarded with fees but in the traditional financial world the transaction processors (Visa/Mastercard/Paypal, etc) also benefit charging a small fee. I wouldn’t mind to pay that, like if I pay 0.005 atoms for a tx fee I’d be OK to be charged 0.006 for their good service or maybe the tx would allow the wallet to inject an address in the tx fee (the gov proposal could specify how much after community discussion).
I’m glad you brought this up. This is one issue that the Keplr wallet team is constantly thinking about as Cosmos Network scales beyond a few zones. We have been funded by a few sources including: Interchain Foundation service agreements to develop new wallet features, Secret Network community pool, Grant.fish delegation donations, and other software consulting work. That being said, most of our funding sources rely on developing new features rather than for operations/maintenance of the wallet product (which we are okay with for now!).
In regards to requiring a mandatory fee that goes to the wallet provider, do you see this as a feature that’s built into the protocol itself? or something that the wallet provider independently imposes to the users?
Currently, the total daily tx fee (which 100% goes to the validators) has hovered between 8-16 ATOMs per day (data). While I do hope the number of transactions will begin to pick up once IBC launches and more on-chain activity happens, realistically the tx volume will need to at least 100x or more from where we are (assuming the fees will be split between validators and wallet providers) for this model to be sustainable.
As a wallet provider, we have come to realize that the value of our product comes from the value of the networks that we support. MetaMask’s value to the Ethereum ecosystem wouldn’t be as substantial if it weren’t for the vibrant dApp ecosystem that exists. Therefore, we are happy to align our future incentives to the use-cases and protocol features of the network (i.e. Hub AMM) which would eventually lead to more on-chain activity in the long run. But until then, we hope that ICF (and other network’s foundations/community pools) will provide support for us to sustain + maintain our operations.
That being said, most teams that build end-user services (i.e. explorers and wallets) are people who know the protocol well enough to launch a zone. For teams like these, the upside to just launching + selling a token is much greater than developing and operating a public good end-user service. Passion for the Cosmos ecosystem is a huge component of why these teams choose to build and maintain public goods infrastructure rather than launching shitcoins. Even something as simple as the appreciation and recognition of the work being done means a lot.
Hope to see more vibrant discussions on this topic!
I also think that tx fee from wallet is too small and not a practical solution as now.
I think it is a good strategy for community fund to allocate proportional amount of incoming tax to UX/UI providers. ICF or AiB can donate Atoms to this allocation. Community can decide which teams are contributing UX/UI the most, then split the funds for each contributing team.
From my imagination, the total UX/UI fund can be about $500K per year, and then it can be distributed to 3~4 teams. Then, at least we can support sustainable UX/UI operation for several teams.
Community can annually evaluate the effort invested by each team, then conclude the amount of distribution.
To do this, we might also need a professional independent committee who discuss and suggest such fund distribution.
Thanks for bringing up this proposal! While I agree with @dogemos and @bharvest on the point that fees are too small right now to be a sustainable funding source, I think it is very useful to look to the future and prepare for a time when fees are sufficient to provide sustainable funding (as they likely are today on Ethereum).
I imagine there will be an upcoming overhaul to how fees work in the Cosmos SDK soon, with the inclusion of consensus min-fees and/or EIP 1559 integration. I think adding an in-protocol wallet fee may make sense to add in as well along with this.
@andynog if you want to work on a proposal/ADR to add this, Sikka would be happy to help, especially with SDK development work
Thanks guys, I think this is a good start. I would like to further the conversation a bit more. It would be interesting to validate some assumptions related to this topic, maybe talk or get feedback from wallet providers and see if this is an interesting business model assuming certain scenarios. Also would be interesting to discuss this with validators and see their opinion. Then if it makes sense a proposal can be created and submitted.
I, as a participant and user, strongly against such a proposal.
Decentralized structures should not be guided by processes in the traditional financial world. We must not look back, but look into the unknown, looking for ways to reduce, not increase, transaction fees.
But if you really want to look back and look at the experience of the past, then we will see that people paid for a wallet once, and after that they kept money in them absolutely free. And they paid only when changing the old wallet to a new one, but not in the process of using the wallet.
I think a wallet itself should have its minimal functionality to have most robust, steady, and not so often upgraded characteristics for strong security purpose as a signature machine.
All the additional functionalities with frequently upgradable features can be provided via web frontend, and the wallet itself should work as a dumb signing machine without knowing nothing about the contents of messages.
If the services are too dependent with wallet functionalities, then such so many web frontend utilities are too dependent on the status of the wallet, hence too centralized risk. I imagine the wallet should be super light so that any frontend can quickly adopt the wallet without heavy dependencies.
This kind of separation of utility of each tool can expand the usability of our frontend tools.