Current Liquidity

masterOfDisaster · May 31, 2016, 3:08pm

Creating market awareness is important to allow economic operation of liquidity provision.
It’s good to start working on a mathematical model.

I know already that market awareness will provoke opposition, but I’m damn sure that liquidity provision doesn’t work reliably without it (we see it at the moment):

you either run out of funds trying to support liquidity provision with high volume at a tight spread not caring about environmental parameters
or you run out of liquidity provision at all

What we can derive from the current emergency situation and the gateways at a high buyside offset is:

even at 5% offset trades happen
quite some trades happen with orders that aren’t provided by the gateways - this could be
regular traders
ALP funds

In fact there’s a kind of market awareness, albeit not as a formula, that made the offset of the gateways that big:
the BTC bull market created an immense demand for BTC. The supply of BTC in Nu reserve is limited and so the price had to increase.
As long as there’s no sign of the bull market being over, there’s no reason to reduce the offset. Doing it would just empty the reserves, leaving totally no peg support left.
The fate of the peg would be in the hands of traders.
That doesn’t sound much like a pegged currency.

A buyside peg to $0.95 is better than no peg!
The sellside is pegged to $1.005 btw.

If the spread would be adjusted by formulas like those proposed by @mhps, the trade volume would suffer from it.
We see less trade volume at Poloniex now for several reasons.
One is that BTC is less volatile and not surging (or nosediving) at the moment. Another one is the offset.
With market awareness, spreads would increase (and decrease) as a function of traded volume, volatility or other parameters.
Seeing less trade volume doesn’t sound attractive.
Having a much more reliable and even cheaper liquidity provision is the benefit of it.

With properly adjusted market aware parameters, there would be no need for gateways (I’d like to keep them as backup - just in case…).
But that means, that depending on the situation, even ALP need to operate far outside 1% spread.
And why not?

If you can’t guarantee a small spread for as long as you wish (forever?), it’s better to increase the spread, if that helps you sustaining liquidity provision at all.

masterOfDisaster · May 31, 2016, 5:53pm

###2016-05-31 - peg according to CMC

Poloniex NuBot gateway status

Tue May 31 17:47:51 UTC 2016
status of mOD dual side NuBot at Poloniex:
nud getliquidityinfo B | grep B9gXptkoqAApF3AFrQyhUbhSzvuEudxupt -A 2
        "B9gXptkoqAApF3AFrQyhUbhSzvuEudxupt" : {
            "buy" : 11992.13,
            "sell" : 20161.9209
status of zoro dual side NuBot at Poloniex:
nud getliquidityinfo B | grep BJs4YbtaqCmxeHLiR6zzjnZEotYVFAPfMo -A 2
        "BJs4YbtaqCmxeHLiR6zzjnZEotYVFAPfMo" : {
            "buy" : 9376.08,
            "sell" : 21278.2562

Liquidity according to ALiX

jooize · June 1, 2016, 2:21am

When is the peg considered lost? At no liquidity or at a certain spread?

Do we currently have any liquidity at tight spread?

@JordanLee said high spread is a suicidal tendency. What other measures can be taken? How much liquidity can we provide at a tight spread right now, soon, and later?

crypto_coiner · June 1, 2016, 2:41am

Good questions –
Let’s redefine our peg –
The peg definition is the premise to all Nu’s business and profit avenues

cryptog · June 1, 2016, 8:24am

reported buy side liquidity at 3%.

masterOfDisaster · June 1, 2016, 8:50am

Only if you look at a tight spread, which is not appropriate for the current emergency situation.

If you include buyside orders at an increased offset:

Wed Jun  1 08:44:24 UTC 2016
status of mOD dual side NuBot at Poloniex:
nud getliquidityinfo B | grep B9gXptkoqAApF3AFrQyhUbhSzvuEudxupt -A 2
        "B9gXptkoqAApF3AFrQyhUbhSzvuEudxupt" : {
            "buy" : 11966.36,
            "sell" : 20161.9209
status of zoro dual side NuBot at Poloniex:
nud getliquidityinfo B | grep BJs4YbtaqCmxeHLiR6zzjnZEotYVFAPfMo -A 2
        "BJs4YbtaqCmxeHLiR6zzjnZEotYVFAPfMo" : {
            "buy" : 11042.62,
            "sell" : 19665.5832

you’ll find $23,000 buyside liquidity.
If you add that to the buyside and relate that to the 123,000 NBT on sellside:

you are at close to 20% (23,000 / (123,000+23,000+4,000)).
Not that bad at all.
Only possible due to increased offsets!

cryptog · June 1, 2016, 1:42pm

0.47 % buy side liquidity at tight peg now, only!

nmei · June 1, 2016, 2:03pm

Is there BTC anywhere???

