[bisq-network/proposals] Improve incentives for Arbitrator (formerly known as Refund Agent) (#222)

Chris Beams notifications at github.com
Mon May 18 10:13:23 UTC 2020

> _This is a Bisq Network proposal. Please familiarize yourself with the [submission and review process](https://docs.bisq.network/proposals.html)._

## Background
The Arbitrator role (bisq-network/roles#93) often requires large outlays of both BTC and BSQ, putting the person playing that role at significant risk without much incentive for doing it.

## Proposal
Proposed is that we improve incentives for this role by establishing:
- a 50 USD per case fee, and
- a 1% per cycle interest rate for BTC paid out.

## Example
Let's assume that during Cycle 13, the arbitrator handled 8 cases, paying out a total of 4 BTC. Under the proposed incentive scheme, the arbitrator would be entitled to 8x50 = 400 USD plus 4*0.01 = 0.04 BTC.

Let's assume the posted USD / BSQ exchange rate for Cycle 13 is 0.63 USD / BSQ. This means that the arbitrator would be entitled to 400/0.63 = 635 BSQ.

And let's assume the current 30-day BTC / BSQ exchange rate is 0.00007553. This means that the arbitrator is entitled to 0.04/0.00007553=530 BSQ.

Total compensation requested in this example would be 635+530=1165 BSQ.

## Benefits
The main benefit is to ensure the arbitrator is sufficiently compensated for their time and risk, such that they continue performing the role. A secondary benefit is that these higher values should incentivize the DAO to reduce the number of trades that go to arbitration. Ultimately we want to do away with the role entirely, and have traders submit reimbursement requests manually, but that can only happen when there are a sufficiently low number of arbitration cases per month. It's still too high to do this.

## Notes
@RefundAgent already submitted a compensation request for Cycle 13  (bisq-network/compensation#571) based on this scheme proposed here. If you vote to approve this proposal, you should also vote to approve for that compensation request and vice versa.

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