[Draft] Nustream a new BTC/NBT liquidity pool on Cryptsy

[mhps]

The idea is to give a good bang for the first month at cryptsy.

The risk-concious part in me worries what if adverse condition develops and it turns into a bad bang as @Dhume, apparently not familiar with liquidity provision as a pool-runner yet, has to shoulder it both technically and financially by him/herself.

[Nagalim]

The only big technical concern in this first month is nubot, which is a straightforward implementation as far as I understand.

The other option would be for dhume to continue with funds in the other liquidity pools while setting up the one on cryptsy and to start out with a small target and increase each term. The downside here is that we may see a broken peg on cryptsy until nustream comes up to speed.

[Dhume]

The risk-concious part in me worries what if adverse condition develops and it turns into a bad bang as @Dhume, apparently not familiar with liquidity provision as a pool-runner yet, has to shoulder it both technically and financially by him/herself.

Seeing as the fee is paid after my service has been completed I don’t see how this is a risk for Nushareholders?

[mhps]

Seeing as the fee is paid after my service has been completed I don’t see how this is a risk for Nushareholders?

We don’t want to lose you when say a series high profile double spendings occur in the QT-XT fork and BTC price dives. Then some medium sized traders on Cryptsy come in and in a few transactions bought all your sell side NBT at 240. When things crash and burn for a while they sell into your buy wall, which has all your funds in it, at 150, just before the BTC core team nuke the offending chain into oblivion. BTC price bounces back and you and Nu’s high profile peg are 40% in the red.

When the last time similar situation happened, facing shareholders inquiries, LPC’s argument boiled down to why don’t you try it?.

The shareholders have been brushing off this systemic risk and hang Nu’s fate on BTC prices by providing most liquidity in the risky nbt/btc pair. It’s not all your or LPCs’ problem. We are all stakeholders on the same boat. Deep liquidity seems particularly profitable to hedge against on an exchange full of whales.

[masterOfDisaster]

The question is: when will Nu begin to focus on the trading pair it really promises a peg: NBT/USD?
That would reduce the compensation by the volatility/hedging aspect and provide Nu with cheaper and the liquidity provider with less risky operation.
Traders who want to move BTC to NBT still can do that utilizing the BTC/USD pair.
For how much longer shall Nu pay for traders’ comfort by supporting NBT/BTC?

[mhps]

The question is: when will Nu begin to focus on the trading pair it really promises a peg: NBT/USD?

Currently there are $42k liquidity for the nbt/btc pair in total and $9k for the nbt/fiat pair.

If the shareholders are willing to stomach losing $120k value in a few months with nbt/crypto pairs, why not use 1% of that amount every month to make the interest for nbt/fiat pairs the same as nbt/btc pairs, which I think is enough to equalize the liquidity distribution between nbt/btc and nbt/fiat. @Cybnate

[Sentinelrv]

For how much longer shall Nu pay for traders’ comfort by supporting NBT/BTC?

I’m all for adding more support for NBT/USD, but how does removing support for NBT/BTC mesh with @JordanLee’s plan of turning NuBits into an intermediary currency that provides the best liquidity for every coin on every exchange? Embracing this intermediary role and creating the necessary amount of liquidity, credibility and trust was the first step he saw in our path toward driving mainstream adoption…

“We can provide the best liquidity for every coin on every exchange. We can aggregate all the liquidity for any particular coin and offer it on multiple exchanges. In order to tap into this liquidity, people will need to buy NuBits. Providing liquidity has worked for us so far, but we can take it much further. Take Dogecoin for example, whose liquidity is fragmented between BTC38, Bter and Cryptsy among others. With the system I have outlined, a custodian with accounts at BTC38, Bter and Cryptsy can offer as much liquidity as all three exchanges combined, on any and every exchange they operate. This liquidity will be irresistable to traders. All they have to do to access it is buy NuBits. So they will. Talk of phasing this out in favor of our non-existent USD market is presumptive at best. Where is the demand for USD/NBT going to come from? No one is saying because no one knows. What we do know is the market has rewarded us for liquidity provision. Therefore, I argue for doing more of what has made us successful, not less.”

