FLOT BTC Operations (buy side)

woodstockmerkle 2015-11-30 17:22:14 UTC #37

I would be comfortable with the FLOT managing 15%

JordanLee 2015-11-30 17:39:02 UTC #38

My understanding of the latest votes are:

Dhume: 15%
woodstockmerkle: 15%
cryptog: 10%
mhps: 10%
masterOfDisaster: 50%
ttutdxh: 50%

Because half (4) of FLOT members have requested 15% or more, 15% will be transferred. Tier 4 buy side funds consist of 722.1 BTC at the moment, so 108.3 BTC will be sent to 3QDWJ2yqJ5iTUg6cSpAwxx95ba3NG97hzG. I will transfer funds before the end of today UTC.

Are we in agreement that the planned transfer is correct and complies with all applicable motions? Will FLOT begin taking primary responsibility for tier 4 buy side support beginning December 1? I plan to only get involved in the event there is an unexpected problem with FLOT operations.

masterOfDisaster 2015-11-30 20:56:09 UTC #39

I find no contradiction. Please correct me if I’m wrong.

My take is: yes - this is what FLOT wa created for!

That meets my expectation. The previous tests (relevant here:. BTC (T4 buy side), but NSR (T6 buy side) as well) showed that FLOT is technically capable of performing its job.
From an organizational perspective FLOT needs to be tested. But that’s what the split responsibility is for - at least in my opinion.
I’d say: go for it!

Nagalim 2015-11-30 21:10:12 UTC #40

The only big responsibility that FLOT will need to take on immediately is to count the Circulating NBT and T4 buy side funds (this can be done verifiably), pick a BTC price for the week (needs to be agreed upon each week), calculate the T4 overflow, and send the required BTC to @NSRBuyback.

Overflow calculation:
Weekly Buyback Volume in BTC = 0.1 * [ (T4 Bitcoins) - (0.15 * Circulating NBT / BTC price) ]

masterOfDisaster 2015-11-30 21:16:24 UTC #41

Really? I think it’s one of the important responsibilities, but what about balancing the buy (and sell side) wall(s)?
And although this motion is up for voting only a few hours, very soon the FLOT might be involved in more than that: [Voting] T4 buy side / BTC - maintaining and refilling value

Nagalim 2015-11-30 21:43:37 UTC #42

FSRT and JL are also on call for that. Those operations are evolving, and actually aren’t currently under contract. The NSR buyback is the contracted bit and in my opinion highest priority for FLOT to take the reins on. Of course you’re correct that FLOT should do its best to be there to balance liquidity, but I think we’ll find that using multisig in times of pressure is a lot less efficient than something like this: T3 custodians, which is essentially what JL has been doing anyway.

jooize 2015-11-30 21:49:58 UTC #43

35 BTC has been received at 3QDWJ2yqJ5iTUg6cSpAwxx95ba3NG97hzG.

JordanLee 2015-11-30 23:26:08 UTC #44

108.3 BTC of tier 4 buy side funds have been transferred to 3QDWJ2yqJ5iTUg6cSpAwxx95ba3NG97hzG.

The funds are not needed at the moment because tier 1 liquidity has 42% on the buy side. If that drops below the threshold for action, I am expecting FLOT to take that action. I will increase buy support only as a backup should FLOT be unable to function.

JordanLee 2015-12-01 00:44:29 UTC #45

How does FLOT feel about engaging in wholesale transactions that exceed the liquidity available on exchanges? What if someone wanted to buy 50,000 NBT from FLOT? I have had two traders approach me in the last few weeks about buying 50,000 NBT or more. They were both frustrated with low liquidity on exchanges.

woodstockmerkle 2015-12-01 00:52:26 UTC #46

I’m not opposed to it outright – demand of such magnitude is exciting news – but it would be good to understand the level of effort.

Also I think we’d want to get a take if the community feels this is a good thing, or perhaps a missed opportunity to strengthen liquidity thru the LP’s.

A purchase of those magnitudes would likely have triggered some need to re-balance things, so proactivity may be of benefit here since the FLOT would have likely been called to order reactively.

It may have a helpful sense that if someone wants to move say 5% or more of the market cap, they should be engaging the FLOT.

@jordanlee – when it came to the initial Nu distribution as well as the B&C distribution, what is your best experience with time to execute each transaction, what percentage required followups, and how much effort was involved in customer support?

