Harberger fees

Liquid Listings would not work without an incentive to ensure that the seller is setting a fair price. Without such an incentive, users could list their items at extortionate prices with no intention to be filled whilst still accessing a freshly minted ƒ token. This would result in the ƒ token depegging from the market as it could no longer be used to claim a fairly priced item.

To resolve this issue, ƒlayer introduces Harberger Fees, where an interest rate is paid on the price set by the holder.

With a correctly set interest rate it is possible to create a strong incentive for users to set the price at a fair market rate, ensuring that the ƒ token itself remains pegged and that the system remains healthy. Users are still able to set their price far above the fair market rate, however the interest rate will be high and the item will not sell, incurring losses that would eventually force the listing to close.

Harberger Fees pave the way for “Liquid Listings” as described in Alice’s example earlier. Liquid Listings grant the ability to list a mid-tier or rare, accessing instant floor liquidity while the user waits for the remaining value to be sold.

When a user lists an NFT, they pre-pay the interest to cover their listing up until the chosen expiry date. All fees are paid in ƒ tokens that are deducted from the liquidity released at the point of listing.