“Let’s say I have some Dell stock and I want to exchange it for Google stock. There isn’t any liquidity in that pair, so I trade my Dell stock for a currency, such as US dollars, and then use the dollars to buy my Google stock. In the cryptocurrency world today, that intermediate currency is Bitcoin. If I want to exchange my Dogecoin for Litecoin, I first exchange to Bitcoin. With the plan I have outlined here, we can easily exceed the liquidity offered by Bitcoin for these scenarios. Better yet, our currency is stable, so someone wishing to trade Dogecoin for Litecoin doesn’t have to also expose themselves to Bitcoin if they use NuBits as the intermediary. Our goal should be to make NuBits play the same role in the crypto world that US dollars play in the US stock market.”

[mhps]

Those quotes were made in mid December last year before Nu lost heavily in exchange hacks and BTC price fluctuations. Much has changed then. Jordan’s vision might still hold valid, but the path to them is perhaps far from a straight one. Since then B&C has been created to address the exchange hack problem but I don’t see the volatility problem has been effectively tackled.

[Sentinelrv]

The NuBot development roadmap mentions futures market integration. Would automating something like this help?

[Cybnate]

If the shareholders are willing to stomach losing $120k value in a few months with nbt/crypto pairs, why not use 1% of that amount every month to make the interest for nbt/fiat pairs the same as nbt/btc pairs, which I think is enough to equalize the liquidity distribution between nbt/btc and nbt/fiat. @Cybnate

If anything, I believe as a shareholder we should lower the BTC/NBT rate instead to say 0.25%. We are still paying a premium rate, but I recognise the market is still immature and/or still perceived risky. We are missing the number of participants, so it is too early. In 2 weeks time the NuDroid / NuBits ad goes up again. So hopefully that attracts more users/competition.

[cryptog]

• 10% is not that higher than the 9% asked by pools. So I would not have any problem with the 1500 NBT requested for the first month.
• i think balancing the sell/buy sides from time to time would be preferable. Would it be possible to add an element about that?
• after the motion is passed, within how many days would you start the operations?

[nmei]

I am not against Nustream. We need to be on Cryptsy now.
I’m against granting someone a corner of the liquidity market on that exchange.

[Dhume]

So what’s the consensus now?

[mhps]

If anything, I believe as a shareholder we should lower the BTC/NBT rate instead to say 0.25%.

Let’s see if nbt/usd on CCEDK can reach and stay at the 5000 target at 0.2% perday. It’s a lower-limit for nbt/btc rate.

[Nagalim]

So what’s the consensus now?

I’d like to see the wording of the grant (you will need a custodial grant address to submit liquidity, so at least 1 NBT). Ultimately, you need to write your contract yourself, but i personally liked the 30 days private then tllp.

[mhps]

If there is a private nubot on an exchange, can there be a tllp on pybot on the same exchange without a lot of coordination between the operators of these bots?

[tomjoad]

Ultimately, you need to write your contract yourself, but i personally liked the 30 days private then tllp.

I would support this too. We’re looking forward to having a reliable liquidity provider on Cryptsy, so write up a motion using the feedback you’ve received here and let’s see how the vote goes.

[Nagalim]

can there be a tllp on pybot on the same exchange

There can even be multiple tllps on the same exchange if all the participants agree to play fair and not try to get double counted. Theoretically, there is no way for the tllp to prevent the pybot user from getting credited in the tllp as well. Practically, this is not an issue if we trust our pybot providers.

For example, both NuLagoon and NuPool operate on poloniex.

[Sentinelrv]

but i personally liked the 30 days private then tllp.

Agreed. This sounds reasonable, but not the 90 days. 30 days then switch sounds fine to me. Can you answer @cryptog’s questions above please?

[Nagalim]

@dhume

i think balancing the sell/buy sides from time to time would be preferable. Would it be possible to add an element about that?
after the motion is passed, within how many days would you start the operations?

I’m guessing operation would start immediately from how dhume has been talking. I also want to know if dhume intends on balancing the liquidity periodically during the first month.