[Discussion] about the size of buy and sell side / T1-3 (T4)

mhps 2015-12-01 01:56:32 UTC #47

I am more concerned with security implications of any single entity acquiring more than half of total buy side liquidity ($15 -$25k currently). An owner of such fund doesn’t have to be an attacker to wreak havoc on liquidity operations – he/she only needs to be ignorant and dumps the whole lot when everyone else is selling. Of course we don’t want to shut legitimate business opportunities out.

I think in situation like this Nu should respond by declining offers to a buy offer that is more than 50% of the total buy side, and at the same time increase the NBT/BTC buy side liquidity. Nu should demand targets of fixed reward ALPs to be increased, and increase reward of fixed cost ALP, all by a factor according to how much new NBT are sold. The sell side will have to increase accordingly.

Fixed cost ALP (Nupond) has shown that LPs accept rates lower than that offered by current fixed reward pools. So I suggest increase target of fixed reward pools but lower interest rate to keep total reward the same, and do this until target cannot be reached, thereby finding out a fair market price of fixed reward liquidity.

[Discussion] about the size of buy and sell side / T1-3 (T4)

Nagalim 2015-12-01 02:00:17 UTC #48

Not technically true currently, but bter is not necessarily a neutral testing field.

I’m more concerned with the spread. Let em buy 100,000 nbt all at once as long as it’s at $1.05

mhps 2015-12-01 02:06:56 UTC #49

Maybe this should be discussed more (better in another thread).

Anway I think the right response to more demand is increasing liquidity.

cryptog 2015-12-01 07:02:58 UTC #50

If we make sure we have the right reserve (Tier4 and 6, with the right NSR market cap), I think we should not decline selling 50k NBTs.
We should be more than happy to sell large amounts, I feel.

mhps 2015-12-01 07:09:30 UTC #51

I agree that a rationalized set of tiers 1-6 should be happy to take any buy amount. So far tiers 1-3 are patch works and tier4 is in transition.

Dhume 2015-12-01 13:54:31 UTC #52

I feel we as a business should not pass up such an opportunity, this could be and should be great for Nubits. I do feel it’s wise to ask them why they require a large amount, if they want it for hedging then it’s very likely they might soon sell it back to us. We can ask them if they would be willing to sell it back to us directly instead of dumping it on an exchange, and if they rather sell them on an exchange inquire which one they would use so we can increase tier 1 buy side liquidity on that specific exchange.

My vote would be to do so with a spread slightly bigger than our liquidity provision currently does so the “emergency” backup liquidity that we put out is only used for huge dumps of Nubits. They way we could bring this liquidity to the exchanges would probably be some sort of gateway similar to what @masterOfDisaster is setting up for the sell side.

masterOfDisaster 2015-12-01 14:34:38 UTC #53

I agree that it sounds intriguing. As much as I’d like seeing Nu go viral, I need to raise a warning:
as long as Nu is mainly used for hedging BTC volatility AND has no deep NSR liquidity, selling an unlimited number of NBT can be dangerous.
I don’t say 50,000 NBT is too much. I don’t know the exact number. But I know that there’s a number which is too much.

Example:
Nu sells 1,000,000 NBT today. Tomorrow BTC drops 20% in price. The buyer wants to sell the 1,000,000 NBT for BTC. The value of T4 buy side (I ignore the BTC that have been there before to keep it simple) dropped by 20%. 200,000 USD value are lost by BTC volatility. Nu needs to sell NSR to retrieve BTC worth 200,000 USD.
The daytrader is happy.

As long as Nu doesn’t have the capability to store a big amount of value in a short period of time internally it remains dangerous for Nu to sell big amounts of NBT, especially in a short period of time.
Mitigating that requires e.g. NSR buybacks that don’t push the NSR price because of the tremendous NSR market depth and daily trading volume of tens of thousands of USD.

I have set up one for buy side as well anticipating the need for that

Dhume 2015-12-01 14:38:50 UTC #54

50,000 is still a long way off from 1 mil at once though. But I do second your concerns I think looking for ways to protect ourselves from BTC volatility are very important. We need some sort of hedging instrument although I’m not sure what would be suited for this yet.

mhps 2015-12-01 15:09:18 UTC #55

That is what I have been thinking. Maybe NSR futures?

Dhume 2015-12-01 15:13:31 UTC #56

We’ll have to keep an eye out, futures could be a solution but also holding USD at trusted exchanges instead of BTC could be an option to partially hedge some funds.