Doubt about Liquidity


#1

I have been thinking about the whole liquidity Nu system.

I was wondering, would not it be more effective to mantain the peg to focus all system’s reserves into only NBT/USD pairs? The rest of pairs would keep the correct exchange rate due to arbitrage, wouldnt them?

Please enlighten me about this.


#2

That’s a great plan. You might want to rename the thread title, because “doubt” is not the right word. It is more like an idea. :smile:

The problem is that the two major exchanges supported by Nu (CCEDK and BTER) do not have active BTC/USD currency pairs. This inhibits arbitrage operation.

The general goal is to transition shareholder-funded support to NBT/USD support only, gradually over time, if this becomes possible.


#3

This way the system would save lots of money lost due to distortions in the automatic sell/buy price and in volatility (i.e., when using BTC)


#4

Ok, cool, but I guess someone must have pointed out this before right?

We need then to open a discussion on how to incentivate big exchanges to implement NBT/USD pair. That would be a very well invested money, IMO.

I read that NBT have already been used to short bitcoins, taking into account they are much more fluid (when moving them from exchange to exchange) than USD.

Imagine for example Bitfinex and Bitstamp have NBT pairs implemented. That would facilitate arbitrage between both exchanges as arbitrers could easily move NBT (USD) from one another.


#5

There has been an in-depth discussion progressing around these issues in this thread: Finalized evolution of liquidity operations