CCEDK USD adoption

masterOfDisaster 2016-03-07 17:37:16 UTC #1

Continuing the discussion from FLOT Operations - buy side / BTC related:

Because we are nowhere close to “FLOT Operations - buy side / BTC related” any more, I started a new thread.

Dunno.

What exactly would be the problem for customers or Nu in that scenario?
Seriously, I don’t know what you are trying to get at.

Nu supports a few exchanges that offer NBT/USD (or other fiat) pairs with liquidity.
These exchanges are for now the only exchanges where customers can (try to) convert fiat to Nu products (currently only US-NBT) and vice versa.
If Nu doesn’t want to maintain that any longer, supporting the fiat trading pair buy side is no longer an issue. The fiat trading pairs are at least immune to BTC volatility, but handling USD without middlemen is nearly impossible for Nu.

I don’t know whether it’s wise to discontinue fiat pairs in general or CCEDK in particular.
I’m interested in reducing the costs for liquidity provision.
That’s why I started [Discussion] Liquidity operations - a paradigm shift

FLOT BTC Operations (buy side)

Nagalim 2016-03-07 17:46:11 UTC #2

This is not a trivial problem. Basically, imagine the usd deposited on CCEDK to have a different name, like CUSD. Now imagine an exchange like bitfinex where the deposited USD is much more liquid, and pretend usd on bitfinex is representative of the real usd price. Now imagine BTC/USD != BTC/CUSD. If we are pegging NBT to USD on one market and NBT to CUSD on another market, there is an opportunity for arbitrage. That arbitrage is being paid out indirectly through the pool compensation.

Does Nu want to pay to force CUSD=USD? Is this part of our business model and advertisement, that we can help exchanges align their local usd with the global usd despite illiquid markets? I just want to be sure we know what we’re up to so we can advertise it effectively.

masterOfDisaster 2016-03-07 17:49:02 UTC #3

My naive answer would be, we peg to USD and not to CUSD.
Without a price feed for CUSD, we can’t support that pair.

Nagalim 2016-03-07 18:02:01 UTC #4

CUSD doesnt have a price feed cause it’s illiquid. If we were talking something like btc-e we could use btc/busd as a pivot like i do with cny on bter. However, i would suggest that our nbt liquidity is way more than the total cusd liquidity so we are the price feed. Maybe the logic is circular, but i cant help but make the statement that we are the most pertinent economic force deciding the cusd/usd price via our nbt/cusd=1 peg.

masterOfDisaster 2016-03-07 18:03:39 UTC #5

If CUSD is like you explain it, we have the same trouble as with CNY at Bter.

Nagalim 2016-03-07 18:07:31 UTC #6

The real reason ccedk is a problem is due to lack of liquidity on exchange. There is plenty of cny on Bter, if we wanted to support the cny pair we could sell btc on-exchange, even at large volumes in reasonable time frames. Ccedk would take weeks to push small amounts at huge losses.

masterOfDisaster 2016-03-07 18:08:50 UTC #7

So basically you are arguing for discontinuing support for CCEDK due to lack of trade volume, right?
If so, you are close to what I propose:

reduce support efforts for exchanges, that don’t have trade volume and focus on the exchanges with the volume
convert the ALP centred liquidity provision to an MLP centered model (with support by Nu funded bots) to ensure liquidity in volatile times
keep ALP as “first line of peg defense”, but with vastly reduced targets to save money for an overall unreliable scheme

Nagalim 2016-03-07 18:13:30 UTC #8

Nah, im for advertising what we are doing on ccedk to other exchanges as a way to keep their local usd pegged to everybody else’s.

mhps 2016-03-08 07:37:27 UTC #9

There is no such thing as USD on any exchange. Any USD you can find is an exchange USD – CCEDK has CCEDK USD, btc-e has btc-e USD, bitfinex has bitfinex-USD, PerfectMoney has PerfectMoney USD … They all have different value due to two main reasons: deposit cost and demand. All of the exchanges are subject to transaction fees charged by payment processors or banks. CCEDK is not special and not particularly bad. You can observe rate between btc-e USD with omg tether USD at e.g. http://www.rchange.net/

edit: This has an unobvious implication on the “$1” slogan of Nubits – it’s impossible to be $1 at all places without causing arbitrage possibilities in general.

