Motion RIPEMD160 hash: tbc
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A need has arisen for guidance of trusted network liquidity pool operators providing service on low volume NBT markets beyond that provided by the motion 0ec0be7f113a0bf6ff603545a974cd6410458e00. Acting as a tool in a box of viable, shareholder approved strategies, this motion is intended to provide a declarable philosophy that supercedes the spread regulation motion in pertinent NBT markets. The method spelled out is to be called upon as a guideline for the conversation between the liquidity pool operator and the shareholders when proposing a grant.
A Moderate Quality Peg
The intent proposed here is to keep a peg of moderate quality on low volume NBT pairs while still maintaining both competition and fiscal prudence in relation to liquidity provision on pairs of similar type (i.e. BTC or Fiat).
Liquidity provision (LP) across pairs of similar type should maintain similar parameters with regards to LP reward rate and market spread. To account for the variation in risk and volume among different exchanges, the LP target will be used as the variable of interest. A liquidity pool should never support a target of less than 500 NBT total liquidity and should increase target term by term as long as that target is being consistently reached. The operator should be awarded a consistent % of the total liquidity target. Once the pool has reached a target of 5,000 NBT total liquidity the guidelines set out by this motion are no longer relevant.
It is incumbent upon the shareholders to identify the situation where a pool is accumulating large amounts of liquidity provision while simultaneously maintaining little or no trade volume. This scenario is outside the scope of this motion and should be understood as a special circumstance. The philosophy espoused by this motion is that if we build it they will come and if it’s crowded they’ll spread out.
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Motion RIPEMD160 hash: **tbc**
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A need has arisen for guidance of trusted network liquidity pool operators providing service on low volume NBT markets beyond that provided by the motion 0ec0be7f113a0bf6ff603545a974cd6410458e00. Acting as a tool in a box of viable, shareholder approved strategies, this motion is intended to provide a declarable philosophy that supercedes the spread regulation motion in pertinent NBT markets. The method spelled out is to be called upon as a guideline for the conversation between the liquidity pool operator and the shareholders when proposing a grant.
A High Quality Peg
The intent proposed here is to keep a peg of high quality on low volume NBT pairs while still maintaining both competition and fiscal prudence in relation to liquidity provision on pairs of similar type (i.e. BTC or Fiat).
Liquidity provision (LP) on low volume pairs is fundamentally different from that on high volume exchanges. Spread after fees is minimally relevant on such a pair and so should be minimized as close to 0% as possible. As low volume pairs tend to have additional exchange risk associated with them and this type of LP is of a higher quality than normal, the provision rates are expected to be high.
To maintain fiscal prudence, the target on such a pair is limited to 5,000 NBT total. As target is consistently filled, the pool operator is expected to lower the provision rates until they are consistently in equilibrium with other pools of similar pair type. Once that goal is attained, the pool has advanced outside the scope of this motion.
The operator fee should be inversely related to the LP rate, such that the fee increases as the rate decreases. It is incumbent upon the shareholders to hold an operator accountable for an unfilled pool, as the pool is being well funded with the goal of a filled pool. The philosophy espoused by this motion is that a big bang opening will get people interested and once they are set up they will willingly stay for longer, even if the rates go down.
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Motion RIPEMD160 hash: **tbc**
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A need has arisen for guidance of trusted network liquidity pool operators providing service on low volume NBT markets beyond that provided by the motion 0ec0be7f113a0bf6ff603545a974cd6410458e00. Acting as a tool in a box of viable, shareholder approved strategies, this motion is intended to provide a declarable philosophy that supercedes the spread regulation motion in pertinent NBT markets. The method spelled out is to be called upon as a guideline for the conversation between the liquidity pool operator and the shareholders when proposing a grant.
A Low Quality Peg
The intent proposed here is to keep a peg of low quality on low volume NBT pairs while still maintaining competition in relation to liquidity provision on pairs of similar type (i.e. BTC or Fiat).
A low volume pair does not speak for Nu the way a high volume pair does. In that case, out of extreme fiscal prudence, we should simply not fund them as well. The best way to accomplish this is to reward a very large spread after fees. A pair of similar type with higher volume can afford to tighten the peg and award a low rate, but on a low volume pair the spread should be let go in order to keep a competitive liquidity provision (LP) reward rate.
To maintain the strain of fiscal prudence, the target on such a pair is limited to 5,000 NBT total or less. As target is consistently filled, the pool operator is expected to raise target up to the full 5,000 NBT first, then lower the spread after fees until they are consistently in equilibrium with other pools of similar pair type. Once that goal is attained, the pool has advanced outside the scope of this motion.
The operator fee should be inversely related to the spread after fees, such that the fee increases as the spread decreases. It is incumbent upon shareholders to demand a low operator fee for a poorly filled pool. The philosophy espoused by this motion is that anyone on the order book is our friend and we can get them interested if we let them keep a large spread while they provide liquidity.
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The 5,000 NBT figure is now united across motions. This number is the level at which pools are expected to operate at similar rate and spread as other pools before they are considered no longer fledgling.