"We suggest they fund themselves by:
Charging a nominal or small percentage fee on each claim processed"
Arbiters are employees of the blockchain, like block producers. Why should block producers be paid out of inflation while arbiters charged extra fees on users to fund themselves?
Maybe they should be funded by directing part of block producer pay to arbitration fund.
Another option is to pay arbiters out of worker proposal fund.
By charging a fee, the ecosystem is disincentivizing arbitration. Arbitration is an incredibly inefficient process compared to block production, so we should try to keep systems as automated as possible. If I were an arbiter and wanted to be paid by inflation, I could submit a bunch of transactions and then a bunch of arbitration requests for those transactions, and then serve my own requests and get paid. If I've lost $100 worth of EOS, I'm definitely willing to put in an arbitration request for 10% or 20% of what I get back. Arbitration works to charge fees for specifically because it is almost exclusively used for transactions of value. Just my thoughts on it.
Arbiters can't work on contingency. It's a conflict of interest. Payment would need to be settled passively (to avoid favoritism or cronyism) or in advance by the interested party.
It's better to pay arbiters out of worker proposal fund. They should be independent from the bps.
Agreed.