Basically, the risk of Shareholder Default, which is equivalent to the risk that the peg will be lost while you’re providing liquidity and suddenly you end up with tons of NBT and nowhere to sell them. This risk goes down as our reputation as a stable crypto grows.
Reputation is also responsible for the growth of the group of people that buy NBT and hold it, but as our sell side liquidity has been growing as well this is most likely not significant yet compared to effects dealing directly with custodians.
{“blocks”:569493,“buy”:89562.5437,“sell”:140682.4926}
It is a pity that all this liquidity remains largely unused.
If the reputation grows and grows (there is more and more trust in the peg), it will grow further on each side but it will not bring Nu shareholders any dividends.
In order to get dividends, the sell liquidity needs to diminish so that Nu shareholders decide to print new NuBits.
But we do not need to wait necessarily for that moment. We can print a small quantity (such as 20k) right now and sell it on the open market. In case all those buyers sell those NuBits back to Bitcoins, it would shift down the buy side from 90k to 70k.
So the buy side would still be half of the sell side. Still tolerable.
I feel we would need to distribute real dividends soon.
Now is the right time to be aggressive, with the competition ramping up and several projects being in the spotlight.
What do you hink?
The sell side have increased significantly recently. Currently 137k sell over 79k buy. If this trend continues we might have to increase interest rates or imo better burn some NBT. Need to keep an eye on this.
Not tolerable in my eyes. The trend is an increasing sell side. As said on watch and definitely not a time I would support dividends. The current high liquidity cost puts more than enough pressure on the sell side.
this sell increase could also be a result of BTC’s steadily increase in value lately.
When it comes back down, then sell side will be balanced with buy side.
I agree that expecting a drop in BTC price might people want to trade BTC for NBT to buy back BTC after the drop.
Liquidity providers feeling uncomfortable holding NBT in such a situation, could trade a part of them for NSR.
But sadly the NSR liquidity is low and seeded auctions seem to be far away…
I think many are seeing the sudden rise of Bitcoin as a pump and they might hedge the expected dump of Bitcoin with NuBits by now. It is good to see some renewed traction on BTER we haven’t seen for a while, hope that is a trend. We need some arbitrage though as we have lot’s of NBT to sell on other exchanges. It may not be worthwhile as mentioned by Nagalim elsewhere before (too lazy to link).
it seems it would be a nice way to “burn” some nbt into cny. but then those cny should be either "burn"
into usd or btc in bter
edit: if my calculatios are correct, if someone has CNY in bter it could be easier to buy NBT and then with those NBT to buy BTC! We can provide more BTC liquidity than the direct BTC/CNY pair!
This NBT cycle could be profitable for NU? @Nagalim, @masterOfDisaster
edit2: no, cycle is not possible, BTC/CNY has low liquidity! I am answering my self
the issue is that BTC/CNY * CNY/USD != BTC/USD
I address this issue here, along with the solution:
Let me explain. If we sell all our NBT for CNY, we could certainly get it at a higher price than if we sold it for USD. But then what do we do with the CNY? Well, we could try to distribute PPC dividends, but PPC tends to sell more expensive for CNY than USD, so we’d be right back where we started. We could try buying BTC for tier 4, but then again, BTC sells more expensive for CNY than USD.
The most efficient thing we can do is use the CNY for tier 1 liquidity or adjust the price of CNY/NBT. I propose we allow custodians a greater belly for their orders (high tolerance) and they will close in on the correct price themselves. I’m excited to see how this works with the parametric order book. CH-NBT will also help us solve this problem, as long as we don’t try to peg CH-NBT to US-NBT without proper thought about the price.
After a rough estimate it seems we have paid over 51k in custodial funds for liquidity. Less than 30% of that was given to pool operators, so over 35k went to interests. The difference between sell-side and buy-side is smaller than that, which is a bit surprising considering other custodians have also cashed out their NBTs.
Right you are talking about the liquidity provision rewards. At the beginning, I thought parking rates.
Why do you think that they cashed out? I am curious because this is also my assumption but I do not know for sure although it is likely since they have expenses to recoup.
But if they did cash out and assuming also that the contractors have cashed out, the buy side liquidity should be decreased by 20k if the expenses bleeding pace is the same as last month.
See below:
However, this is does not take into account the new arrival of buy side liquidity brought by new custodian’s money.
Right now the liquidity is: {“blocks”:576497,“buy”:99419.3192,“sell”:99569.9931}
Pretty much the same on both sides.
I do believe that fresh buy side liquidity is counterbalancing the cashing out.
However, custodians provide liquidity the same way to both sides, buy and sell side.
So new liquidity should not be able tofill the gap. (it should keep the difference created by the cashing out).
From there, we can infer that there is more liquidity being brought to the buy side liquidity.
In that situation, this is because the sell side would be overcrowded (too much competition which causes the rewards to be too low) and custodians are attracted to the buy side which offers more rewards.
But this works only in a fixed costs ALP scheme.
From what I understand, there is only one pool (NuPond on NBT/BTC) that adopts that scheme.
So its effect should be negligible on the overall liquidity.
So probably there is more demand for NuBits right now because traders are wary about the decrease of bitcoin after its recent rise, which would be behind a natural market force filling the gap, taking nubits from the sell side to the buy side?