Apparently my CCEDK LP is down for fiat too…that alp software requires 2X daily monitoring - to restart because of errors.

masterOfDisaster · June 1, 2016, 2:03pm

What do you mean?
I seriously don’t understand it.

cryptog · June 1, 2016, 2:07pm

I meant there are only or less than 1000 usd of buy side liquidity at T1, liquidity that sleeps at spread lower than 1%.

masterOfDisaster · June 1, 2016, 2:22pm

Understood.
ALix is at the moment the situation not reflecting properly (this “moment” lasts for some days already).
The situation is as much under control as possible at this moment.

ttutdxh · June 1, 2016, 2:38pm

I would propose to start funding buy side again with BTC from a small part of flot multisig. We could be waiting for a nosedive forever.

mhps · June 1, 2016, 2:40pm

It’s not YOURS only. CCEDK terminated their exchange service starting today as announced some 10 days ago.

masterOfDisaster · June 1, 2016, 2:53pm

What offset do you imagine?
How many BTC?
Why not letting ALP fill the gap with an increased spread?
…Ikr, because of the motion…

I have a second NuBot account at Poloniex that could be operated at a buyside offset between the current gateways and current ALP.
If we want to do that, we (FLOT) should talk about the parameters.

Trying the liquidity provision by trying to revive the buyside is crucial for the confidence in Nu.
Offering a buyside offset, that is too low, will not accomplish that and only make Nu lose reserve funds instead.
What we need is the revival of a dual side trading.

What about

and test it with 2 to 4 BTC and 2,000 NBT?
Although the NBT deposit is not important - there are enough NBT on the market

mhps · June 1, 2016, 3:29pm

what do the above lines mean?

masterOfDisaster · June 1, 2016, 3:56pm

A single order has a size of 500 (I don’t know why,
but succeeding order sizes tend to increase…).

The first order has an offset of 0.0035 or 0.35% making it an “offset after fees” of 0.6% for the buyer, if the order is on the order book and gets bought (Nu on maker side, customer on taker side).
It’s an “offset after fees” of 0.5% for the customer, if NuBot places the order into an existing buyside order (not that likely at the moment).

Each succeeding order has an offset increment of 0.001 or 0.1% on top of the preceding order.

mhps · June 1, 2016, 4:22pm

Did you mean 0.6% ?

masterOfDisaster · June 1, 2016, 4:38pm

No, if we (NuBot) buy into an order of the customer, the customer is the maker and pays only 0.15% fee at Poloniex, while the taker (NuBot in that case) has a fee of 0.25%.

masterOfDisaster · June 1, 2016, 6:02pm

@FLOT, @cryptog, @Dhume, @dysconnect, @jooize, @mhps, @ttutdxh, @woodstockmerkle,

the first NSR were sold for BTC:

I suggest we continue the discussion on this matter:

As soon as the NSR are traded, there are funds, which can be used to try reviving the liquidity provision. The BTC are already at one of my Poloniex NuBot gateway accounts. I can’t use NuBot on that account until the sale is complete, because NuBot deletes the NSR orders when shifting walls.

The alternative is to withdraw it to FLOT reserve.
I’m in favour of trying to get the liquidity provision going.
What do you say?

mhps · June 1, 2016, 6:11pm

Before I forget, I suggest we reserve 10 btc and authorize a custodian to place them at e.g. $0.1 in case of a bank run or an attack described here (step 3). If someone wants to sell cheap nubits, we want them to fall in our hands. Proceeds Nubits are outstanding nubits and will be burned.

There are about 3.5btc on the buyside above $0.1 but below 5% spread. Placing a sizeable order at $0.1 encourages smaller bargain hunters to front run this order therefore putting more buys above it.