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What to expect with new unshielding fees

#1

As some of you may already know, Unshield has been merged with Send. Depending on the receiving address users enter, fees will be different.

Out-network transactions (unshielding) will now also incur a cross-chain fee. This fee will take into account fees charged by the Incognito network, as well as those charged by the destination chain.

For all currencies, unshielding requires 2 actions – one to burn the privacy coins on the Incognito chain, and one to return the same amount of public coins to the external address indicated by the user.

Here’s what you can expect when you unshield

Total fee incurred: Incognito network fee + External network fee

The Incognito fee is incurred when privacy coins are burned - the typical in-network fee quoted by the app. The rest of the fee is based on the destination network fee, for example, Bitcoin or Ethereum.

Speed options: For BTC, users will be able to choose between fast speeds and faster speeds, paying more for the latter. Prices are dictated by the external network from publicly available sources and APIs.

For Ethereum-based currencies, there will only be one default speed option – fastest, as per etherscan.io. This is due to a history of high volatility on the Ethereum chain, and is necessary to ensure a traffic jam doesn’t occur for all transactions leaving the Incognito network. For currencies on other chains like Binance, Tomochain, etc., there will also be only one speed option, as there is little need to adjust fees for performance.

Currency options: For unshielding transactions (sending out of the Incognito network), users will be able to pay fees in the external network currency, say BTC or ETH, or its equivalent in PRV (according to current pDEX prices). The total amount quoted will include the Incognito network fee in whichever currency the user chooses.

For bigger coins with more liquidity on Incognito, say USDC, the same structure applies, but instead of ETH, users will be able to pay fees in the sending currency (based on its current ETH price). Users will be only able to pay fees in currencies with pDEX pools containing over 10,000 PRV. For currencies with smaller or no pools, PRV is the default. The external network fee will still determine the unshielding fee, but it will be payable in PRV.

Note: More generally, the out-network experience (both Shield and Unshield) is an ongoing research topic. This is not exhaustive, and we can expect to see improved versions and more options going forward.

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TLDR:

You are now able to access Unshield from your Send screen, and the fee will change depending on whether the address you enter is an internal or external address. The fee quoted dynamically takes into account what the external network is currently charging.

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[Shipped] App v.3
Weekly Privacy Newsletter 09/15/20
Weekly Privacy Newsletter 09/08/20
[Shipped] App v.3
#2

This is exciting news for multiple reasons. Not only are we solving the frozen transaction problem, but we are making the app more user friendly and easy to use. This is definitely a step in the right direction. I can’t wait for the implementation.

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#3

:crossed_fingers:!

we’ll also be pushing out revised out-network status messages that will be more informative and more… accurate. right now they show ‘failed’ when really most of them are simply ‘delayed’, ‘taking longer than usual’, ‘being retried automatically’, etc. this should help a great deal with user-friendliness.

cc @doc for drawing attention to this - thank you!

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#4

For maintainability, yes, an unshielding fee is required but especially the current ETH fees will be discouraging for the users who think using Incognito. As we know, %10 of the block rewards are reserved for DAO. Could we use some part of it to compensate the unshielding fees?

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#5

As is not a problem of incognito network i don’t see why we should do this.
Ethereum is clogged, as always, people should change blockchain or just pay!
Now the stuff is : yeah i can pay 30-50$ dollar fees on uniswap because the coin will make 10x or whatever or i can farm “food” that give me 1000% or more(Ethereum is speculation).
Me actually i’m really happy that i can move my eth without fees here and adding privacy to them, but i know that when i gonna use them will be a pain in the ass.

It is an old story for crypto people already!

And after people say: yeah when ethereum 2.0 will come will be better (if we are still alive when that happens)

The point is that a network like incognito can improve is technology much faster because is not decentralized yet and the team can really work, When the network is big you have many players and you have to reach consensus.

On ethereum miners don’t want eth 2.0, and if is like this gonna be like ETH and ETH classic so 2 different forks when eth 2.0 will be launched.

The only way to avoid this for the miners is to make as much money as possible spamming and pushing fees so high before eth expected launch.

If Vitalik waited a bit for the launch that story would be different!

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#6

This is a sad day but as they say, “There’s no such thing as a free lunch.” Incognito was paying the gas/tx fees for us and it’s become unsustainable.

I would like to request or ask for comment if segwit will be planned to implement for BTC? While ETH is the subject of high gas fees at this moment, BTC can get quite expensive sometimes too. Segwit drastically reduced these costs which is why I would recommend using it.

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#7

Hey - segwit is supported. So you can send from your segwit address to incognito, and also withdraw to a segwit address.

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#8

As a holder of PRV, I feel it wasn’t ever sustainable for incognito to pay all the unshielding fees for Eth so I’m glad this change is being made because it means that unshielding fees will be correctly priced, which means users can choose to unshield larger amounts but less frequently.

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#9

hey everyone, when the smart contract upgrade completes, this feature will be live.

for BTC, users will be given 2 fixed speed options to choose from, based on the bitcoin blockchain API.

for ETH and ERC20 tokens, there will be just one option – we use the default fastest recommendation given by ethereum, as the lower settings can be dicey due to much higher volatility.

for coins on other chains, there will also be just one option - fees on these are fairly stable.

