13.47. DD 47: STEFAN

13.47.1. Summary

The Standardized Template for Effective-Fee Approximation Numbers (STEFAN) is a feature to ensure customers see consistent fees for equivalent purchases (largely) independent of the specific coins selected. It will also make it easier for merchants to configure their systems to pay all reasonable fees.

13.47.2. Motivation

Taler has a logarithmic fee structure for good reasons (to compete in different market segments with reasonable profit margins). However, the logarithmic fee structure inherently implies that the specific coin selection made by the wallet can result in very different fees being applicable for the same amount at the same merchant merely due to different coins being available in the wallet. To minimize support costs, it is important that customers do not need to be aware of the concept of coins and are instead shown consistent fees for equivalent transactions.

13.47.3. Requirements

  • keep the logarithmic nature of the fees (proportionally high fees for tiny amounts, medium fees for medium amounts, low fees for large amounts)

  • same purchase, same perceived price; prices are predictable for users

  • enable merchants to easily cover all fees in most cases

13.47.4. Proposed Solution

The proposal is for the exchange to advertise three STEFAN-parameters that encode a fee curve of the form stefan_abs + stefan_log * log P + stefan_lin * P where P represents the gross price to be paid. Here, the numerical value for P is to be computed by dividing the actual gross price by the smallest denomination offered by the exchange.


This calculation is already done using floating point (!) as we want the STEFAN-curve to be smooth and not a step-function. This is also needed so that we can invert the computation and calculate gross amounts from net amounts and actually get a nice invertible computation where both directions always match. Note that the computation itself is nevertheless non-trivial involving Newton’s method to solve f(x)=0 using a well-estimated starting point for the iteration to avoid divergence issues. Finally, while we do the STEFAN-curve computations using doubles, we should then convert the final amounts back into “human-friendly” numbers rounding towards the nearest value that can be represented using the canonical number of decimal places at the exchange. libtalerexchange (C) has a reference implementation of the gross-net conversion functions (in both directions) and of the final rounding logic. This exception to the general rule of no floating-points for amounts is acceptable as it is not actually done at the protocol level but only in internal computations of the wallet and merchant backend as part of the STEFAN cost estimation logic, which by definition is an estimate and does not need to be exact. (And even if wallet and merchant backend were to (slightly) disagree about the computations due to different floating point implementations, everything would still be fine, and even a significant disagreement would not cause anything but resurface the UI issue the STEFAN-curves addresses.)

The fee curve will be the displayed fee, except in cases where the coin selection is exceptionally bad (which should happen in substantially less than 1% of all cases). The fee curve will also be used as the maximum fee a merchant will cover unless the merchant overrides the mechanism.

In the most common case, where the STEFAN-curve fee is at or below what the merchant covers, no fees are displayed, except in the exceptionally rare case where the actual fees (due to unfortunate coin selection) are above both the exchange’s STEFAN-curve and the what the merchant covers. In this last case the fees shown will be the actual fees minus what the merchant covers and here the fees may vary even for equivalent transactions.

In the uncommon case where a merchant does not cover any fees or only covers parts of the fee according to the STEFAN-curve, the displayed fee will be the value on the STEFAN-curve minus the amount covered by the merchant. If the actual fees paid end up being below the approximation by the STEFAN-curve, the delta is (by default) hidden from the balance of the user to simulate a consistent fee.

However, only the total available balance is marked down based on the STEFAN-curve value. Thus, the wallet will contains coins with a potentially higher balance value than what is shown to the user. This difference is reconciled annually by adding a special transaction that increases the wallet balance to eliminate the difference without any actual network interaction. The entry in the transaction history that boosts the balance links to an explanation. We may consider suggesting the user to donate the windfall.

In developer mode, the user should probably be given the choice to see the delta, to disable the feature, and/or to force the windfall transaction to happen immediately. Computing the curve

Typically, the stefan_abs value should represent a single wire transfer fee. The stefan_log value should be computed to approximate the deposit (and if applicable) refresh and withdraw fees for a coin, to be multiplied by the number of coins. In a canonical setup, stefan_lin would be zero. However, if an exchange is configured to use a linear fee structure, then stefan_lin would become applicable.

The taler-wallet-cli should have an option to compute the STEFAN-values given a denomination fee structure. This computation could probably be done either analytically (if the fee structure is systematic) or by simulation. Modifications to the merchant

Instead of having (just) a “default fee”, merchants should have an option to use the STEFAN-curve when computing the fees they would be willing to cover. Modifications to the exchange

The STEFAN-curve can be configured using three simple configuration values in the [exchange] section. The resulting values should be shared as part of the /keys response, without digital signature. Modifications to the wallets

The STEFAN-curves will be useful as an easy approximate way to compare exchange fee structures. However, wallets may not want to just trust an exchange to honestly report STEFAN-curve values but could possibly use a simulation to check that the given STEFAN-curve matches the actual fees.

Wallets will need to keep the hidden STEFAN-balance and add the annual internal reconcilliation transaction.

Wallets will need to compute both the STEFAN-fee for display and still do their own internal actual coin selection to minimize fees.

13.47.5. Definition of Done

  • exchange modified (DONE)

  • merchant understands STEFAN curve in backend (DONE)

  • merchant SPA has configuration option to enable use of STEFAN-curves

  • wallet-core uses STEFAN-curves to compute display fees

  • wallet-core supports annual reconcilliation transaction

  • wallet GUIs use STEFAN-curves when comparing exchange fee structures

13.47.6. Alternatives

Refresh fees could additionally be waived if the refresh operation yields coins of a lower denomination than the original coin. We should check if this allows us to define tighter STEFAN-curves.

13.47.7. Drawbacks

13.47.8. Discussion / Q&A

(This should be filled in with results from discussions on mailing lists / personal communication.)