This post is to extend disucssions on “Fixed per-minute total interest payout” for liquidity pools here
@Nagalim pointed out that
I think the rollover money is a result of unfullfilled target. If a fixed per-minute interest is implemented, every pool will have to pay out a fixed amount of interest every month. Pools with less volume will get a proportional greater boost (they pay higher interest) compared with a pool with more volume, if they are granted with the same interest funding by the Nu shareholders every month. This has an equalizing effect on trade volume to pools receiving the same amount of funding.
Shareholders will directly control the volume of a pool by controling the amount of interest grant.
Quality of the exchange where a pool operates will have an impact on pool popularity. Less quality (e.g. safety, overall liquidity, API problems) pool will have to offer higher interest. If fixed per-minute payout scheme is implemented, Nu shareholders will observe who is the best quality pool that has the lowest interest for the same interest grant. The shareholders might choose to grant more to the pool on better exchanges.
To summarize, fixed per-minute total interest payout scheme
- gives shareholders directly control of the Nubits pegging liquidity,
both globally and individually over every pool.
- It incentivises liquidity provision when liquidity is thin, hence increases peg security.
- Artificial liquidity targets currrently used, which either are unreached or reached but shut extra liquidity out, will be removed.
Please offer what you think.