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#10

How can the unshielding fees cost several times more than the real gas fees? I was NOT expecting an unshield transaction to use 4+ PRV.

And BTC is 3+ PRV? That makes no sense as well. I just sent a transaction at 4sat that confirmed in less than 30 minutes.

What am I missing?

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#11

Not sure what gas fees your seeing that only cost 4 plus PRV to unshield, but my last unshield was $28.62 which would have cost 20 plus PRV to unshield. So I haven’t even considered moving anything from incognito, if anything I’d move more to it with the gas prices what they are now.
As for the BTC I couldn’t locate the conversation in the forum regarding this, and I could be wrong, but I thought they were adding fees due to people just using incognito as a mixer for thier coins. I’m in support of charging for unshielding, keeps people from constantly hoping in and out of network for free. Gives more incentive to stay on network and use pDex, or pay to use the privacy shield.

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#12

So why should someone enter to Incognito? Especially when such high fees for unshielding exist. Just for privacy? Not enough liquidity in pDex. Very limited access to DeFi. To me, this was a very early move. Anyway, we will see together. I hope I’m wrong.

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#13

Well there is currently $5.6 Mil shielded and being traded on incognito. It’s not a lot but I doubt there are any whales on incognito for the cost saving.

You’ll have various reasons people enter incognito but I’d bet most will do so for privacy. Myself it was privacy first and foremost. pDex privacy trading an added bonus when you realize how to incorporate privacy into your crypto holdings. USDT, BTC, ETH , USDC, DAI the coins all the others coin are traded against on centralized and decentralized exchanges. If you can trade these in privacy everything else is easy to maintain.

DeFi access isn’t important in incognito. Privacy is important. If the developers can one day easily encompass all the other DeFI nonsense into incognito, then great. If they can’t, then I and probably most won’t care because they’ll be interested in the ability to privately shield their coins. Incognito doesn’t need to duplicate what others like Kyber, Uniswap, and all the other farm baskets are doing. You can take BTC and almost any other ERC-20 token and make it disappear from the blockchain just by parking it within your incognito wallet. You can trade or send that to another incognito user without ever reveling the persons or the transaction. That is what incognito is currently here to do.

I’m not sure why you think this was early the cost was prohibitive for incognito to continue footing the bill. People will come to realize the importance of privacy some sooner and some later, but eventually all will see. As more governments try to dictate the use people will continue to push back and look for an alternative. The nodes and eventually the node tree will ensure we have a decentralized and private, unstoppable network with the ability to trade and move their assets privately.

UPDATE:
Noticed that Coinbase Pro now has fees for transfers as of today. Even deep pockets Coinbase isn’t willing to foot the bill for free.

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#14

Unfortunately, I went to unshield some of my ETH, to pay for the transaction fee to claim my 400 UNI from Uniswap. However the price to unshield was so high, it cost more then what I wanted to send. The fees are indeed quite high, and I understand why, but this leads to a much bigger issue that seems to be overlooked.

Having high fees like this means that outgoing arbitrage opportunity is pretty much dead. I think this is really quite bad for the economics of the platform. The price differential from inside the pDex vs outside the pDex will probably expand because of high exit fees. That will probably affect everyone in the near future and make the platform much harder to use. We need to find a better solution as keeping it like this will probably end badly.

Honestly Incognito should be able to be used in this way. This platform is a privacy platform, mixers provide privacy. I’m not sure how big the BTC fee was, but it should be as much as it costs to make a BTC transaction, not any more then that. There should be no reason to have a fee greater then the standard BTC transaction fee.

It might be interesting to explore a membership type feature where users who pay monthly don’t get hit by these crazy fees. I also think we should look for other options to solve these problems.

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#15

Hey you’ll get no argument from me regarding fees today I did unshield 1.1 Eth out and paid 22PRV. It was higher than I would have liked but the opportunity in collecting UNI valued at $1200 when opted to get mine made the transaction worth doing. It turned out that unshield transaction was far cheaper than what I spent to move and cash in some of the UNI.

This only means you need to be careful to select the most profitable arbitrage opportunities.

I’m not sure how this would be detrimental to the platform since the primary purpose is privacy. The pDex inside doesn’t have anything to do with the gas fees outside the network. These are quite separate and should always be looked at that way. Coinbase pro started charging fees for transferring off of their platform. Going Coinbase pro to Coinbase doesn’t incur any fee. Recently in our forums, members were in glee over no sending fees in Coinbase pro, curious how they are feeling about Coinbase pro now. Bet no one is up in arms sending messages about how this is going to hurt their business. It’s because its not going to, people will still use it they’ll be smarter about how they use it.

I’m not sure I quite follow this but you still can use it as a mixer. Me and every other node running member, dev team builder and outside builder agrees that you should, just not for free.

This only applies if your sending really small amounts in and out of network. Being mindful of your use and not just sending for the sake of sending is the key. I mainly use BTC in and out because it’s far cheaper and, it’s what I use for everyday transactions sent out from incognito weekly as needed. It’s up to each individual to be mindful of their use. If 2 or 3 PRV daily is to costly then it’s time to rethink your strategy.

