The tricky part is that we want to aim so that tier 1 + tier 2 correspond to some historical high volumes, so perhaps between 50k ~ 100k each side. For now I might agree to limit that to about 50k each, and aim to find a good way to manage tier 3 to compensate for the reduction.
For NuLagoon one can simply control compensation and regulate how much money should be maintained within different tiers.
For ALPs we can’t get any real tier 2 funds yet. The easiest thing we can do with current software is probably to set up separate compensation levels tied towards spread level, as I wanted to say in here (which was abandoned because I’ve since seen some action in the community). There may be some kind of mechanism that helps with this.
I’ll give an example.
Instead of only looking at proof of order placement, a client can have a pledge phase that shows it is willing to commit funds to liquidity. At the end of the pledge phase, the client should place an order, and give the proof the server. Then, the client enters the normal placement phase where it does what it does now. Then after some time it is allowed to retract the order and return to the pledge phase. During the placement phase, the server will pay the interest rate for the pledge phase (exchange risk) as well as the interest rate for the placement phase gradually.
If there can be proof of funds held on exchange then the pledge phase might be easy. Otherwise, it should be made short. However, if the aim is to have 10% funds in tier 1, then the placement phase should, given the same amount of funds, be 1/10 of the pledge phase in length. The server then tries to rotate between clients by a suitable schedule to ensure roughly 10% of funds are on order books, the risk and rewards are spread appropriate among clients, and that the funds that are not on order books can be used when needed.
There are many practical issues with this and many holes to be filled, but it could be a good starting point.