Nagalim 2016-03-07 14:54:39 UTC #10

What do we do about ccedk nbt/usd? What if no one wants to deposit usd to ccedk? In that case no one anywhere would be able to sell their crypto for usd, so how would Nu deal with that? Are we trying to incentivize ccedk usd deposits?

masterOfDisaster 2016-03-07 15:07:27 UTC #11

At the moment there are still close to $3,000 available there. If they are consumed and nobody wants to deposit USD there, Nu can pretty much do nothing.

I see no direct way for Nu to deal with that.
Providing incentives for LPs in LiquidBits ALP is currently the only way to support it.
Operating a NuBot there with Nu funds is hard to impossible - at least it would create a lot of efforts for the bot operator who needs to convert BTC to USD and vice versa at a different place in order to deposit/withdraw USD there.
FLOT has no USD funds that can be used for that, only BTC.
…and once more I long for CRFC - but the NuBot/ALP integration is almost complete (version 0.4.1)!

Other ways to convert USD to US-NBT and vice versa are required, discussions are already going on:

Nagalim 2016-03-07 16:33:45 UTC #12

I guess my point is that we could indeed increase ALP rewards and so on, but do we really want to be single handedly responsible for getting people to deposit USD on CCEDK? How does paying people to deposit USD to CCEDK part of our profit model? I mean, it’s nice and all that they’re withdrawing from bank accounts to go into crypto, but don’t we want that to happen naturally instead of paying them for it?

masterOfDisaster 2016-03-07 16:38:00 UTC #13

I fear, that’s how we provide liquidity.

It’s not part of the profit model. It’s part of the advertizing model - just like supporting day traders with liquidity in the BTC-NBT pair.

Of course!
But we are not yet there with the current adoption level of Nu.
We need way more adoption and volume by “natural” trade volume instead of having liquidity provision by incentives.

Nagalim 2016-03-07 17:25:00 UTC #14

Will we ever be there though? We arent talking about nubits adoption, were talking about ccedk usd adoption. I could see a world where nbt is the number 1 world currency and the buy side of ccedk still wouldnt be full.

Cybnate 2016-03-07 18:43:50 UTC #15

When NBT is becoming the number 1 world currency. We probably have a USD sell issue as people would be buying NBT with USD. I think there are adequate USD funds, it takes 2-3 days to transfer USD to CCEDK. We can still compete with what the banks are paying on USD balances these days

mhps 2016-03-08 06:00:43 UTC #16

I don’t think the USD on ccedk is totally not natural. What do people do to buy their first crypto? They deposite fiat and use it to buy on an exchange. Why can’t CCEDK have a pool of deposited fiat?

masterOfDisaster 2016-03-08 06:30:38 UTC #17

Can a moderator (@CoinGame?) please move the posts that deal with CCEDK and USD (maybe beginning from FLOT BTC Operations (buy side)) to
CCEDK USD adoption
before the thread gets derailed even more?

Thank you, @CoinGame!

Nagalim 2016-03-08 12:53:41 UTC #18

I disagree. There is an aspect of trust when you deposit usd to an exchange. I would deposit usd to btc-e, but i would never do so with ccedk. It has nothing to do with the deposit cost, it has to do with who gets a trail of your money. Also, exchange default risks are different for usd than crypto.

mhps 2016-03-08 13:25:36 UTC #19

If you deposit one dollar on an exchange, you get one dollar minus fee, no matter you trust the exchange or not.

I have deposited USD on ccedk several times and they worked well. Ronny has a real identity and a business track record. Who gets a trail of your money on btc-e? I think btc-e is reliable due to its track record. But if it vanishes now I have no idea where to get my money back.

It’s much much more difficult to steal fiat than crypto by hacking into the exchange site, which is one of the main cause of exchange default.

Nagalim 2016-03-08 13:54:40 UTC #20

In the same way the risk is different depositing btc to bter as oppossed to poloniex, there are different risk profiles for fiat amongst exchanges. This is very important, you cant just naively use supply and demand rules.

I guess my statement is that the risk profile with regards to fiat amongst exchanges is possibly even more diverse than for btc. If we are able to help exchanges narrow that risk profile by providing an easy exchange between fiat and crypto at a pegged price then we should advertise specifically that to exchanges to lobby them to add us.