[Draft] Monthly Budget and NuLagoon Support Reduction

Motion RIPEMD160 hash: tbc

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As Nu operates as a business, it should have a firm grasp on its monthly budget. This motion is specifically referring to all liquidity provision (LP) for tiers 1 through 3. The budget for such operations shall be known as 12,000 NBT/month. Of this budget, the pool operating under the brand name “NuLagoon” shall be limited to 1/3 (~33%) of the total LP budget per month.

The funding cap on NuLagoon introduced by motion ae07a18b22e20e38d6bf7559e320c1728d7a62dc will be decreased to 4000 NBT/month. This motion will take effect the monthly term following the term in which it passes. @henry is expected to take similar measures to announce the effects of this change to NuLagoon participants.

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We would like to ask the following questions?

  1. Nu is going to create more products. More liquidity is needed in the near future. NuLagoon can play a very important and flexible role in supporting new nubits products.

Why it is urgent to reduce the cost when we are expanding the business?

  1. How the target fee, 3000 NBT/month, is determined?

  2. Why only NuLagoon’s fee is reduced in this motion? Shouldn’t we treat all the LPs equally?

Thank you.


I believe nagalim refers only to NBT product.
If this is true then it should be declared clearly in the motion.
This motion is to make nulagoon a fixed cost pool? if yes, then it should also be declared in motion.

NuLagoon is practically a fixed cost pool. They are effectively capped by 5k/month by motion: ae07a18b22e20e38d6bf7559e320c1728d7a62dc.

I don’t think so, the latest nulagoon grant asking for 4713NBT. Nulagoon has a cap, but it isn’t a fixed cost pool :wink:

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Bit puzzled, can you please explain what is the difference effectively. It will cost NuShareholder up to 5,000NBT/month. The fee is calculated based on the liquidity. They can increase the fee and lower liquidity is that what you are referring to?

i would expect nulaggon to operate as a fixed cost pool only if its montly grant has exactly the same asking amount (currenty 5kNBT)
and then its participants get that amount depending on their participation.
@henry, do you think this kind of operation is simpler and better for your pool?

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What is the value of doing that for the Shareholders? It doesn’t reduce the costs? Still wondering what you are after.

i am not after anything, just point out how i understand the “fixed cost” term :smile:
the cost will be reduced only if this motion passes, but we have to agree in the cap amount :wink:
Lets see how @Nagalim concludes this 3kNBT cap.

Not supporting this motion as it stands now but still interested to hear Nagalim’s response to Henri’s questions.

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I guess controlling exactly how much you will have to pay is the intention.
It is also connected to the very principle of fixed costs: creating competition for a specific amount of money (bounty) that you can earn, like the 25 BTC bounty when you find a bitcoin block as a pool.

The 3k is chosen based on a 10k/month budget. I no longer think NuLagoon should be half of our monthly budget, and think 1/3 is more appropriate. This is not because I think NuLagoon has not done its job, but rather that literally the only way shareholders have of having say over how much NuLagoon is funded is via a motion like this. ALPs meet competition like this every month. If anything, NuLagoon has been the one getting special treatment up until now.

If there are new products, we can revisit negotiations. Those new products are plenty more than a month out.

We could also do some kind of a public announcement of our budget (via motion) and link NuLagoon to a specific % of that budget. If we make the budget 15 kNBT/month, I’d be fine with NuLagoon keeping 5k of it. If we’re still trying to keep costs down to 10 kNBT/month, I think we should consider reducing the portion of it we are promising to a single pool.

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3k looks like a good number but trade volume is picking up.

Having a monthly budget that is split between different liquidity operation models is a part of the equation as well as a split between different exchanges and trading pairs.

Nu might arrive in a (near) future in which e.g. (up to) 10,000 NBT per month are available for NuLagoon, ALPs and NuBot operations and
exchange A trading pair 1 will receive 3,000
exchange A trading pair 2 will receive 2,000
exchange B trading pair 1 will receive 2,000
exchange C trading pair 1 will receive 2,000
exchange D trading pair 1 will receive 1,000

The different liquidity providers can then try to compete for the reward by offering liquidity.
At the moment Nu sits and waits for liquidity providers to step up.
Offering compensation for liquidity can motivate liquidity providers to consider starting an operation.

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But that’s just a tier 1 fixed cost perspective. How can an mlp like nulagoon with its special ability to do tier 2 and 3 compete with alps on such a tier 1 preferenced playing field?

It can’t - at least if you’d expect similar compensation rates for the same amount of tier 1 liquidity. NuLagoon offers a different and additional service: tier 2 and 3 as buffers. That needs to be rewarded as long as it’s considered useful.
BCE will change that to some degree. The borders between tier 2 and 3 blur at BCE.
With my soonTM starting NuBot operation on hitBTC I try to find a place between NuLagoon and the current ALPs.

Different types of liquidity providing will be rewarded differently.
ALPs can stop liquidity providing in an instant.
NuLagoon customers can withdraw twice a week.
I plan to provide liquidity for 30 days (almost) no matter what. That’s one of the (possible) advantages of closed NuBot “pools”.


I edited the OP. I increased to 4 kNBT instead of 3 and added additional phrasing and reasoning.

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  1. It makes sense to link the fee to the budget. Will NuLagoon Fee automatically rise when the total LP budget rises?

  2. Does it make sense to link the fee to the number of trading pairs which NuLagoon supports? We are adding HitBTC to the support list now.

  3. Does it make sense to link the fee to the innovation of the new pools? We are trying to introduce new pools to provide liquidity with locked time period in future.

  4. Does it make sense to link the fee to the additional services? Because It is possible that in future, NuLagoon will provide additional service to Nu beside liquidity provider. For example, NSR auction.

Thank you.

since nulagoon is “expanding”, i don’t think it is the correct timing to reduce its budget.
But if shareholders think that reduction is unavoidable and will help NU in general, then a 10%
reduction for now could be enough. Later we could discuss about another reduction if we see
that nulaggon’s new businesses are not doing so well :wink:

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