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36 changes: 33 additions & 3 deletions docs/market/fees.md
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Expand Up @@ -61,22 +61,52 @@ transaction is more expensive than a [simple spend][ss].
## Earning Maker Fees

As mentioned above, you can use the [Earn][earn] tab to earn maker fees
yourself.[^fn-home-mining] Simply choose an offer type, select how many fees you would like to earn, and press "Start Earning!"
yourself. Simply choose an offer type, select how many fees you would like to earn, and press "Start Earning!"

Make sure to check the [orderbook][orderbook] to compare your offer with current
market rates. If your offer isn't competetive, nobody will take you up on it and
you will earn zero sats.

[orderbook]: orderbook.md

[^fn-home-mining]: You can also mine yourself to earn mining fees, but that's outside of the scope of Jam. We refer the curious reader to [econoalchemist's home mining guide](https://archive.ph/TLIay) instead.

[:octicons-arrow-right-24: FAQ: How much can I earn?][faq-earn]

[:octicons-arrow-right-24: Orderbook][orderbook]

[faq-earn]: /FAQ/#how-much-can-i-earn

## Real life vs. Theory

The Market Makers put up their coins in a hot wallet to be offered for liquidity, which means they face the following inconveniences:
- they are exposed to the risk of getting their coins stolen
- they incur an opportunity cost because they could be using these bitcoins to do something else with them. This is further amplified if additional coins are locked in a [Fidelity Bond][Fidelity Bond]

It only seems fair that they get paid for all those inconvenience.
So how come the profits are minuscule?

With the market dynamics described above, even since the early days, its been observed that makers make very little profit from offering liquidity.
This does not mean the market is "broken" it just reflects the reality of the situation.
There is much more supply than demand for CoinJoins.

This whole thing is a market and it does what markets do well, price in all the relevant information/risks/costs.

Another fact to consider is that the Bitcoin network itself has a cost to use - Bitcoin transaction fees.

Even though most of the times fees seem to be very low, when constructing a CoinJoin the transaction gets big(each input/outputs adds extra data to the transaction).
Because of this factor, CoinJoins will start up starting with a pretty big baseline fee which is taken by the miners, so not that much left for the makers.

We can summaries the trade-off between a maker and a taker like so:
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@dergigi dergigi Jan 23, 2023

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Suggested change
We can summaries the trade-off between a maker and a taker like so:
We can summarize the trade-off between a maker and a taker like so:

- Makers: get kinda-free long term fairly good mixing
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@dergigi dergigi Jan 23, 2023

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I'd remove slang terms like "kinda"

- Takers: non-free short term better mixing

As a taker, you get to pick the exact amounts you want to mix, and as such you will not be left with any [Doxxic Change][Doxxic Change].
Plus, you get to pick who you mix with, so you know the makers, not the other way around, giving a slight privacy advantage.

Worth clarifying that the quality of a CoinJoin is the same for a maker or take, the small advantages/disadvantages are peripheral and have to do with what happens after the CoinJoin.

[Doxxic Change]: /glossary/#doxxic-change
[Fidelity Bond]: /glossary/#fidelity-bond

## Fee Conversion

All fees are denominated in [sats][sats]. Use one of the tools below to convert them to fiat:
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