[Draft] Spread and Nu Ownership

[cryptog]

T1.1, T1.2

I forgot about their definition…

[Nagalim]

Almost done. A few more details and a few more pictures and ill be ready to discuss.

[Nagalim]

“bookSellwall”: 2000.0,
“bookSellOffset”: 0.003,
“bookSellInterval”: 0.004,
“bookSellMaxVolumeCumulative” : 10000.0,

I’d like to get verification that the above parameters would keep the offset (after fees or whatever) below 0.02%. As far as I understand, these settings will produce walls like this:
0.3% | 2000
0.7% | 2000
1.1% | 2000
1.5% | 2000
1.9% | 2000

[masterOfDisaster]

Based on my understanding and experience I’m not exactly sure that it’s producing these offsets and amounts, unless you configure a linear order book type.
If you have exp or log, the numbers are somewhat different.
This is something @desrever can hopefully explain. I’m not aware of the math NuBot uses.
I can make some test, if you like.

And btw. - thank you very much for creating this draft!
It’s a very nice and detailed explanation of the spread model, which is interestingly pretty compatible with my motion to regulate spread, that forces NuPaid operations below 1% spread, while allowing NuOwned operations going above 1%.
I fear it’s in conflict with JordanLee’s version and the meaning of Cybnate’s proposal appears to be somewhat different as well.
I seem to be - besides you - one of the few who thinks a spread above 1% can be very useful.

Limiting T1.2 to 5% spread makes much sense, if you want to want to give T1.2 a meaning with regard to quality.
I don’t have that in my motion, and for that reason I will put your motion into my data feed, once it’s up for voting.
It’s a very great extension of the skeletons JordanLee, Cybnate and me created.

[cryptog]

Very comprehensive and detailed explanation on how meaningful and useful it could be to have a liquidity whose spread >1% .
So this proposes put liquidity whose 1%<spread<=5% at Tier1, what you call T1.2

What happens if most of the T1 liquidity is T1.2 ?

Let us say that most of the liquidity is produced by gateways which are NuOwned in your mode and operate at <5% spread.

In that case, we would have a rather low quality peg which would be a problem.

[masterOfDisaster]

@Nagalim, do you think applying special rules for USNBT/USD trading pairs makes sense?
After all there’s no volatility risk that is one of the reasons for allowing an increased spread.
A slight increase above 0%+fees makes sense even for USNBT/USD, because it reduces the costs for an operation by generating revenue from the spread.

[Nagalim]

If a gateway wants to provide a lot on T1.1 it can. But basic operation is such that gateways are not the only liquidity on the pair. The normal operation is with a portion of liquidity in T1.1, a portion in T1.2, and a portion in T2.

USNBT/USD trading pairs

Well so the minimum is still 0% SAF. If we are talking CCEDK the current motion allows the actual bookoffset parameter to be between 0% and 0.3%. I think that’s already pretty constrained, I’m not really a fan of constraining it more.

[cryptog]

If a gateway wants to provide a lot on T1.1

Any condition on the spread for providing liquidity on T1.1 whether it comes from gateways or not?

[Nagalim]

a maximum spread of … 1%, which will be defined as T1.1.

1% is T1.1, basically

[masterOfDisaster]

What’s your opinion on market awareness?
I’m referring to this post:

Current Liquidity

Maybe we should work toward a coherent market-aware spread strategy for all types of T1 walls. liquidity aware examples: spread increases as wall decreases follow a inverse propportion function: if the wall decreases to 1/3 of starting amount, the spread increases to 3 times of starting spread spread = constant / wall_height spread increases as wall decreases follow a exponential function: if the wall decreases to 1/2 of starting amount, the spread increases to 2 times the current value …

and at least the post after that (at the time of writing).
Basically it woult need to make the range of T1.1 wider, if you want ALP to provide T1.1.

Market awareness happens, whether you include it in your model or not - ALP simply fails, if not being allowed to operate at market aware parameters.
LP stop providing liquidity, because doing so is the rational choice in some events.
Those events need to trigger spread adjustments that make LP continue.

Now I realize that all three motions (@Cybnate’s, @JordanLee’s and mine) that try to regulate the spread are flawed.
ALP/MLP etc. that’s limited to 1% doesn’t work at all events; it’s wishful thinking to believe otherwise.

I still perceive mine as superior to theirs (due to the backup function of the gateways that’s explicitly allowed by it) but yours superior to mine.
Advancing yours makes more sense than refining mine.

[Nagalim]

Yah, im not sure we can define a T1.2. It’s possible the P&L could create attainable goals enough that we don’t need to.

Feel free to shamelessly copy. Im not super motivated to solve this anymore.

[masterOfDisaster]

Im not super motivated to solve this anymore.

So am I.
I want to see how the voting for the three competing motions to regulate the spread proceeds.

I wrote this before this BTC madness was at full speed - because I know how important increased offsets are - and tend to keep with it:

[Passed] Motion to join FLOT - masterOfDisaster

Announcement:

I’m seriously considering a retirement from my position as FLOT member, if a motion that restricts increased offsets passes.

I know that in case such a motion passes, you either need to violate that motion to support the peg; I did that in January, when I made the singleside gateways both dualside by my own discretion and won’t do it again.
Or you have to face a complete failure of the peg sooner or later; I don’t want to have a part in that either.
I’d rather take an extended break and come back later to see what’s left.

[Nagalim]

Some moments last forever and some flare out with love love love

[masterOfDisaster]

No need to mock me
What about your opinion on market aware spreads, even at 1% for ALP/MLP, if the market awareness says so?

[Nagalim]

I like @mhps’s idea of requiring a tight spread for NuPaid stuff. It’s a lot of money to keep NuPool operating just for that though.

I wasn’t mocking you, I was expressing things rattling around in my head. You know I have nothing but respect for you.

[masterOfDisaster]

Thank you for your kind words!
Do you want to tell, what’s rattling aroind in your head?

[Nagalim]

I’m doing it in my own time. I think a lot of people here have a lot to say that they aren’t yet saying.

[masterOfDisaster]

Oh, and some say a lot and maybe they don’t have that much to say, lol.

[Nagalim]

every organization needs a leader or two, if only for morale.

[masterOfDisaster]

Apparently I’m none of those.
Some of my important ideas (at least I consider them important), e.g. regarding reducing liquidity costs and not so tight spreads barely find followers, even if all that keeps the peg at some level are rather big offsets…
…I have a hard time finding the energy to keep the morale high.
Working on all this and tilting at windmills on top is tiresome.
Anyway, this will go by. In one way or another