I would agree with this if the fees were of incognito’s doing. They are not, and the solution from incognito is to stay on network. When Eth miners decide to lower prices the out of network fees, (unshielding and out network trades) will reflect that change. Your asking incognito to fix a problem that they have no control over.
Even Coinbase pro fixed it for their members by charging fees.

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#16

Sorry @kichoman but you and your arguments are just outlier :slight_smile: I think Incognito should find a solution to this problem by e.g. implementing integration with Binance Smart Chain or covering part of fees using DAO or something else. Otherwise, we will see the result in terms of shielding volume.

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#17

I think we will see how the PRV fees fare when the ETH transaction fees go down. For now it’s just a waiting game. I’m doing my part by slaving my graphics card away :joy:, making a pretty penny while doing it to.

The fees on coinbase pro are relatively low, still very manageable. I believe it was 4$ for a $200 transaction.

The real problem is if I wanted to exchange some of my ERC-20 coins I keep in Incognito, I would be losing a large amount of money. I only invest like 10-50$ in alt coins and small transactions like that are very costly. It doesn’t help that when Uniswap was integrated, it seemed like the fees in PRV cost way more then the actual fees on Uniswap. Probably because more transactions are required?

So a lot of my value is stuck right now, hopefully when the fees get lower the PRV cost will go down to, but I have a feeling that the decrease in PRV cost won’t be as dramatic and the fees will still be high.

It was cheaper for me to buy crypto from an exchange and send it to my wallet to receive my free UNI then to withdraw my crypto (that I already owned) from Incognito. That to me seems pretty bad, and I know it’s not up to Incognito. But it makes me hesitant to use the platform.

I personally use Incognito for it’s privacy, and I would love to stay in Incognito. Have all my transactions go through Incognito. Then it wouldn’t matter about an exit fee. But unfortunately that’s not entirely possible. It makes matters worse that pDEX prices are going to be different then on the outside. High exit fees are going to make this worse because arbitrage opportunity was hard already for lower liquidity coins, now it’s going to be basically impossible. I would gain 5-15$ from an arbitrage opportunity on a low liquidity coin, now those profits aren’t existent because of the withdraw fee drains all the profits away. That’s fine and all, I understand why the fees are there, but since I’m not there bringing the price to market value, everyone who trades with that pair is losing their value.

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#18

Fair enough

Good thinking… :neutral_face:

#19

Hey guys, just wanted to clarify something related to eth fee. As you might realize, after the contract upgrade that took place a couple of days ago, the gas used for an unshield transaction has been decreased significantly, it’s 170k - 200k gas for now compared to the previous contract’s (> 400k gas). Here is an example of an unshield tx on etherscan (https://etherscan.io/tx/0x02ec169e1e35205c1d99a1488396825e33af48a787fb5131b1a7d9c7661ed701)

Yeah, I know that is still fairly high, especially in the Ethereum network’s busy situation, when compared to a normal transfer transaction. The main reason is due to the computation of unshield process, it needs to verify Incognito committee’s signatures before unlocking assets to the withdrawer’s address. I mean the more computation, the more gas fee you must pay. This is right for Uniswap trade as well, as you would need to pay around 150k - 200k gas for each trade.

We’re still figuring out a good solution for this sort of problem so any idea would be appreciated!

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#20

Maybe we should start thinking about integrating other smart contract platforms:
-EOS
-TRX
-DOT
-EGLD
Some of these platforms have wrapped ERC-20 Tokens, like Tether for example (if that’s what you want to call it). Being able to withdraw on a low-no fees platform like the ones mentioned above would be extremely useful.

I also got another idea that’s really outside the box and solves the problem internally instead of externally. It might be a bit to crazy though.
The most likely reason why someone would want to bring their ERC-20 Tokens outside the network is to exchange it on the open market. Well what if they can exchange their Tokens here at market price without having to go to the open market? What if we bring the open market to Incognito?
Well how do we do that:

  • What if we pull market price data from multiple exchanges and constantly input them into Incognito.
  • Then we allow users to trade their coins at market price for an Incognito Token that only get’s minted on sale. This Minted Token would be a stablecoin as it’s matched 1:1 with USD. Users can buy other crypto in the pDEX at market price as long as they use this Incognito Token. The value of the Token would stay at 1$ because you are able to purchase other crypto with it (at market price).

Obviously this could be potentially dangerous as the price data that is pulled could be tampered with, but i’m sure we could figure out a way to implement it safely with averages from multiple exchanges. Maybe make nodes pull the information for the Incognito Network. Since the Nodes would be distributed, majority rules with the price data. Like I said, this is a crazy idea, but it would definitely fix the problem of people wanting to leave the network. No need to leave if the outside is on the inside.

It would also give Incognito a stablecoin, and allow users to do arbitrage with barely any fee’s because they are doing arbitrage for the network, on the network. I’m sure there are problems with this idea though, as large whale transactions wouldn’t move the price, so it’s sort of like OTC.

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